New Remediation Commitments at Hansae Vietnam

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Ben Hensler
Date:October 19, 2017
Re:New Remediation Commitments at Hansae Vietnam

I am pleased to inform you that last week Hansae Co. Ltd. (Hansae), the Korean parent company of the Hansae Vietnam factory, a supplier of collegiate apparel to Nike, signed a memorandum of understanding with the WRC to address remediation of outstanding labor rights issues at this facility. As many of you know, this factory has been the subject of in-depth investigation and reporting concerning these issues and engagement with Nike and Hansae on their remediation, by both the WRC and the FLA, for the past two years.

The new MOU is the result of direct engagement between the WRC and the corporate leadership of Hansae in South Korea. As has been the WRC’s practice in other major cases involving longstanding, significant, and complex labor rights problems at factories producing collegiate apparel, we asked Hansae to memorialize its remediation commitments concerning these outstanding issues in a signed MOU – so that they are specifically affirmed by the company’s own top leadership and also clearly articulated to other stakeholders. Accordingly, the Hansae-WRC MOU contains specific time-bound remediation commitments by Hansae to fully resolve all of the issues the WRC considered to be outstanding in Hansae’s prior remediation plans.

As you will see, the issues addressed in the Hansae-WRC MOU include:

  • Pregnancy discrimination – unconditional offers of reinstatement for all women workers who were terminated during the period prior to the WRC’s investigation of the factory who can show that they were pregnant at the time of their separation from employment;
  • Other improper terminations and discipline – compensation and removal of discipline for workers who were improperly penalized for failure to meet excessive production quotas, and unconditional offers of reinstatement and back-pay for other workers who were forced to resign their jobs for invalid reasons (including one who was a victim of physical assault by a company manager);
  • Health and safety – further commitments to ensure provision of ergonomically safe seating that is acceptable to the factory’s production employees; and to maintain workplace temperatures within legal limits (including agreement to install additional cooling equipment if needed to achieve this in a verifiable manner);
  • Financial compensation – payment of $750,000 to the factory’s employees to resolve findings of prior off-the-clock work and payment of improper recruitment fees by job applicants; and
  • Freedom of association – commitments that managers and supervisors will no longer stand for election as union officers, and, instead, that workers will be able to choose such representatives from their own ranks; in addition, a freedom of association training program to be conducted for workers by a Vietnamese university with the involvement of a UC Berkeley labor rights expert (and former WRC board member).

The WRC concludes that these commitments, along with the remediation progress previously achieved at Hansae Vietnam will fully resolve the outstanding labor rights issues at the Hansae Vietnam factory – to the extent possible given current legal and political restrictions in Vietnam on freedom of association. The Hansae-WRC MOU also includes an affirmation by the WRC that we will continue to report to universities, colleges, and other stakeholders on these commitments and their implementation by Hansae.

While the remediation process at Hansae Vietnam has been challenging and protracted, these new commitments, in combination with those made previously and with the remediation work already done, represent a strong remediation plan to resolve all university labor code violations. Based on our direct engagement with Hansae’s top management, we believe Hansae intends to follow through on these commitments. Ultimately, of course, only time – and independent verification of the results – will tell, but we are optimistic about the approach that the company’s top management has adopted as reflected in this MOU.

We also appreciate the role played by several of Hansae’s key buyers, including Nike and also Gap and L Brands, and by the FLA, in urging remediation at the factory. We hope that these buyers, and especially Nike as a university licensee, will continue to engage with Hansae and support implementation of the company’s labor rights commitments.

Please let us know if you have any questions or would like to discuss any aspect of the Hansae-WRC MOU. We look forward to reporting to you further on its implementation.

Scott Nova
Executive Director
Worker Rights Consortium