ODLO International AG, Complaint 233

CONCERNING LABOUR STANDARDS
Freedom of association and the right to collective bargaining Payment of a living wage Reasonable hours of work
STATUS
Resolved
DATE
2017-02-01

A former employee at the factory stated that the situation did not support good working conditions and could even violate labour rights. Specifically, turnover was high experienced employees were given extra workload without extra time allocation or a wage increase. Further, there was cronyism instead of hiring qualified personnel. Workers were also discouraged from registering for medical leave. Finally, it was alleged that verbal abuse occurred on a daily basis.

Findings and conclusions

In February 2017, FWF’s complaints handler in Romania received a complaint from a former factory worker, who claimed increased workload due to increased production turnover given extra workload without extra time allocation or a wage increase. He/she stated that there was cronyism instead of hiring qualified personnel, and also complained that the workers were discouraged and not involved in the social dialogue.

FWF declared this complaint admissible and informed Odlo International, the FWF member sourcing at this factory. An on-site investigation was carried out jointly with Odlo International in May 2017. The investigation found that the workload of experienced workers had continued to increase since 2014, without overtime payment or compensation. A new CBA was negotiated with more restrictive rules. From the investigation, it appears that there was no consultation with worker representation. Practices of cronyism were not found. It became clear that the workers were stressed about workloads and internal communication channels are not working.

FWF required management of ODLO to set a CAP that will create an overview of the findings and discuss measures with factory management to improve the situation.

Follow up complaint visit was conducted by FWF in October 2018. Significant improvement of working conditions in the factory was observed, such as CBA negotiated; meetings for social dialogue and decision for paying compensations for those who were affected by the repairs practice. However, it was considered that the brand and factory should put some more efforts to the issues related to the clear system of setting the workloads for specific operations and product type and more consistent workers involvement in decision-making processes related to the calculations of benefits and the compensation of the overtime hours performed.

Another FWF Verification audit took place in May 2019. The factory has improved the management system to follow the improvements in the working conditions. The decision to pay the amount for the unrecorded and unpaid overtime worked for repairs in the past was communicated to the workers by the representatives and the payback for the overtime worked whenever were needed repairs to ready-made garments were calculated and paid for 134 employees still active in the company.

The complaint can be considered resolved based on the verification audit and review of the process adopted by ODLO International from the consulted documents and interviews with the workers.
As this pertains to unrecorded overtime, there is no way for FWF to establish the ‘fairness’ or ‘correctness’ of the compensation amount defined and paid to the workers.
But it is evident that the brand took serious efforts to resolve the complaint by arriving at a reasonable proposal for compensation.

Overview of the complaint investigation

2017-10-12 Investigation

After discussing the claims further with the complainant and Odlo, FWF decided to conduct an on-site investigation on 30 May 2017. As part of the investigation process, documents were consulted and worker and management interviews were carried out.
The consulted documents include: the collective bargaining agreement (CBA) signed at unit level, including its annexes; the minutes concluding the social dialogue carried out at unit level in 2017; dossiers of the personnel hired/who left the company in 2017 (including job descriptions); the payslips dated from January 2017 until May 2017; the records of overtime in 2017; the medical leaves recorded in 2017; and some internal production reports. The audit reports and the training reports issued between 2013 and May 2017 formed the document baseline about the working conditions in the company. The people interviewed inside the factory were: the head of production, the human resources director, and nine elected workers’ representatives. In addition, FWF interviewed several former employees outside the factory.

2017-10-12 Conclusion of the investigation

Findings:
1. Extra tasks are added to the workload of experienced employees
without extra time allocation or a wage increase. This causes extra
pressure for the skilled workers. Skilled workers are leaving the company because of the increased work pressure.
Increased pressure at work was noticed starting in 2014, when the matrix
for polyvalence skills was introduced in the company as a HR tool. At the
same time, a technician from another factory started to visit the factory
on a regular basis in order to enhance the internal production process.
During the course of the investigation, documents such as the overtime
register were consulted, and worker representatives were interviewed.
According to the worker representatives, the workloads of the most
experienced workers increased after 2014 and have continued to increase.

Conclusions:
A. There were confirmed legal violations regarding the normal working
hours, records of performed overtime (OT) and the weekly rest time. Overtime
records did polyvalence not match statements of worker representatives and factory management. The management team recognised there is a common
practice to work until the workloads are finalised in good quality conditions.
That means workers must work hours after the normal working hours.
OT hours should be paid 175% between Monday-Friday and double on Saturdays.
Reference regarding overtime: Art. 119, 120-125, 137-138 from the Labour Code
B. Increased work pressure was confirmed by the interviews with worker
representatives and the consulted documents, not only for the most
skilled workers. The new CBA contains more restrictive rules about the
personal needs and interests of workers.

