Garment Workers Have Lost Out on £4 Billion of Severance Pay, Says Rights Group

Greater than £4 billion ($5 billion) in wages has been withheld from tens of millions of garment employees making garments for western clothes manufacturers over the previous 15 years, in accordance with new estimates on severance “wage theft” within the international vogue trade.

The Worker Rights Consortium, a labour rights investigative organisation, says that garment employees have been denied billions of kilos of legally mandated severance pay, which they need to have obtained after being sacked or shedding their jobs as a result of manufacturers cancelling orders or manufacturing facility closures.

Severance pay is monetary compensation that employees are legally entitled to if their employment is terminated or the enterprise closes.

“It doesn’t seize headlines, however when employees lose their jobs and are then denied severance they spent years incomes, it has devastating penalties for them and their households,” stated Scott Nova, govt director on the WRC.

Nova stated the difficulty of severance “theft” was a “hidden crime” within the international vogue trade that obtained little consideration, whereas victimising tens of millions of employees the world over.

“Attire manufacturers have identified about severance theft for years however have executed nothing to cease it. Their voluntary labour requirements have allowed them to disregard the issue with impunity,” Nova stated.

The WRC highlighted an ongoing case involving employees at a manufacturing facility making Disney merchandise in El Salvador, which it claims owes 250 employees a complete of £1.4 million ($1.76 million) in severance pay. For some, their share of the whole is the equal of greater than two years’ wages.

The manufacturing facility, Model Avenue, which made branded sportswear, ceased manufacturing in February 2023 and closed in Could, making a whole lot of employees unemployed.

Disney had granted a licence to Outerstuff, a US designer and producer of licensed youngsters’s sportswear, to make Disney youngsters’s clothes. The clothes was made on the manufacturing facility and was co-branded with the logos of US Nationwide Soccer League or Nationwide Basketball Affiliation groups.

The WRC says that one of many house owners of the manufacturing facility was quickly jailed for failing to pay healthcare and pension contributions for workers. As a substitute of being paid what they had been owed, the WRC says that Model Avenue workers had been paid about £45 every, lower than 1 p.c of their authorized entitlement.

The WRC claims that this failure to this point to pay employees made Outerstuff an outlier within the trade and that as corporations making garments for sure manufacturers, together with for the NFL and the NBA, had been topic to enforceable labour requirements, that obliges them to repay stolen severance pay.

In response to the WRC’s declare, Outerstuff claims that the WRC’s evaluation is factually inaccurate and denies that it is obliged to pay the severance cash. Nevertheless, after the Guardian approached Outerstuff for remark, the corporate confirmed it will pay practically $1 million.

In an announcement to the Guardian, Outerstuff stated it “takes and has constantly taken employee rights very severely. We handle a structured, international compliance programme that outlines and requires a code of conduct for all our suppliers. At the moment, regardless of our robust feeling that now we have met all licence necessities, Outerstuff is nonetheless engaged on a structured plan that can present practically $1 million in funds to the employees as quickly as potential.”

Nova stated: “Along with Outerstuff, you may have Disney with annual income of $89 billion, the NFL and its groups with $18 billion, and the NBA with $11 billion. With mixed income of $120 billion, you’ll assume these manufacturers may scrape collectively $1.8 million to pay the employees who sewed their onesies the cash they earned.”

Disney, the US Nationwide Soccer League and the NBA have additionally been contacted by the WRC to enchantment for them to intervene within the dispute. They didn’t reply to requests for remark from the Guardian.

One former employee on the manufacturing facility stated she had been working at Model Avenue for 12 years and is now going through destitution after shedding her job and never getting her severance pay.

“They by no means informed us the manufacturing facility was going to shut however when it did, I knew they needed to pay us severance,” she stated. “I used to be owed $7,700 in whole. The manufacturing facility informed us they’d pay us 50 p.c of what we’re owed however they by no means did. I’ve money owed to repay and since I haven’t been capable of make funds, the curiosity is accumulating. We’ve got needed to borrow cash for electrical energy and water. I haven’t been capable of purchase clothes or footwear for my youngsters.”

One other employee who stated she labored at Model Avenue for greater than 10 years stated that, after the manufacturing facility closed, she went to the Ministry of Labour for her severance calculation and was informed she was owed $12,000.

“My month-to-month wage on the manufacturing facility was $360 however that by no means lined my residing bills. Not getting my severance has had a huge impact. Our home has a tin roof and water is coming in however I don’t have cash to repair it. I can’t purchase meals or get medication for my abdomen an infection.”

The WRC says that severance wage “theft” has spiked since Covid shuttered excessive streets and led to clothes manufacturers cancelling tens of millions of kilos value of clothes orders with their abroad suppliers. Because of this, a whole lot of 1000’s of garment employees misplaced their jobs as factories closed and manufacturers continued to cancel or cut back orders in an try to recoup the losses they suffered.

Shortly after the pandemic, WRC investigations discovered that employees had been denied practically $1 billion in severance pay and different unpaid wages from 2020-2022.

In 2022, a coalition of greater than 200 rights teams urged manufacturers to signal a binding settlement with unions to ascertain a worldwide severance fund that they’d pay into to assist employees who had misplaced their jobs and weren’t paid what they had been due.

By Annie Kelly