Docstoc

Findings

Document Sample
Findings Powered By Docstoc
					FLA Audit Profile Country Name of Factory Independent External Monitoring Organization Date(s) in Facility FLA Affiliated Compan(ies) Number of Workers Product(s) Production Processes FLA Code/Benchmark

China 440015702F Global Standards October 15-16, 2007 Hennes & Mauritz AB 783 underwear sewing, QC, sapling, packing, cutting Compliance Status Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.) Describe notable features implemented by factory management or Company

1. Code Awareness Noncompliance GEN 3: Develop a secure communications channel, in a manner appropriate to the culture and situation, to enable Company employees and employees of contractors and suppliers to report to the Company on noncompliance with the workplace standards, with security that they shall not be punished or prejudiced for doing so. 2. Forced Labor There will not be any use of forced labor, whether in the form of prison labor, indentured labor, bonded labor or otherwise. F.1 General Compliance Forced Labor F.4 Employment Terms/Prohibitions Noncompliance

No noncompliance reporting mechanism which allows factory workers to contact the Company.

management interview, visual inspection

See below.

Noncompliance

F.14 Forced Overtime

Noncompliance

Labor contract. Article 8. If workers quit the factory before the end of contracts, the factory will deduct workers' wages for one month as fees for breach of faith. Forced OT at night in the factory. During worker interview, visual inspection inspection, the auditor saw a task sheet posted in bulletin board on second floor for Line H saying that: 1. Workers who could not finish tasks must all work till 12am; 2. The factory would not count pieces that workers made during the day, if workers left workplace without prior approval. It was written on a bulletin board that a worker left the factory early. The auditor interviewed this worker and this worker reported that workers worked till 11pm that night, but [the worker] left the factory at 10:30pm. There is no procedure for ensuring there is no forced labor in the factory. records review, management interview

records review, management interview, worker interview and visual inspection records review, management interview

Other 3. Child Labor

Risk of noncompliance

1

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.)

Describe notable features implemented by factory management or Company

No person will be employed at an age younger than 15 (or 14 where the law of the country of manufacture allows) or younger than the age for completing compulsory education in the country of manufacture where such age is higher than 15. CL.1 General Compliance Child Noncompliance Labor CL.3 Proof of Age Risk of noncompliance Documentation CL.4 Other Means of Age Risk of noncompliance Verification CL.6 Employment of Young Workers Noncompliance

See below. No age verification policy and procedure. There is no other method to check workers' real age other than checking ID cards. The factory provides physical examinations to juvenile workers twice a year, but the examinations did not specify juvenile workers. No system for identifying work stations and operations that are inappropriate for young workers according to applicable laws. No procedures to ensure that child labor is not in use.

management interview, records review, workers interview management interview, records review management interview, records review management interview, records review, workers interview

CL.8 Young Worker Identification Risk of noncompliance System

records review

Other 4. Harassment or Abuse Every employee will be treated with respect and dignity. No employee will be subject to any physical, sexual, psychological or verbal harassment or abuse. H&A.1 General Compliance Harassment and Abuse H&A.3 Discipline/Review of Disciplinary Action

Risk of noncompliance

records review

Risk of noncompliance Risk of noncompliance

See below.

H&A.16 Punishment of Abusive Workers/Supervisors/Managers

Risk of noncompliance

management interview, records review, workers interview No appeal system for workers to have records review, management disciplinary action imposed on them reviewed interview by someone at a higher managerial position than the manager who imposed the disciplinary action. No disciplinary policy for management who records review, management engage in any physical, sexual, psychological interview or verbal violence, harassment or abuse. No harassment and abuse procedure. records review

Other Risk of noncompliance 5. Non-Discrimination No person will be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin. D.1 General Compliance NonDiscrimination Noncompliance

See below.

management interview, visual inspection, records review, workers interview

2

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.) management interview, records review

Describe notable features implemented by factory management or Company

D.3 Recruitment and Employment Practices (Job Advertisements, Job Descriptions and Evaluation Policies)

Noncompliance

It is written in factory's recruitment ad at the gate of the factory that the factory recruits workers between 18 to 25 years old. The management explained that due to the particularities of underwear industry, the factory usually just hires female workers, male workers normally work in packing and cutting departments and warehouse.