Findings:
2. Management is hiring less qualified, lower-paid staff to replace skilled workers who left the company. The training of these new workers is again added to the workload of experienced staff.
Some work processes were restructured – a situation that relates to
dismissal of workers after the modification of the organisational chart.
In the production orders planned for 2017, there is a noticeable gap in
the number of production personnel required to produce the allocated
orders from month to month.
The management team believes workloads did not increase; instead
more responsibility was given to different categories of production
personnel. The managers declared that they would like to hire only
qualified employees in order to replace the missing staff, but that is not
possible, because there are not enough qualified workers available in the country.

Conclusions:
A. The restructuring of the company was not discussed with worker
representatives during meetings.
B. The company does not retain any formal documentation/plan to describe the steps to be implemented in order to reach 250 active employees by the end of 2017. The job descriptions remained unaltered.
C. There were confirmed legal violations regarding communication and
consultation with the employees and regarding the occupational health
status.

Findings:
3. Romanian middle managers hire family members/friends without
proper qualifications to help carry out the related tasks. This was not confirmed by the studied documents and the interviews with the workers.
4. Workers do not dare to register for medical leave as management
discouraged workers from doing so. Certain workers whom the
management considers ‘privileged’ are exempt from this practice.
The rest leave of the employees is not planned according to legislation,
which imposes collective and individual negotiations, but is set by the
employer in general terms and in certain periods considered to be low
seasons.
The rest leave is decided only by the management, without consultations
with the worker representation. In 2017, the unpaid leave was reduced to maximum five days, with prior information to management 30 days before the unpaid leave application. The only manner for workers to have some personal time for themselves remained the medical leave. The new appendix of the CBA stated that the annual bonus shall be applied only to workers who did not “benefit” of medical leave of certain kind.
Records are kept of the medical leaves. An average of 7% of medical leaves from the total number of employees occurs on monthly basis. Adding the suspended contracts due to maternity leaves, it was observed that a mode of 15% from the total workforce is not active in the company each month.

Conclusions:
A. Some of the normal employees’ needs that are protected by the labour legislation are not being respected, but discouraged by internal rules. Internal rules are in conflict with the right to negotiate for the rest leave, the right to be granted 48 consecutive hours as weekly rest, the right to have unpaid leave within reasonable terms.

Findings:
5. Verbal abuse occurs on a daily basis; workers are threatened that
they will lose their job if they do not fulfil tasks or if they question the practices outlined in this complaint.
All interviewed employees spoke openly about the essential problems in
their company. There are two key problems from the workers’ point of
view: to have open, transparent, respectful communication and to have
their workloads recalculated.
Worker representatives confirmed workers are threatened they would
lose their jobs if they do not fulfil the workloads.
The managers listened to the accusation and responded that they do not understand why workers are afraid to talk directly to the management. The managers explained that workloads were not increased, but individualised this year. They added that, overall, on each production line the workloads remained the same.

Conclusions:
A. Stress is confirmed and internal communication is not functional. There is a major risk of demotivation and progressive loss of productivity if the current approach is maintained.
B. The standard related to health and safe working conditions is not being respected and that may lead to serious health problems and increase risk of work accidents.

2017-10-12 Remediation

FWF recommends Odlo to create an overview of the findings and discuss measures with factory management to improve the situation based on timelines.

FWF recommends the following remediation points:
1. The administrator should consult with the worker representation about each action to be taken regarding this complaint and agree on the monitoring steps for its
remediation. On request, FWF can mediate the meeting.
Art. 142 paragraph 1) from the Law regarding the social dialogue no. 62/2011,
republished

2. The administrator to elaborate the intended organisational chart, with a time frame for implementing the restructuring measures. Workers’
representatives have to be informed about the future objectives of the company. (collective dismissal)
Art. 69 and Art. 40, para 2), letters a)-e) from the Labour Code

3. The administrator should organise a meeting with all employees and explain the present and the future situation of their workplace.
Law no. 467/2006 regarding the general framework for communication and consultation with the employees.

4. The factory must set up a functional internal communication and grievance mechanisms and communicate the procedures to workers, including how complaints will be addressed. This could include setting up more complaint boxes and locate these in the eating area and in the locker room in order to encourage employees to open up about their fears, workloads, etc. under the protection of anonymity and confidentiality.
(workloads) Art. 132 from the Labour Code

5. The administrator to consider organising an exchange of experiences with the homologue factory in Portugal for some interested employees in order to compare the workloads; an alternative solution would be to find an independent technologist who may recalculate workloads in the company.

