Odd Molly International AB, Complaint 395

Payment of a living wage Reasonable hours of work Legally binding employment relationship

The complainant claimed that in the last two months, the salary credited to his/her bank account has been less than usual. For March the amount credited was Rs. 100 less and for April's salary the amount was Rs. 200 less. This information is based on the text messages received from the complainant's bank, which is usually sent on 7th of every month.
The complainant would like to understand why the deductions have been made. S/he tried talking to Human Ressource staff, but did not receive an explanation.

Next to this individual grievance, the complainant also raised several general issues:
a) Two hours of overtime are done almost every day
b) Overtime is paid only at regular hourly rate
c) Overtime is paid in cash
d) Bonuses have not been paid during the last three years
e) Salary of production workers has not increased since the time factory was transferred from Okhala industrial area to Faridabad while salary of staff, including supervisors, increased continuously. According to the complainant, staff's salary increased in May 2018 as well.

Overview of the complaint investigation

2018-05-24 Investigation

Fair Wear informed the brand about the complaint and they in turn informed the supplier to get their response. Factory got back with their response on 22nd July 2018 which was studied with great care. A monitoring audit was conducted in this factory end of October 2018 because this is was a new unit of their old supplier and also to check on the two complaints that were filed by workers.

Factory sent their response on 22nd July 2018 where they claimed to prepare comparative charts for past few months of some of the workers, but as the workers are employed through different contractors – this exercise was not fully completed. Until that time they did not identify any specific case where salary was less by Rs100/ - in March and Rs 200/- in April so are unable to give any specific reason for these deductions. Factory claims to have given strict instructions that salary must always be calculated and disbursed accurately, and if there are any discrepancies then they must be corrected.

As per the factory management some of the probable reasons of deduction could be:
a) Time in and out as noted by him/her may be different from actual. The worker may have come late or left early and may have forgotten. The software notes time by the minute and calculates by giving an allowance of 5 minutes initially in the first 15 minutes in the morning and then in slabs /actuals. At end of day some workers may come down a little early and punch out before actual closure time – so that they can exit the gate at exact closure time. (As the factory provides free bus service to Okhla – some may do this to get a preferred seat in the bus.)
b) At times a worker may actually forget to swipe the card.
c) The worker may have gone out for personal work, or returned significantly late after lunch. This is noted by security and put into the system at the end of the month.
d) If a worker is found to be carrying tobacco / betel nut / betel leaf there is a penal deduction equivalent to 2 hours. (Chewing tobacco / betel nut / betel leaf is not only harmful for health, but also causes hard stains on garments and consumption or carrying of this into the work place is prohibited.) Such cases happen only once or twice a month.
e) If a worker is absent without leave being sanctioned then any such day is counted as absent and without pay and salary calculated would be less. Leave should be sanctioned before such absence, however application can be submitted later too and sanction can be taken post facto. But this would be above Rs 300/- if it’s a full day so in the case mentioned its unlikely to be because of this as the amount is Rs100/ - and Rs 200/- in different months.
f) Earlier the entire overtime amount was paid in cash and there were no deductions on it. From some time last year (2017) a part of the overtime is paid through the payroll and bank transfer as well. If overtime taken on bank transfer was less than previous month then salary transferred could be less but unlikely to be an exact Rs 100/- or Rs200/- On this amount there is also a statuary deduction of Employee State Insurance of approx Rs30/- in the month from the employee’s salary which was not happening earlier. As this amount is small it is unlikely to be the cause in the present case.

2018-07-31 Conclusion of the investigation

Since the complainant didn't want to reveal his/her identity it was difficult to find out the exact detail of his/her payment.

Factory management didn't get back with their final result of the check of pay roll on deduction of INR 100 and INR 200 from a particular worker's salary until mid December 2018. The complainant was not reachable over his/her phone for a cross check either. Fair Wear tried reaching out to the complainant several times from October until mid December without success.

2018-07-31 Remediation

With regard to structural issues that were mentioned in the complaint an audit is planned for October 2018. All these issues would be checked during the audit.

2018-11-12 Verification

A monitoring audit was conducted on 30th and 31st October 2018. The factory seemed to have improved on many counts but there were areas where only partial improvement was seen.
On specific points of check:
a) Two hours of overtime are done almost every day
Audit findings showed that there has been unreasonably high hours of overtime in this factory. The security guard and a few workers were shown to be working on everyday, even on national holidays.

b) Overtime is paid only at single hourly wages;
Document inspection revealed that overtime hours were paid at a premium of 1.25 times of the hourly rate. However, this was not commensurate to the stipulated rate of double the hourly rate.

c) Overtime is paid in cash;
It was also found that part of the overtime payment was made in cash. Management conceded to this fact a

- Whether workers have been provided with up-to-date appointment letters
Factory seemed to have partially improved on this front. Workers interviewed during audit revealed that most of the workers have not received the copy of the appointment letter. Only few workers have said that they have received the same. However, all newly joined workers have got an appointment letter which is both, in English and Hindi.

- Whether the factory shift has affected worker's length of service and salary level
During the exit meeting the management was very clear that the shift in factory location would not affect the longevity of the workers' service. All dues accrued to workers that comes with the length of the service will still be intact despite the shift. However, the appointments to all older workers (from previous factory) have not given so workers do not have a proof of employment.

- Whether their social security is paid correctly
No improvement has been made on this front. The ESI deduction/calculation is not made as per the law since ESI is not deducted from the OT payment. OT is paid at 1.25% which is less than stipulated rate (double the hourly rate). Retrenchment benefits are not paid to contract workers.

- Whether the factory has functioning internal grievance mechanisms in place where workers can raise complaints without fear of repercussions
FWF CoLP along with details of complaints mechanism is displayed in shop floor and on notice board. But only those workers who are working for a long time are aware of complaint mechanism. There is no formal training on FWF CoLP either. However there has been an improvement in including contract workers in their induction training.

2018-11-12 Evaluation of the complaint

Most of the complaint's issues were related to structural issues in the factory. The audit reveals that some progress has been made on having all registered workers, giving appointment letter to all newly joined workers, better grievance mechanisms, suggestion boxes were up and overtime was paid at slightly higher rate. Despite the improvements there are areas which still remains to be made better which are as follows:
- Appointment letter to all workers who have continued from their previous factory
- Retrenchment benefits to be paid to contract workers as well
- Proper payment towards social security of all workers
- Awareness training of workers on labour codes, grievance mechanism and workers entitlements

2018-12-24 Remediation

Fair Wear recommends the brand to have a WEP training in this factory as workers seems to be unaware of labour codes and grievance mechanism. No improvement has been shown on this front since the last audit. An audit in beginning 2020 is suggested to check the improvement on areas still lagging behind.

2020-02-27 Closed

The monitoring audit conducted on 30th October, 2018 showed that some of the structural issues on overtime, payment of overtime and social securities remained the same. As a part of remediation, it was suggested that an audit would be conducted in 2020 to verify the improvements. But, since the business relation between brand and factory has ended this complaint is considered as closed.