Other Risk of noncompliance 6. Health and Safety Employers will provide a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities. H&S.1 General Compliance Health and Safety H&S.2 Document Maintenance/Worker Accessibility and Awareness Noncompliance

No nondiscrimination procedure.

records review

Noncompliance

records review, management interview, worker interview and visual inspection The factory is short of poster on warning or records review, management  Article 22 of Law of the prescription signs such as ①No warning interview and visual inspection People's Republic of China on signs of excessive noise and notice of Prevention and Control of wearing ear protection before entering the Occupational Diseases generator room were posted. ② No warning   At eye-catching places, sign against use of lifts during fire is posted alarming signs with warning near elevator doors. ③No posters of descriptions in Chinese shall indicating PPE use were found in the factory. be put up at the operation posts where serious occupational disease hazards are produced. The descriptions shall clearly furnish the categories, consequences and prevention of and the emergency rescue measures for, the occupational disease hazards.

See below.

H&S.3 Written Health and Safety Risk of noncompliance Policy H&S.5 Health and Safety Risk of noncompliance Management System

The factory has no written health and safety policy. The factory has no H&S management system which includes: ① procedures that enable workers to raise H&S concerns, ②procedures reporting right handling of incident or accident (including near miss incident) , ③procedures that ensure the system are regularly tested and reviewed and continuously developed.

records review and management interview records review and management interview

3

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.) Article 25 of Special Appliance Quality safety Monitoring Regulation: Before or within 30 days after the special appliance is operated, the using unit shall register with the special appliance quality safety monitoring department of cities directly under the jurisdiction of State Council or cities with districts. The registration symbols shall be placed at eye-catching place or well-marked place of the appliance.

Describe notable features implemented by factory management or Company

H&S.8 Permits and Certificates

Noncompliance

Two generators and two air tanks visual inspection, records review, (compressing equipment) that have been management interview used for at least 5 months are not registered in local safety monitoring department for special appliance quality.

H&S.9 Evacuation Requirements Noncompliance and Procedure

There are poor performances on emergency visual inspection, records review, requirements and procedures, for instance, management interview, worker ①No any plan for the evacuation of workers interview is posted in the factory; ②10 emergency lights randomly tested are not functioning; ③Emergency signs installed near exit doors and passages are not illuminated with an internal light source backed up by battery; ④There is no loudspeaker in each workshop, only installed in stairways; ⑤ The sound of fire alarm is very similar to the bell that rings at the end of the work shift; ⑥No fire prevention training provided for workers in the factory. No workers on site received fire-fighting training nor had fire-fighting skills. records review, management interview, worker interview Article 21 of Fire Prevention Law of the People’s Republic of China (extracted): Any unit or individual shall not damage or arbitrarily use, dismantle and stop using fire control facilities and devices, and shall not bury and occupy hydrant, occupy fire prevention space and block fire control passageway. Article 28 of Fire Prevention Regulation for Organization, Group and Enterprise: the unit which equips the automatic fire prevention facility should regularly arrange the complete test for those automatic facilities, the test report and the test filing. Article 41 of Factory Safety and Health Rules: The insulation of electrical equipment and wires must be intact. Bare live conductors should be installed out of reach.

H&S.10 Safety Equipment and First Aid Training

Noncompliance

H&S.17 Ventilation/Electrical/Facility Installation and Maintenance

Noncompliance

Wire of a fan was found in damp area in cook visual inspection room.

4

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.) Factory Safety and Health Rules: Article 32 Protection devices shall be mounted on dangerous parts, e.g. driving belt, open gear, grinding wheel, electric saw, axial ring that is close to the ground, rotary axle, belt pulley and flywheels.

