$2.5 Million Extra Severance, Extended Healthcare at Collegiate Factory

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Ben Hensler
Date:July 20, 2023
Re:$2.5 Million Extra Severance, Extended Healthcare at Collegiate Factory in Honduras

Leading blank goods manufacturer Gildan Activewear has agreed to provide $2.5 million in additional severance (above the legal requirement), as well as priority hiring, extended health coverage, and other benefits to workers at a collegiate apparel factory in Honduras whose closure it announced last month. The Gildan San Miguel factory had been disclosed for collegiate apparel production by the university licensees, Fanatics, Lakeshirts, Lo + Jo Brands, MV Sport, New Agenda, and Onward Capital.
In a settlement last Friday with the factory workers’ union, Gildan committed to pay each of the facility’s 2,700 employees between $447 and $1,343 (roughly one to three months’ wages)—depending on their length on service—on top of paying the severance already due under Honduran law. Gildan has also agreed to pay to continue workers’ health coverage for four months after the closure (which is twice the legal requirement) and compensate workers who developed chronic health conditions during their tenure at the factory.
As the WRC reported at the end of last month, only days after Gildan announced the San Miguel factory’s closure, the workforce was struck by a terrible tragedy when four employees who were leaders of the factory workers’ union were killed in a mass shooting in the city of Choloma on June 25. The perpetrators remain at large. No evidence has emerged, as yet, that the shooting was connected to the workplace or to the victims’ roles in the union. The WRC expressed to the CGT labor federation, with which the San Miguel workers’ union is affiliated, as well as to Gildan, our shock at this tragedy and our condolences and solidarity in the face of this horrific incident.
The WRC also emphasized to Gildan executives—in both written communications and in an in-person meeting last week in Washington, DC—the company’s responsibility, under university codes of conduct, to deal fairly with the San Miguel factory’s workers in relation to the facility’s impending closure. We reminded Gildan that the employees’ right to bargain collectively, which university codes require the factory to respect, obligated Gildan to negotiate in good faith with the workers’ union over measures to address the impact of the closure on employees. The settlement reached on Friday between the company and union indicates that Gildan has met this obligation.
It is worth noting that the collective bargaining relationship between Gildan and the CGT unions, which made this settlement possible, has its direct roots in the historic success of efforts by universities and the WRC, more than a dozen years ago, to promote freedom of association in Honduras through enforcement of university labor standards. Loss of employment for workers is inevitable whenever a factory closes. However, the fact that, in this case, affected employees will receive not only their legally due severance (which garment workers elsewhere in the world are all too frequently denied) but also substantial additional benefits to help their families weather the impact is testament to the ongoing legacy of universities’ groundbreaking efforts.
As always, please let us know if you have any questions or concerns.