Takko Holding GmbH, Complaint 187

CONCERNING LABOUR STANDARDS
Payment of a living wage Safe and healthy working conditions
STATUS
Evaluation of the complaint
DATE
2016-10-25

The complainant claimed that
a) Overtime salaries were not paid correctly. For a daily salary of 300 INR, they only received 150 INR for four hours of overtime.
b) Bonus payments are different for workers that have been with the factory for 1 year (8000 INR), 2 years (10 000 INR) or 5 years (23 000 INR). The workers would like a bonus of 20 000 INR for all workers.
c) The transport provided by the factory has changed its route. Workers are now dropped off in front of a shop which is 2 km away from their home town.

Findings and conclusions

On 25 October 2016, FWF received a complaint from an employee currently employed at the factory. The complainant claimed that overtime salaries were not paid correctly, that bonus payments are different for workers that have been with the factory for different lengths of time, and that the transport provided by the factory has changed its route. Workers are now dropped off 2 km away from their hometown.

FWF decided that the case is admissible on 28 October. Takko’s local audit team conducted an investigation on 11 November 2016. In addition, a FWF verification audit was conducted in February 2017.

Both the Takko investigation as well as the FWF verification audit confirmed that overtime hours are within legal limits and are always paid at double rate. The factory has a three-tiered model for bonuses that follows legislation and is understood by all workers. The investigation concluded that the factory had merged two bus routes, and that the larger bus could not travel down the narrow road to two workers’ homes. They are dropped off 500 m away, in a well-lit area.

FWF recommends remediation steps for the organisation of worker committees and the process for raising grievances with this committee. The bonus structure should be negotiated with worker representatives and the CBA adapted accordingly. FWF will verify progress on remediation steps at the next audit.

Overview of the complaint investigation

2017-02-28 Investigation

FWF informed Takko about the case. Takko’s local audit team conducted an investigation on 11th November 2016. FWF later discussed the findings of the investigation with the complainant and verified copies of documents that were compiled by the Takko audit team.
In addition, a FWF verification audit was conducted in February 2017.

2017-02-28 Conclusion of the investigation

The following findings and conclusions could be made:
A. Payment of overtime:
Both the Takko investigation as well as the FWF verification audit confirmed that overtime hours are within legal limits and are always paid at double rate. During the investigation process it became clear that the complainant was employed in the quality department. These employees are considered non-production workers and hence receive a fixed salary without overtime payments. This is in compliance with Indian legislation. This part of the complaint is hence not grounded.
B. Bonus payments:
The lowest bonus paid (8000 INR) is in compliance with Indian legislation that requires an annual bonus of 8.33%. The higher bonus payments for workers that have been with the factory for a longer time are generally a positive incentive that goes beyond legal requirements. This three-tiered model is understood by all workers.
The collective bargaining agreement (CBA) of the factory did however include a 10% bonus payment for all workers. The factory has since adapted the CBA to reflect the three-tiered model they had been practicing, but the text of the CBA remains contradictory.
C. Change in bus route:
The investigation by Takko concluded that the factory had merged to bus routes and replaced two smaller vehicles with a larger bus. This made it difficult to reach one place as the road was too narrow for the bus to turn. Two workers were hence dropped of 500 meters from their home place. The investigation by Takko also concluded that this issue had not been raised in any committee, that workers were aware of the committees and generally expressed satisfaction with the new bus route. The investigation team also examined the route and found that the street from the bus-stop to the worker’s home was well-lit. They could not determine a safety risk.
During the FWF verification audit other workers (than the complainant) were interviewed and the FWF auditor also visited the place. It was found that the same vehicle (a smaller van) is being used for the transportation and has not changed in the last months according to several workers. One worker also shared the (s)he raised a grievance regarding safety concerns with the new route through the grievance committee. The grievance was however not recorded in the minutes of the committee.
FWF also found that some of the committee members had been selected by management instead of elected by workers. This was also shared by workers who hence expressed limited trust in the grievance channel.
FWF concludes that the change of bus route has not been discussed with workers or in the grievance committee. The transportation vehicle seems to not have changed and could still follow the narrow route. It is possible that there is a safety risk for workers.

2017-02-28 Remediation

FWF recommends the following remediation steps:
• The factory must conduct an election to ensure all committee members are democratically elected by workers instead of selected by management. All grievances must be addressed and documented in the minutes of the committee.

• Workers should be consulted about their preference regarding the bus route to find a solution that is acceptable for everyone and that does not endanger any of the workers.

• The bonus structure should be negotiated with worker representatives and the CBA adapted accordingly.

2017-02-28 Verification

FWF will verify progress on remediation steps at the next audit. FWF recommends
Takko to follow-up with its own audit team in the meantime to validate improvements.

2017-02-28 Evaluation of the complaint

The complainant has since resigned and was not available for a call by the FWF complaint handler.