Odd Molly International AB, Complaint 294

CONCERNING LABOUR STANDARDS
Payment of a living wage Reasonable hours of work Legally binding employment relationship
STATUS
Evaluation of the complaint
DATE
2017-12-07

The complainant claims that on the evening of 6 December, after completing his/her shift, the HR manager informed the complainant that he/she was no longer required to come to the factory. The manager offered full and final payment along with due wages for the work done in November 2017. Apart from this, management made two other offers:
a) The company will pay him/her extra wages for 10 days if he/she would choose to rejoin as a new worker.
b) The company will pay him/her extra wages for 20 days if he/she does not rejoin as a new worker.

According to the complainant, he/she asked the manager not to terminate his/her contract, but that if the manager insisted on doing so, the complainant must be paid all legal benefits. Management refused this request.

The complainant claims that he/she had been working in this company since March 2016 as a sampling tailor with a salary of INR 12,408 per month. He/she was covered by ESI and PF (social security). From 23 November to 2 December 2017, he/she was on approved leave, but due to a personal problem, he/she could only return to work on 6 December 2017. The complainant claims that he/she worked 40 hours of overtime but does not have evidence for this. At present, overtime payment is 50 Rs per hour.

If all the complainant's statements are correct, the full and final payment must include the following legal benefits for retrenchment cases:
i) Wages due for the work done (22 days) in month of Nov. 2017
ii) Payment for overtime at double rate.
iii) Notice pay equivalent to wages for one month
iv) Retrenchment compensation equivalent to wages for one month (15 days for every completed year (240 days) of service)
v) Bonus
vi) Payment for earned leave not used

Findings and conclusions

On 7 December 2017, FWF's complaint handler in north India received a complaint call from a former factory worker who claimed that he/she had been dismissed suddenly without being offered all legally required payments. FWF declared this complaint admissible and informed Odd Molly, the FWF member sourcing at this factory. Odd Molly reached out to factory management, who responded that they had made all required payments, providing a letter signed by the complainant confirming the receipt of payment. FWF reviewed the letter and concluded that the payment matched legal requirements, except for retrenchment compensation and overtime compensation. FWF called the complainant and verified that he/she received the amount. The complainant is aware that the payment does not match legal requirements entirely, but has accepted it and does not want to pursue the complaint further. As the individual complaint was solved to the satisfaction of the complainant, FWF considers the complaint resolved. Progress on structural remediation points, such as legal dismissal procedures and reasonable overtime hours paid according to legal requirements, will be assessed during the next on-site FWF audit.
The verification audit which took place in first week of February 2018 reflected that the factory has not acted on most of the structural problems raised in last few complaints; most of the workers still do not get appointment letter, overtime is not paid at legal rate, workers are terminated without following procedures and there has been no training on harassment at workplace. FWF urges Odd Molly to continue remediation of these structural problems.
On 30 October, the brand visited the factory along with fair wear country representative and saw that the factory considerably improved on the CAP. A verification audit in 2019 was suggested for a thorough check of the management systems in this factory.

Overview of the complaint investigation

2017-12-29 Investigation

Odd Molly informed the factory about the complaint and asked for their response. FWF looked into the explanation of factory sent over email, a letter signed by the worker and payment voucher.

2018-01-02 Conclusion of the investigation

The factory replied on 29 December 2017, stating that they paid all outstanding payments. A hand-written letter dated 22 December and signed by the complainant was attached as confirmation. FWF reviewed the letter and concluded that the payment matched legal requirements, except for retrenchment compensation and overtime compensation (as claimed by the complainant).

2018-01-03 Evaluation of the complaint

The complainant confirmed the receipt of payment as asserted by the factory.

The complainant is aware that the payment does not match legal requirements entirely, but has accepted it and does not want to pursue the complaint further.

2018-01-03 Remediation

As the complainant does not want to pursue the complaint further, no remediation is required for the individual grievance.
On a structural level, FWF recommends the following remediation steps:
1) The factory should establish and follow legally-compliant dismissal and termination procedures including providing all legally-required payments.
2) Overtime hours should be non-excessive and paid according to Indian legislation (200% of regular rate).

2018-01-03 Resolved

As the individual complaint was solved to the satisfaction of the complainant, FWF considers the complaint to be resolved. Progress on structural remediation points will be assessed in the next on-site FWF audit.

2018-04-03 Verification

A verification audit was conducted in this factory on 7th and 8th February 2018. The audit findings that reflect on the structural aspects of the complaint arer:
- Workers are unaware of management policies. There was no induction training provided so new workers had no awareness about probation period, termination policy or employment terms and conditions.
- No training on workplace harassment was conducted.
- Workers during offsite and on site interviews stated that the management periodically dismisses some workers every 6-7 months. These workers are given their due wages but benefits like notice pay or retrenchment payment is not made to them.
- Records of full and final payment to workers were shown but it did not contain any date on the resignation letter or date of payment. It was thus not possible to verify the time the factory took to make final settlements.
- Factory still does not pay overtime premium at legal rate. Currently workers receive a little more than single hourly rate for overtime hours (wages for 2.5 hours for 2 hours work)
- Actual time attendance and wages could not be verified because of inconsistencies observed in broken needle register and time record.
- Security guards were not given a weekly day off after 6 days of work, but only after 8 days.
- Appointment letters were not given to all workers. Of the six workers randomly selected during the audit, only two could show their appointment letter.

2018-04-03 Remediation

FWF recommends Odd Molly to ensure remediation steps outlined in the corrective action plan of the audit are implemented. All workers must be employed under legally binding employment relationships and receive their legal benefits, including overtime payments at double rate. Proper dismissal/termination procedures must be defined, communicated to workers and followed. FWF has provided guidance on fix-term contracts in Indian law which has been shared with Odd Molly.

2018-10-30 Evaluation of the complaint

The brand along with the country representative of Fair Wear made a visit to the factory to check on the progress of CAP. The Director of Magnolia, HR manager and compliance manager were present in this meeting and they responded that all workers are now being given an appointment letter. The overtime hours are within the limits and are paid at double the rate. Turnover of workers still remains an issue but all workers are now granted leave with their entitlements. A thorough check on the remediation will be done in verification audit in end of 2019.