Describe notable features implemented by factory management or Company

H&S.18 Machinery Maintenance and Worker Training

Noncompliance

Some machines are in short of safety guards, records review, visual inspection for example, ①30% dynamoelectric sewing machines were short of needle guards in 2/F,3/F; ②At least 20% of overlock machines needle guards' were taken down or used for other purpose in 2/F. ③2 punching machines with 2-hand operation system tested were just partly functioning: two press buttons were without time-order control, which makes it easy for workers to control these machines with one hand. The factory has no administrative body for production safety or full-time personnel for the administration of production safety. records review, management interview,

Other

Noncompliance

Article 19 of The Production Safety Law of the People’s Republic of China: The production and business operation entities not mentioned in the preceding paragraph but have more than 300 employees shall establish an administrative organ for production safety or have full-time personnel for the administration of production safety; ..

7. Freedom of Association and Collective Bargaining Employers will recognize and respect the right of employees to freedom of association and collective bargaining. FLA Comment: The Chinese constitution guarantees Freedom of Association (FOA); however, the Trade Union Act prevents the establishment of trade unions independent of the sole official trade union - the All China Federation of Trade Unions (ACFTU). According to the ILO, many provisions of the Trade Union Act are contrary to the fundamental principles of FOA, including the non-recognition of the right to strike. As a consequence, all factories in China fall short of the ILO standards on the right to organize and bargain collectively. However, the government has introduced new regulations that could improve the functioning of the labor relations mechanisms.

5

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.)

Describe notable features implemented by factory management or Company

The Amended Trade Union Act of Oct. 2001 stipulates that union committees have to be democratically elected at members' assemblies and trade unions must be accountable to their members. The trade union has the responsibility to consult with management on key issues of importance to their members and to sign collective agreements. Trade unions also have an enhanced role in dispute resolution. In Dec. 2003, the Collective Contracts Decree introduced the obligation for representative trade unions and employers to negotiate collective agreements, in contrast to the previous system of nonnegotiated administrative agreements.

FOA.1 General Compliance Freedom of Association Other

Risk of noncompliance Risk of noncompliance

See below. There are no procedures related to freedom of association and collective bargaining.

records review records review

8. Hours of Work Except in extraordinary business circumstances, employees will (i) not be required to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country of manufacture or, where the laws of such country will not limit the hours of work, the regular work week in such country plus 12 hours overtime; and (ii) be entitled to at least one day off in every seven day period. HOW.1 General Compliance Hours of Work Noncompliance See below. management interview, records review, workers interview

6

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.)

Describe notable features implemented by factory management or Company

HOW.6 Time Recording System Noncompliance

The factory provides fake time records to workers interview, visual inspection auditors. Workers interviewed reported OT at night from 10pm to 12am. During visual inspection, the auditor saw a task sheet posted in bulletin board on second floor for Line H saying that: 1. Workers who could not finish tasks must all work till 12am; 2. The factory would not count pieces that workers made during the day, if workers left workplaces without prior approval. It was written in bulletin board of third floor for Line K that all workers will work till 12am tonight (October 13th). While management interview and records review all indicated that workers worked 2 hours at most per night. It was written in a bulletin board that a worker left the factory early, so the auditor interviewed this worker. This worker reported that workers worked till 11pm that night, but [the worker] left the factory at 10:30pm. Through records review, the auditor found that this worker was a juvenile worker. Another juvenile worker interviewed also reported OT on Saturdays and at night. Thus, the auditor could make the conclusion that juvenile workers worked the same working hours as other normal workers, while no OT for juvenile workers were indicated in the time records. No voluntary OT system. Some workers in each department worked from 36 to 80 OT hours in August and October 2006. Some workers in sewing department worked over 36 OT hours in January and March 2007. Many workers in each department worked over 36 OT hours in September, November, December 2006 and April to August of 2007. Although the factory receives comprehensive working certificate issued by local government, through reviewing time records from August 2006 to August 2007, average working hours per month still exceed 36 hours. management interview, records review management interview, records review

