WRC Factory Investigation

Hong Seng Knitting

Factory: Hong Seng Knitting

Key Buyers: Amer Sports, Carter’s, Fanatics, New Balance, Nike, Russell

Last Updated: 2022

Case Summary

2021

Through documents, worker interviews, and written exchanges with factory management, the WRC uncovered an illegal wage theft scheme at Hong Seng Knitting, carried out by the factory from May through October 2020. The factory coerced workers to acquiesce to this scheme and retaliated against workers who spoke up against it. The factory has deprived workers of nearly $600,000 in legally mandated wages, an average of $172, or more than 15 days’ wages, per worker.

The violations stemmed from the factory’s desire to evade a law that sustains workers’ income during periods of low production. Under the law, if a factory temporarily suspends workers, it has to pay them a reduced wage, so workers still have some income to support their families. When the pandemic caused orders to drop, Hong Seng wanted to suspend workers but did not want to pay the legally required partial wage. To avoid paying, management compelled workers to sign a form falsely stating that they wanted to take voluntary unpaid leave. Management then used the falsified forms to justify depriving workers of their pay. There is overwhelming evidence that the leave was involuntary and that the scheme was illegal. This includes credible testimony from numerous workers that they were pressured to sign the leave forms and a ruling from the Thai government that the forms do not constitute a lawful basis to deny workers their wages.

When some workers resisted the scheme, management responded with threats of dismissal and other forms of retaliation and intimidation. Most egregious, factory management retaliated against one worker, a Burmese migrant, by reporting him to the police. The worker had expressed concerns about the nonpayment of wages to other workers via Facebook messenger. Fearing unjust imprisonment in a country where police treatment of migrant workers is often both arbitrary and brutal, the worker was compelled to flee the country, along with his wife and infant son.

The WRC has engaged with Nike extensively regarding this case, beginning in August of 2020. Unfortunately, while Nike has acknowledged that violations occurred, it has only supported corrective action in a small number of cases, representing less than 1 percent of affected workers. Our report discusses Nike’s position in depth and includes a statement from Nike, but, in short, it is Nike’s position that most workers volunteered to take unpaid leave, even though all of them could have chosen to be paid. Nike has not offered an explanation for why hundreds of workers would freely choose to give up wages to which they were legally entitled. The WRC is continuing to engage with buyers at this time.

2013

Hong Seng Knitting is an apparel factory in Bangkok, Thailand that employs roughly one thousand workers, of whom approximately 250 are migrant workers from Burma. It has been disclosed by Russell Corporation as a supplier of university logo apparel and also produces non-collegiate garments for Nike and Carter’s Inc. The WRC undertook its assessment of labor rights practices at Hong Seng Knitting in response to complaints received in August 2012 from the factory’s workers of violations of Thai law and university and buyer codes of conduct in the area of women’s rights. The WRC found the following violations by Hong Seng Knitting management of its workers’ rights:

  • Threatened discriminatory dismissal of three female Burmese workers on account of pregnancy. Although company managers claimed that the workers were being terminated on account of poor work performance, the workers had not received any prior warnings or discipline in this regard. The WRC’s investigation concluded that this justification was merely a pretext for dismissing the workers on account of their pregnancies, which is a violation of Thai labor law, international labor and human rights standards, and university and buyer codes of conduct.
  • Failure to provide accommodations in job assignments to pregnant workers for reasons of health and safety.

Due to the timely intervention of the WRC – and Nike – the factory’s management rescinded the impending dismissals of the three pregnant migrant workers, and, moreover, took steps to prevent further violations of this kind and improve conditions for female and Burmese migrant workers. These improvements include a revision of company policies relating to work performance, employee evaluation, and pregnancy; provision of Thai language classes to Burmese workers; and accommodation in job assignments for pregnant workers.

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