Odd Molly International AB, Complaint 535

Payment of a living wage Legally binding employment relationship

The complaint involves two Issues:
1. Workers engaged through contractors
1.1. Issues related to full and final payment and Provident Fund (PF)
Some workers were relocated to a new location and engaged through a contractor. They were promised that they would receive their full and final payment from the previous location and to be hired on a formal payroll at the new location. Among these workers, there were about 4-5 workers who were engaged but not hired by the contractor on a formal payroll despite the promise. A few days before the FWF audit in October 2018, the factory dismissed these workers, allegedly to avoid that unregistered workers were found during the audit. These workers demanded their full and final payment, which was still outstanding. They also requested the factory forward their PF withdrawal application to the PF office. The complainants claimed that when they tried to discuss all these issues with the factory's HR, they were told to talk to the contractor and that they could not help them in any way. After subsequent requests, the contractor responded and asked them to bring their check book. This caused confusion among workers who thought that their bank details would suffice. According to the complainants, in 2016-17, in the previous location only about 20% of the workers were covered in Employees' State Insurance (ES) and PF. As a consequence, the above problems of nonpayments of full and final payment and PF relate only to this 20%, the rest of the workers were not on formal payroll and were not in a position to make any claims.

1.2. Issue related to deductions in payment
According to the complainants, workers on payroll at the new location receive lower wages than they are eligible for in a particular month. HR did not help them and asked them to talk to their contractor. When workers raise any issues with the contractor, they are fired the very next day, without following any process and without any full and final payment.

1.3. Issue related to periodic discontinuity and loss of longevity of service
According to the complainants, the contractor follows a practice of periodically discontinuing the workers on payroll and showing them as being rehired as new workers. Many times this happened without any clear reason. This also happened in cases when workers took 2-3 days of leave. When there is not enough work, workers are given a break from 2-15 days without any payment. In such case, they are fired and rehired on payrolls as new workers.

2. Issues of workers on factory's payrolls
Workers are not provided with appointment letters and ID cards. They also did not receive any transfer letter when they were transferred to the new location. There was no mention about the start date in their payslip. Therefore, workers do not have any proof on their start date and their length of service, although they have lengths of service between 5 and 20 years. Also, in the wage records of some workers, the factory's address remains that of the previous location while in other cases the address has been changed to the new location. Moreover, according to the complainants, the factory has been using four different names on the payrolls.

Overview of the complaint investigation

2018-12-04 Investigation

FWF shared the complaint with the brand. The corrective Action Plan of the audit conducted on October 2018 was also consulted as part of the investigation.

2018-12-20 Conclusion of the investigation

Audit results show that there were no unregistered workers in the factory. This is an improvement from their last audit, however one cannot negate the presence of unregistered workers completely either.

Document inspection during the audit found no incidence of wages deduction. However, FWF is unable to ascertain whether the deductions are made by the contractor.

There is a high number of contract workers. During the exit meeting, the factory management expressed that they tried to offer consistent employment to their workers, even during lean periods. However, there have been times when they had to lay off workers because of lack of work. Contract workers may be the first to suffer in such scenarios. The longevity of service has been a concern and the audit found that not all workers have received an appointment letter.

2018-12-31 Remediation

FWF recommends the brand to check the contract of their supplier with the contractor. Despite a verbal commitment of the factory management that the shift of location would not adversely impact the benefits that workers accrue for the longevity of their service, it is nevertheless suggested that the factory provides appointment letters to all their workers as soon as possible. In order to have consistent orders throughout the year, the brand is advised to study their supplier's work cycle and be judicious in placing their orders. A partial audit can be conducted in mid-2019 to monitor the improvements made.

2019-07-17 Investigation

Factory did not give an explanation for the issues raised by the complainants . Monitoring audit conducted on 30th October, 2018 revealed that only only those workers who are working for a long time are aware of complaint mechanism and also there is no proper payment on the social securities. Since there was no reply from the factory, follow up with the complainants could not be accomplished . However, audit which was planned in 2020 to verify the some structural issues raised on another complaint could be a possible remediation for this complaint as well .

2020-02-27 Closed

Since the business relation between brand and factory has ended this complaint is considered as closed.