HOW.8 Overtime/Reduced Mandated Overtime HOW.10 Overtime/Calculation over Period Longer than One Week

Risk of noncompliance Noncompliance

According to Article 41 PRC Labor Code, the employing unit may extend working hours as necessitated by its production or business operation after consultation with the trade union and laborers, but the extended working hours per day shall generally not exceed one hour; if such extension is needed for special reasons, under the condition that the health of laborers is guaranteed, the extended hours shall not exceed three hours per day. However, the total extension in a month shall not exceed thirty six hours. According to Regulations about Employee Work Time by the State Government - May 1, 1997, Article#3 Employees shall work 40 hours per week, overtime is not to exceed 36 hours per month.

7

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.)

Describe notable features implemented by factory management or Company

HOW.13 Public Holidays

Noncompliance

Workers do not have all national holidays off worker interview, records review, as per law. visual inspection Workers interviewed reported that workers had one day off for Labor Day only. During visual inspection, the auditor found a worker's piece count sheet in sewing department on third floor indicating that this worker worked on October 2nd and 3rd. management interview, records review

HOW.18 Annual Leave/Wage Noncompliance The factory does not pay for annual leave in Payments advance while in the fixed pay date. 9. Wages, Benefits and Overtime Compensation WAGES AND BENEFITS: Employers recognize that wages are essential to meeting employees’ basic needs. Employers will pay employees, as a base, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and will provide legally mandated benefits. OVERTIME COMPENSATION: In addition to their compensation for regular hours of work, employees will be compensated for overtime hours at such premium rate as is legally required in the country of manufacture or, in those countries where such laws will not exist, at a rate at least equal to their regular hourly compensation rate. WBOT.1 General Compliance Noncompliance See below. Wages, Benefits and Overtime Compensation WBOT.10 Premium/Overtime Uncorroborated noncompliance Because the factory provided the auditor with Compensation fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was fake. Further, wages that normal workers reported to the auditor during interview were almost the same as what were recorded in payroll. Thus, the auditor could only say that either the factory paid OT less than required as per regulations or no OT compensation for some OT hours. WBOT.19 False Payroll Records Noncompliance

management interview, records review, workers interview records review, worker interview

WBOT.26 Pay Statement

Noncompliance

Because the factory provided the auditor with records review, worker interview fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was also fake. No pay slips provided to workers. management interview, worker interview

8

FLA Code/Benchmark

Compliance Status

Describe noncompliance, risk of noncompliance or uncorroborated evidence of noncompliance

List sources/documentation used for Cite and describe local and/or reference and corroborating evidence country laws used for additional (e.g. worker interviews, factory reference walkthrough, records review, etc.)

Describe notable features implemented by factory management or Company

10. Miscellaneous Subcontracting, homework and other issues not covered by above benchmarks and code requirements.

9

FLA Audit Profile Country Name of Factory Independent External Monitoring Organization Date(s) in Facility FLA Affiliated Compan(ies) Number of Workers

China 440015702F Global Standards October 15-16, 2007 Hennes & Mauritz AB 783

FLA Comment: In situations where an FLA-affiliated Company is no longer sourcing from a factory that has received an Independent External Monitoring visit, the Company shall submit information on (a) the reason for exiting; (b) the status of compliance and summary of efforts to remediate noncompliances in the factory; and (c) plans to follow up on critical issues. The FLAaffiliated Company in this case has submitted the following information, which has not been verified by the FLA:

