Suit Supply B.V., Complaint 609

CONCERNING LABOUR STANDARDS
Payment of a living wage Legally binding employment relationship
STATUS
Resolved
DATE
2018-12-29

The complainant filed a complaint to FWF on the 29 December 2018 about the delayed payments and she seriously worried about their payments for the coming Chinese New Year. The complainant informed factory always delays 5 days for payments; for instance, the wage of November 2018 will not be paid to them until 5 January 2019.

The complainant hoped to get all their due wages before the CNY, so that they can enjoy a good new year. She hoped to get the wage of December 2018 by end of January 2019 and get the wage of January 2019 by end of February 2019. In this way, they can ensure they have enough money for the Chinese new year.

But according to the previous practices of the factory, normally the wage of January would only be paid to them on the 5 of April of next year, as to keep them coming back after CNY.

Findings and conclusions

On 29 December 2018, FWF received a complaint about delayed payments and concerns of a worker about their upcoming payments for the Chinese New Year. The complainant stated to FWF that the factory always delays 5 days for payments; for instance, the wage of November 2018 will not be paid to them until 5 January 2019.

The complainant hoped to receive all their due wages before the Chinese New Year, so that they can enjoy a good new year. She/he hoped to get the wage of December 2018 by end of January 2019 and get the wage of January 2019 by end of February 2019, according to the law.

Factory confirmed that they decided to pay all December salaries before Chinese New Year. Since Chinese New Year is early this year, workers will receive 2000 RMB up front from their January salary- and the rest after Chinese New Year. This includes the workers that decide to not come back to the factory. The factory will arrange a meeting with all workers to explain this and to comfort them that they will receive their salaries before Chinese New Year.

Nevertheless according to a FWF audit in April, the wage was still paid to workers on the 5th of the next month for wage of the previous month; the payment was still delayed for 5 days. Suit Supply confirmed that this unfortunately was still the case and was caused by a bank issue and an HR capacity issue at the factory. The factory hired an additional person to follow-up on these late payments and stated that payments were made on time from now on.

In the FWF audit in October 2019, it was verified that “Through review the payroll records from March to August 2019, the wages were paid to workers at the end of each month for wage of the previous month”.

FWF complaint handler reached out to the complainant and the complainant confirmed that they received wage of October 2019 on 1 November 2019, which could have been paid one day in advance by the factory. This case is resolved.

Overview of the complaint investigation

2018-12-29 Investigation

The late payments was also found in the audit carried out at this factory in October 2018 and seem to be very persistent.

The local bank that the factory uses to pay the salaries of the workers ‘pushes’ the factory to pay the salaries in the new month.
This is related to the banks’ cashflow and the mortgage loans of the factory. They ‘request’ delay in salary payment to ease pressure and create a higher short-term yield.
Suit Supply is discussing with the factory to see if they can change banks or simply can pay the workers sooner. Suit Supply is monitoring this and see if this can be changed in the near future.

2018-12-29 Remediation

Suit Supply was asked to follow up on this issue with urgency, to ensure the entitled payments are done before the Chinese New Year.

2019-01-07 Remediation

Complaint was followed up with the factory, who confirmed the following:
Factory decided to pay all December salaries before Chinese New Year. Since Chinese New Year is early this year, workers will receive 2000 RMB up front from their Jan salary- and the rest after Chinese New Year. This includes the workers that decide to not come back to the factory.
The factory will arrange a meeting with all workers to explain this- and to comfort them that they will receive their salaries before Chinese New Year.

2019-04-09 Verification

According to a FWF audit in April the wage was paid to workers on the 5th of the next month for wage of the previous month; the payment has been delayed for 5 days.

2019-06-03 Remediation

The feedback we received from Suit Supply was that the late payments finding indeed came up with the audit- and is unfortunately something that is hard to correct; the local bank that the factory pays its salaries through and does all its business with, ‘pushes’ the factory to pay the salaries in the new month.
This is related to the banks’ cashflow and the mortgage loans and related to the real estate bubble happening in China. They ‘request’ delay in salary payment to ease pressure and create a higher short-term yield.
Suit Supply is in discussion with them to see if they can change banks or can change this system, but both seem no option at the moment. Suit Supply is monitoring this and see if this can be changed in the future.

Suit Supply informed FWF that an HR manager was hired in May/June and 100% of the salaries for all workers were now paid (this was also checked by the Suit Supply's China office)

2019-06-03 Investigation

Unfortunately it appeared that still not everyone was paid cosistently and on time. Sometimes 20% or even 40% was paid 5 days later.
Besides the bank problem this had also to do with capacity in HR to push things through. Suit Supply agreed with the factory that they would hire an additional HR person, which was hired in June 2019. According to the factory all wages were paid on time now.

2019-06-03 Verification

FWF tried to reach out to the complainant to see if this could be confirmed from his/her side, but we were not able to reach the complainant. We decided to wait for the next audit in October to verify this issue.

2019-10-11 Verification

In the FWF audit it was verified that “Through review the payroll records from Mar to Aug 2019, the wages were paid to workers at the end of each month for wage of the previous month”.

2019-10-11 Evaluation of the complaint

On the 29 December 2018, FWF received a complaint about delayed payments and the concerns of a worker about their upcoming payments for the Chinese New Year. The complainant stated to FWF that the factory always delays 5 days for payments; for instance, the wage of November 2018 will not be paid to them until 5 January 2019.

The complainant hoped to receive all their due wages before the Chinese New Year, so that they can enjoy a good new year. She/he hoped to get the wage of December 2018 by end of January 2019 and get the wage of January 2019 by end of February 2019, according to the law.

Factory confirmed that they decided to pay all December salaries before Chinese New Year. Since Chinese New Year is early this year, workers will receive 2000 RMB up front from their Jan salary- and the rest after Chinese New Year. This includes the workers that decide to not come back to the factory.
The factory will arrange a meeting with all workers to explain this- and to comfort them that they will receive their salaries before Chinese New Year.

Nevertheless according to a FWF audit in April, the wage was still paid to workers on the 5th of the next month for wage of the previous month; the payment was still delayed for 5 days. Suit Supply confirmed that this unfortunately was still the case and was caused by a bank issue and an HR capacity issue at the factory. The factory hired an additional person to follow-up on these late payments and statde that payments were made on time from now on.

In the FWF audit in October 2019, it was verified that “Through review the payroll records from Mar to Aug 2019, the wages were paid to workers at the end of each month for wage of the previous month”.

FWF complaint handler reached out to the complainant and the complainant confirmed that they received wage of Oct 2019 on the 1st of November 2019, which could have been paid one day in advance by the factory. This case is resolved.

2019-11-13 Resolved

FWF complaint handler reached out to the complainant and the complainant confirmed that they received their wage of Oct 2019 on the 1st of November 2019, which could have been paid one day in advance by the factory. This case is resolved.