2018-10-23 Verification

A follow-up visit to the factory was initiated by FWF to get an overview of the current situation. The objective of this visit was to prioritize and to structure recommendations/requirements for the applicable labour standards.
Findings:
The interviews held with the employees revealed the fact that starting May 2018 they observed a significant improvement of their working conditions at ODLO Romania, such as:
• There is a collective bargaining agreement signed at the unit level in May 2018 in force until May 2020;
• The meeting for social dialogue is organised on a monthly base;
• In September 2018, workers' representatives were informed by the factory management about paying compensations for those who were affected by the repairs practice. The information about compensations has been shared to all employees by the workers' representatives.
Based on the documents checked in the last three months it is observed that the wages for months August, September and October 2018 are increased by 3%.
FWF could verify that a dialogue with the worker representation took place and workers were informed on the payments that would be done. FWF (and the brand) did, however, observe that the understanding of its role and skills of the worker representation might need to be improved to ensure a good dialogue.

The issues that still need to be addressed are related to the clear system of setting the workloads for specific operations and product type and more consistent workers involvement in decision-making processes related to the calculations of benefits and the compensation of the overtime hours performed.

A more detailed report is shared with all the actors involved, as the conclusions are too many to include in the public report. However, the main recommendations/requirements are summarised below:
- To involve worker representatives in drafting the solutions and decision-making process regarding the clear monitoring system in a more consistent manner, rather than only informing them about the decisions. The monitoring system is recommended to be drafted by Odlo International and should include specific activities and dates (besides auditing, Workplace Education Programme trainings and complaints remediation). This can be communicated on the next workers representative meeting.
- Factory management to initiate an internal checking on how workers could be involved in setting the individual workloads per operation and product type.
- The factory management to create an overview of all the monetary and non-monetary benefits as a company wage policy, including the methods on how productivity bonuses are calculated and also the forecast for implementation of the Living Wage Project developed by ODLO International. The wage policy should be regularly communicated with the workers on more consistent manner.

2019-04-01 Verification

A verification audit is planned for May 2019 to verify the improvement status and close the complaint.

2019-07-01 Evaluation of the complaint

The verification audit took place on 9-10 May 2019.
• After the documents being reviewed, factory visit and interviews with the management, workers and responsible persons, it is concluded that the factory has improved the management system to follow the improvements of the working conditions. The production planning is improved, and currently is made 4 months up to one year in advance, offering flexibility and adaptability to unpredictable situations. The management of the factory has confirmed that the forecasting and placement of orders are better than in the previous years. The fact that they plan up to one year in advance offers them higher flexibility in building the production capacity of this unit and also for the sub-contractors
• There are responsible persons in the company that deals with the working conditions issues and ensure the legal requirements are met.
• There is a workers committee elected by workers, periodical meetings are organized, minutes are kept and the company still has a CBA at the company level, even if this is no longer a legal requirement. The workers'representatives have monthly meetings with the management and these are documented in writing, with conclusions of the meetings being posted on the Info Boards for all workers to read.
• The decision to pay the amount for the unrecorded and unpaid overtime worked for repairs was communicated to the workers by the representatives after the meeting held on 25th October 2019. Some things were not clearly understood by the workers and the management has made all needed explanations (such as the fact that only workers employed prior to August 2017 will receive the payback for overtime made for repairs). The payback for the overtime worked whenever were needed repairs to ready-made garments were calculated and paid for 134 employees still active in the company.
• Wage rolls are very clear, they meet attendance records and workers’ confirmations in the interviews. Payslips are also issued including all the needed details, even if this is no longer a legal requirement. Annual rest leaves, sick leaves and social benefits were accurately paid, as per local law. Workers were fully aware of their rights, and also of their benefits at their workplace, the payment system was clear to them, and they appreciated that wages are correct and always paid on time.
• The workloads/set production norms are proposed by the employer and are consulted with the worker's representatives; workloads may be adjusted if technical conditions changes; if it is not insured a full load of the working time, ; Fair Wear Foundation. The procedure to re-calculate workloads is set in the CBA and Internal Regulation, upon request of employer's or WR's request; in case of dispute on this regard, independent technical expertise shall be insured.

2019-08-05 Resolved

The complaint can be considered resolved based on the verification audit and review of the process adopted by ODLO Romania from the consulted documents and interviews with the workers.
As this pertains to unrecorded overtime, there is no way for FWF to establish the ‘fairness’ or ‘correctness’ of the compensation amount defined and paid to the workers.
But it is evident that the brand took serious efforts to resolve the complaint by arriving at a reasonable proposal for compensation.