H&M note (July 2008): Business relationship with this factory started in April 2006. In mid April 2006, H&M internal Full Audit Programme was conducted, during which we found that its overtime situation was far below the average level. That made us alert on the risk that they were showing us false documents regarding overtime. Two internal follow up audits were conducted, in December 2006 and August 2007. During these visits, we emphasized again and again, both to the factory and its supplier, the fundamental conditions and importance of transparency for our cooperation. Yet the factory still denied the falsity of the records. In October 2007, FLA audited the factory. Inconsistency was again found between the documents and furthermore, forced OT issue was discovered. In November 2007 we had a meeting with the factory, discussing its code of conduct compliance along with both our internal findings as well as the FLA findings, but management persisted in denying falsity of their documents and totally denied the forced OT issue. Despite our efforts made in getting the factory to be transparent and showing us the true documentation, we still found them non- cooperative and unwilling to work towards compliance. Since the basic conditions for a successful remediation are not met we have come to the conclusion to end our business with the factory and will therefore not continue to carry out our remediation. Remediation Company Remediation Plan

Product(s) Production Processes

underwear sewing, QC, sapling, packing, cutting

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance No noncompliance reporting mechanism which allows factory workers to contact the Company.

Target Completion Date

GEN 3: Develop a secure Noncompliance communications channel, in a manner appropriate to the culture and situation, to enable Company employees and employees of contractors and suppliers to report to the Company on noncompliance with the workplace standards, with security that they shall not be punished or prejudiced for doing so.

During our internal audits and discussions with the factory H&M primarily encouraged the factory to develop and deepen its own confidential non-compliance system. We support the factory in building a dialogue system within the factory in order to have a forum for the workers to communicate grievances to the management. During our audits we regularly check the function of these systems. At all H&M audits we conduct worker interviews. During these confidential, one- to one interviews, our contact information is provided to the workers in order for them to be able to contact with us to put forward their grievances directly to us. We have decided to establish a hotline in order to ensure that the workers can put forward confidential complaints directly to H&M. It will be a mobile number that the workers can call or SMS. The mobile number will be printed on business cards that will be provided to the workers during worker interviews.

F.1 General Compliance Forced Labor F.4 Employment Terms/Prohibitions

Noncompliance Noncompliance

See below. Labor contract. Article 8. If workers quit the factory before the end of contracts, the factory will deduct workers' wages for one month as fees for breach of faith. There is no procedure for ensuring there is no forced labor in the factory. H&M requires the factory to establish lawful contracts with its workers, specifying, amongst other things, the procedure of termination of employment, including time of notification from both employer and employee. Feb-08

Other

Risk of noncompliance

H&M requires the factory to create, communicate and implement a policy against forced labour.

Jan-08

CL.1 General Compliance Child Noncompliance Labor CL.3 Proof of Age Documentation Risk of noncompliance CL.4 Other Means of Age Verification Risk of noncompliance

See below. No age verification policy and procedure. There is no other method to check workers' real age other than checking ID cards. H&M requires the factory to create, communicate and implement a policy and procedure for verifying worker IDs. H&M strongly suggests that the factory should establish additional methods for verifying worker IDs. Jan-08

Jan-08

10

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance The factory provides physical examinations to juvenile workers twice a year, but the examinations did not specify juvenile workers. No system for identifying work stations and operations that are inappropriate for young workers according to applicable laws.

Remediation Company Remediation Plan

Target Completion Date Dec-07

CL.6 Employment of Young Workers

Noncompliance

H&M will suggest that the factory obtains examinations that specify juvenile workers.

CL.8 Young Worker Identification Risk of System noncompliance

H&M requires the factory to create and maintain a Jan-08 system, in accordance with applicable laws, for establishing which work stations and procedures are not suitable for juvenile workers.

Other

Risk of noncompliance

No procedures to ensure that child labor is not in use.

H&M looks very seriously on child labour. We will encourage the factory to create and implement a policy and procedure to ensure that underage workers will not be admitted to the factory.

