Odd Molly International AB, Complaint 414

CONCERNING LABOUR STANDARDS
Payment of a living wage Legally binding employment relationship
STATUS
Resolved
DATE
2018-01-05

According to the complainants, the factory has moved area after the last FWF audit. After shift of the factory end of 2016, there has been no increment in wages of production workers. One of the complainants stated that s/he as well as other workers was paid INR 9000 per month at the end of 2016 and also now. According to the complainants the salaries of the staff including supervisors, master tailors, floor in-charge and administration staff have been increased but not the wages of production workers.

The minimum wage in Delhi (Okhla) for end of 2016 was INR 9 724 (unskilled), INR 10 764 (semi skilled) and INR 11 830 (skilled) while the minimum wage for Haryana (Faridabad) for end of 2017 was INR 8 272 (unskilled), 8 694-9 128 (semi skilled) and 9 585-10 064 (skilled). It is unclear under which category workers were paid in Okhla and are paid now.

The complainant also stated that the factory has stopped giving INR 10 per day for evening tea after the shift.

Workers are also not clear whether shift of factory has had any adverse impact on the continuity (length) of their service in this factory. They said that ESI and PF contribution (social security) continues to be deducted from their wages and ESI and PF number continue to be same; but they are not clear whether they have joined this factory as a new worker or old worker. They did not get I-cards and there is no record showing date of joining, therefore this aspect is not clear.

The complainants raised these concerns with the management but they responded that the wages will be increased only when the production orders from buyers will be increased. There is a general fear among workers that raising the voice on this issue may result in getting fired from the job.

Overview of the complaint investigation

2018-01-11 Investigation

FWF shared the complaint with Odd Molly on 11th January 2018 and asked them to discuss it with the factory. The factory provided a detailed explanation on 26th March 2018 about the events that took place and the reasons for specific actions of factory.
FWF received the statement from Odd Molly on 1st June and reviewed it.

2018-06-07 Conclusion of the investigation

Based on the statement from the factory the following is concluded:

A. As the minimum wage in Delhi has been increased, the factory was relocated to a rented factory in Faridabad which is only about 11 kms away from the previous location. The exact date of relocation was not provided.

B. Factory management claims that all workers were given a detailed briefing by the director and HR department before the shift. This briefing included information on the following points:
i) All workers were told that they are only being transferred and there would be no break in continuity of service. The workers PF and ESI numbers have not been changed and their compliance continues to be done through the head office located in Delhi.
ii) Workers were assured that they would continue to receive the same wages as currently in Delhi even though the minimum wages in Faridabad are lower.
iii) For some time all workers will be provided with a free bus service. Time to commute by factory bus (appx. 30 minutes) will be counted counted towards their 8 hour shift in Faridabad. The factory is currently spending approximately Rs. 2000/- per worker per month on this bus transportation.

The factory did not provide any evidence to support these claims. FWF can at this point not conclude whether or not the statement is factual.
If measures to inform workers were taken, it appears that not all workers fully received or understood the information.
It is unclear whether the workers have been provided with appointment letters that specify their length of service and conditions of employment. The complainants claimed that they did not receive such letters.

C. With regard to increase in salary of few staff factory management claims that the increase is based on their individual performance or change in level of responsibility. Wages of these personnel are not linked to minimum wages while salary of workers is generally revised based on the revision of minimum wages by the Government. Government of Haryana (where Faridabad is located) has not revised the wages after the beginning of 2017. The factory is willing to comply with the upward revision in minimum wages as applicable.

No supporting documens were provided to support the claim that at least legal minimum wage (Haryana) is paid to production workers. The complainants claim that they receive a net wage of 9000 INR. This could or could not be legal minimum wage, depending on their skill grade and whether overtime payments are included in this amount. FWF cannot determine this without further investigation.

D. Till the year 2011 workers at a previous location in Ohkla used to receive INR. 10 per day for evening tea, if they stayed after shift. This was not mandated by law, but an additional benefit provided by factory management. Once the factory shifted to Faridabad management is giving a packet of biscuit and Rs. 5 per day to each worker who stays after the regular shift as an incentive, which is not legally required.

2018-06-07 Investigation

FWF clarified with the complainants under which skill category they fall (for confidentiality reasons details are not included in this report) and confirmed that their net wage (after ESI and PF deductions) matches at least the legal minimum wage levels for Haryana. The minimum wage for Haryana (Faridabad) applicable from 1st January 2017 is INR 8 272 (unskilled), 8 694-9 128 (semi skilled) and 9 585-10 064 (skilled).

2018-06-08 Remediation

Based on the information provided so far FWF cannot yet fully conclude whether the complaint is grounded.
As an audit has been requested by Odd Molly for this site as part of their regular monitoring for later in the year, FWF proposes to investigate the un-clarified claims then.
The audit should specifically focus on:
- Whether workers have been provided with up-to-date appointment letters.
- Whether the factory shift has affected worker's length of service and salary level.
- Whether their social security is paid correctly.
- Whether the factory has functioning internal grievance mechanisms in place where workers can raise complaints without fear of repercussions.

2018-11-12 Verification

A monitoring audit was conducted on 30th and 31st Oct 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:
- 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 effect 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.

2018-12-24 Evaluation of the complaint

Most of the complaints 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.

2020-01-24 Verification

The verification of some of the structural issues was planned to be taken up during verification audit in 2020. However, in the beginning of 2020 the brand ended it's membership with Fair Wear and therefore the audit was called off too. No further verification can be done on this case.

2020-01-24 Resolved

Most of the issues raised in the complaint were found to have been remediated in Oct 2018 audit. Rest of the issues could not be verified because of the aforementioned reason.