Vaude Sport GmbH & Co. KG, Complaint 382

Payment of a living wage

A factory worker reached out to FWF and stated that the factory uses monetary fines as disciplinary practice. He claimed that workers are fined 100 RMB if they commit an offence, such as smoking in non-smoking areas or using their smart phone in the toilet during working hours.

The complainant stated that the factory issues a lot of monetary fine notices, which are published in the workshops. The notices do not include how much money is deducted for a serious offence, but the complainant claims that every worker knows that 100 RMB be deducted directly from workers current month's wage for a serious offence.

These sort of monetary fines are illegal. According to the law, monetary fines should not be used to punish workers' offences.

Findings and conclusions

On 11 May 2018, FWF's complaints handler in China received a complaint from a factory worker, who claimed that the factory gave monetary fines as disciplinary practices, which is illegal according to Chinese law. He stated that workers are fined 100 RMB if they commit an offence, such as workers smoking in non-smoking areas or using their smart phone in the toilet during working hours. FWF declared this complaint admissible and informed Vaude, the FWF member brand sourcing at the factory. Vaude investigated the complaint and discovered that indeed notices of monetary fines were presented during meetings and Wechat groups and posted in the workshops. Vaude contacted the factory, who stated that they do not make use of monetary fines and as evidence, sent a payslip without monetary fines. In order to remediation, Vaude recommended that the factory issue an announcement that they factory will not implement monetary fines for the violation of company rules. Instead, the factory will make use of warnings and verbal notices. This policy should also be posted on a notice board. Vaude further requested that the factory share their plans on how to ensure that internal procedures are correctly implemented and that worker training is more effective. As such, the factory sent evidence showing the policy posted for the view of workers and powerpoint presentations used for training workers. The FWF complaints handler tried to reach the complainant several times to check if the factory had stopped using monetary fines, but FWF was unable to reach the complainant. Furthermore, Vaude ended their business relationship with this factory, which means that further follow ups and conducting an audit became very difficult to impossible. Therefore, this complaint has been closed.

Overview of the complaint investigation

2018-05-11 Investigation

Vaude investigated the complaint and discovered that indeed notices of monetary fines were presented during meetings and Wechat groups and posted in the workshops. Factory management sent Vaude the payslips of workers who according to management received a notice. From this sample Vaude concluded that they had no evidence that deductions were made.

To change the company policies, further attention is needed.

2018-05-11 Conclusion of the investigation

There was a discrepancy in the information received. The factory showed payslips where no deductions were made but the complainant that claimed that many monetary fines were used. Further investigation is needed.

2018-05-11 Remediation

As remediation, Vaude suggested to factory management to issue an announcement on behalf of General Management that the factory will not apply monetary fines for the violation of company rules. The notice has to announce that the factory from now on will strictly prohibit the use of monetary fine as punishment, and instead use warnings and verbal notices to educate workers not to commit the violation again. Vaude requested factory management to announce this verbally and post a written notice.

As per the investigation, the implementation of company policies and the training of workers needs further attention. Vaude requested that the factory share their plan of how to make sure that internal procedures are strictly implemented and that worker training is more effective.

2018-05-14 Investigation

At the same time that Vaude had reached out to the factory and set the above remediation steps, FWF contacted the complainant to check if he had evidence of deductions that took place. FWF received pay slips that show that deductions were made. The pay slips that were received have a column named 'negative incentive - 负激励'. The negative incentive has 50 or 100 RMB as punishment for small/big demerits. The complainant was worried that they payslips would identify him to factory management and therefore, in order to protect his anonymity, these payslips could not be shared with the factory.

The wage slips that the factory management shared with Vaude may be from workers who have not received a 'negative incentive' and hence do not include the column in the wage slip.

FWF will maintain contact with the complainant the coming weeks to check whether the new factory policy on not using monetary fines is put into practice.

2018-05-15 Conclusion of the investigation

While the evidence supplied by the worker is deemed strong enough by FWF to conclude that monetary fines have indeed occurred, at least in this case, the remediation steps proposed by Vaude remain the same. Furthermore, FWF proposed to schedule a FWF audit where the FWF audit team can check whether the use of monetary fines has indeed stopped, by checking wage slips. However, Vaude had, prior to this complaint, already started the process of phasing out this supplier, which means that an audit cannot be organised.

2018-05-16 Verification

The factory sent Vaude evidence that a written notice was published that monetary fines are not applied in the factory.

2018-06-12 Verification

Vaude received documents from the factory that showed three trainings took place.

The documents that the factory sent to Vaude contain:
(1) A powerpoint presentation with the training about FWF audit methodology, processes and FWF Code of Labour Practices.
(2) A powerpoint presentation from a yearly internal training at the factory, and a third
(3) A powerpoint was from an internal training on the FWF CoLP that took place on 31 May 2018.

The prohibition of monetary fines is not explicitly mentioned in any of the powerpoint slides. It may be included in the section on living wage, but that cannot be deduced from the slides.

2018-09-11 Evaluation of the complaint

Since Vaude is phasing out of this supplier, they did not receive any further feedback from the factory. FWF tried to contact the complainant again to see if monetary fines were still implemented or not, however, after trying several times, FWF could not reach the complainant again, so was unable to verify.

2018-09-11 Closed

Unfortunately, since Vaude no longer has a business relationship with the factory and the complainant could not be reached, this case has been closed. Due to the fact that Vaude is not working with this factory anymore, it is not possible to conduct a FWF audit to verify whether monetary fines are still used or not.