Jan-08

H&A.1 General Compliance Harassment and Abuse H&A.3 Discipline/Review of Disciplinary Action

Risk of noncompliance Risk of noncompliance

See below. No appeal system for workers to have disciplinary action imposed on them reviewed by someone at a higher managerial position than the manager who imposed the disciplinary action. No disciplinary policy for management who engages in any physical, sexual, psychological or verbal violence, harassment or abuse. No harassment and abuse procedure. See below. It is written in factory's recruitment ad at the gate of the factory that the factory recruits workers between 18 to 25 years old. The management explained that due to the particularities of the underwear industry, the factory usually just hires female workers, male workers normally work in packing and cutting departments and warehouse. No nondiscrimination procedure. H&M will ask the factory to revise its recruitment policy, Jan-08 as well as ads, and remove discriminatory elements. A policy should be created, communicated and implemented to ensure that no discrimination takes place in the factory. We will encourage the factory to create an appeal system for workers facing disciplinary action. Jan-08

H&A.16 Punishment of Abusive Workers/Supervisors/Managers

Risk of noncompliance

H&M does not accept harassment or abuse in any form. Jan-08 We will ask the factory to create and publish a policy on the prohibition of harassment and abuse, including the disciplinary actions that will be taken if the policy is breached. H&M does not accept harassment or abuse in any form. Jan-08 We will ask the factory to create and publish a policy on the prohibition of harassment and abuse.

Other

Risk of noncompliance

D.1 General Compliance NonNoncompliance Discrimination D.3 Recruitment and Noncompliance Employment Practices (Job Advertisements, Job Descriptions and Evaluation Policies)

Other

Risk of noncompliance

H&M takes a strong position against discrimination in any shape or form. We will encourage the factory to create, communicate and implement a policy of nondiscrimination.

Jan-08

H&S.1 General Compliance Health and Safety

Noncompliance

See below.

11

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance The factory is short of poster on warning or prescription signs such as ①No warning signs of excessive noise and notice of wearing ear protection before entering the generator room were posted. ② No warning sign against use of lifts during fire is posted near elevator doors. ③No posters of indicating PPE use were found in the factory. The factory has no written health and safety policy. The factory has no H&S management system which includes: ① procedures that enable workers to raise H&S concerns, ②procedures reporting right handling of incident or accident (including near miss incident) , ③procedures that ensure the system are regularly tested and reviewed and continuously developed. Two generators and two air tanks (compressing equipment) that have been used for at least 5 months are not registered in local safety monitoring department for special appliance quality. There are poor performances on emergency requirements and procedures, for instance, ①No any plan for the evacuation of workers is posted in the factory; ②10 emergency lights randomly tested are not functioning; ③Emergency signs installed near exit doors and passages are not illuminated with an internal light source backed up by battery; ④There is no loudspeaker in each workshop, only installed in stairways; ⑤ The sound of fire alarm is very similar to the bell that rings at the end of the work shift; ⑥No fire prevention training provided for workers in the factory.

Remediation Company Remediation Plan

Target Completion Date

H&S.2 Document Noncompliance Maintenance/Worker Accessibility and Awareness

We will encourage the factory to create, communicate Dec-07 and implement a system for keeping the workplace safe and to ensure that workers are informed about necessary protective equipment, as well as provide feedback such as accident records, to relevant manager.

H&S.3 Written Health and Safety Risk of Policy noncompliance H&S.5 Health and Safety Management System Risk of noncompliance

We will encourage the factory to create, communicate and implement a workplace safety policy.

Dec-07

We will encourage the factory to create, communicate Jan-08 and implement a system for keeping the workplace safe and to ensure that workers are informed about necessary protective equipment, as well as provide feedback such as accident records, to relevant manager.

H&S.8 Permits and Certificates

Noncompliance

We will encourage the factory to monitor which appliances that needs specific registration, and take appropriate action in these cases.

Jan-08

H&S.9 Evacuation Requirements Noncompliance and Procedure

We will encourage the factory to create, communicate Jan-08 and implement a system for keeping the workplace safe and to ensure that workers are informed about necessary protective equipment, as well as provide feedback such as accident records, to relevant manager.

12

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance No workers on site received firefighting training nor had firefighting skills.

Remediation Company Remediation Plan

Target Completion Date

H&S.10 Safety Equipment and First Aid Training

Noncompliance

H&S.17 Ventilation/Electrical/Facility Installation and Maintenance H&S.18 Machinery Maintenance and Worker Training

Noncompliance

Wire of a fan was found in damp area in cook room. Some machines are in short of safety guards, for example, ①30% dynamoelectric sewing machines were short of needle guards in 2/F,3/F; ②At least 20% of overlock machines' needle guards were taken down or used for other purpose in 2/F. ③2 punching machines with 2-hand operation system tested were just partly functioning: two press buttons were without time-order control, which makes it easy for workers to control these machines with one hand.

HM require all workers should have necessary Jan-08 knowledge for saving one' s life in case emergency, such as fire. Evacuation drill is required twice a year, and fire fighting training should be given for workers. We will keep monitoring this issue and push the factory to make progress towards compliance. We will ask the factory to create a system for ensuring a Jan-08 well-maintained safety situation. We will encourage the factory to create, communicate Jan-08 and implement a system for keeping the workplace safe and to ensure that workers are informed about necessary protective equipment, as well as provide feedback such as accident records, to relevant manager.

Noncompliance

Other

Noncompliance

The factory has no administrative body for production safety or fulltime personnel for the administration of production safety. See below. There are no procedures related to freedom of association and collective bargaining.

We will encourage the factory to create, communicate Jan-08 and implement a system for keeping the workplace safe and to ensure that workers are informed about necessary protective equipment, as well as provide feedback such as accident records, to relevant manager.

FOA.1 General Compliance Freedom of Association Other

Risk of noncompliance Risk of noncompliance

The workers should be free to form associations of their Jan-08 own choosing, and to bargain collectively. H&M does not accept any disciplinary actions from the factory against workers who choose to peacefully and lawfully organise or join an association. During our audits and dicussions with the factory we will encourage the factory to develop a functioning dialogue system between the workers and the management in the factory.

HOW.1 General Compliance Hours of Work

Noncompliance

See below.

13

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance The factory provides fake time records to auditors. Workers interviewed reported OT at night from 10pm to 12am. During visual inspection, the auditor saw a task sheet posted in bulletin board on second floor for Line H saying that: 1. Workers who could not finish tasks must all work till 12am; 2. The factory would not count pieces that workers made during the day, if workers left workplaces without prior approval. It was written on bulletin board of third floor for Line K that all workers will work till 12am tonight (October 13th). While management interview and records review all indicated that workers worked 2 hours at most per night. It was written in a bulletin board that a worker left the factory early, so the auditor interviewed this worker. This worker reported that workers worked till 11pm that night, but [the worker] left the factory at 10:30pm.

Remediation Company Remediation Plan

Target Completion Date Mar-08

HOW.6 Time Recording System

Noncompliance

We require the factory to record all working hours and report them truthfully to H&M. Workers should be provided enough time to rest between each workshift, and have at least one day off per week. All overtime should be voluntary, and paid for according to the law.

HOW.8 Overtime/Reduced Mandated Overtime

Risk of noncompliance

Through records review, the auditor found that this worker was a juvenile worker. Another juvenile worker interviewed also reported OT on Saturdays and at night. Thus, the auditor could make the conclusion that juvenile workers worked the same working hours as other normal workers, while no OT for juvenile workers was indicated in the time records. No voluntary OT system.

H&M encourages the factory to create, communicate and implement a policy on voluntary overtime.

Jan-08

14

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance Some workers in each department worked from 36 to 80 OT hours in August and October 2006. Some workers in sewing department worked over 36 OT hours in January and March 2007. Many workers in each department worked over 36 OT hours in September, November, December 2006 and April to August of 2007. Although the factory receives a comprehensive working certificate issued by local government, through reviewing time records from August 2006 to August 2007, average working hours per month still exceed 36 hours. Workers do not have all national holidays off as per law. Workers interviewed reported that workers had one day off for Labor Day only. During visual inspection, the auditor found a worker's piece count sheet in sewing department on third floor indicating that this worker worked on October 2nd and 3rd.

Remediation Company Remediation Plan

Target Completion Date Mar-08

HOW.10 Overtime/Calculation over Period Longer than One Week

Noncompliance

We require the factory to record all working hours and report them truthfully to H&M. Workers should be provided enough time to rest between each workshift, and have at least one day off per week. All overtime should be voluntary, and paid for according to the law. We have requested the factory to provide us with a remediation plan on how to, in a sustainable manner reduce the overtime.

HOW.13 Public Holidays

Noncompliance

H&M requires the factory to grant and pay compensation Mar-08 for annual leave as specified by law.

HOW.18 Annual Leave/Wage Payments WBOT.1 General Compliance Wages, Benefits and Overtime Compensation

Noncompliance

Noncompliance

The factory does not pay for annual leave in advance, while in the fixed pay date. See below.

H&M requires the factory to grant and pay compensation Jan-08 for annual leave as specified by law.

15

FLA Code/Benchmark

Compliance Status Description of noncompliance, Company Internal Audit Findings (optional) risk of noncompliance or uncorroborated evidence of noncompliance Because the factory provided the auditor with fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was fake. Also, wages that normal workers reported to the auditor during interview were almost the same as what were recorded in payroll. Thus, the auditor could only say that either the factory paid OT less than required as per regulations or no OT compensation for some OT hours.

Remediation Company Remediation Plan

Target Completion Date

WBOT.10 Premium/Overtime Compensation

Uncorroborated noncompliance

H&M requires the factory to pay overtime compensation Mar-08 as specified by the law. We have requested the factory to provide us with a remediation plan on how to, in a sustainable manner increase the overtime compensation until it reaches the legal level.

WBOT.19 False Payroll Records Noncompliance

Because the factory provided the auditor with fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was also fake.

H&M requires the factory to pay at least minimum wage, Mar-08 as well as pay overtime compensation as specified by the law. We have requested that the factory provides us with a remediation plan on how to, in a sustainable manner increase the overtime compensation

WBOT.26 Pay Statement

Noncompliance

No pay slips provided to workers.

H&M requires the factory to clearly inform workers about Jan-08 the respective compensation levels for normal and overtime working hours, as well as potential bonuses and deductions.

16

in April 2006. In mid April 2006, H&M internal Full ertime situation was far below the average level. ments regarding overtime. Two internal follow up these visits, we emphasized again and again, mportance of transparency for our cooperation. , FLA audited the factory. Inconsistency was ue was discovered. In November 2007 we had a along with both our internal findings as well as the ocuments and totally denied the forced OT issue. showing us the true

work towards compliance. Since the basic o the conclusion to end our business with the

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

From 01/01/2008 factory will use new <<Labor law>> to underwrite contract with all workers.

Factory has set up the procedure and already passed the notice to related department heads so as to inform all management and workers of this policy and to prevent the same case in future.

Factory will monitor falsity of ID information strictly. Factory will monitor falsity of ID information strictly.

17

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

Factory will provide juvenile workers with specific physical examination.

According to the applicable law, the factory will constitute a specific file and system for identifying work stations and operations for young workers. And they will paste the specific label on inappropriate work stations for young workers. Factory will monitor falsity of ID information strictly.

Factory has set up an appeal system and provided the <<Worker Suggestion Box>> in the production plant. They have also assigned a person to get the information and pass those appeals to our Management Committee directly. Factory will perfect managerial system and constitute correlated disciplinary policy.

Factory will collect relevant laws and set up the internal procedure.

Factory has stipulated in <<Engage Document>> that those messages should not appear anymore in the recruitment ads.

Factory has stipulated in <<Engage Document>> that those messages should not appear anymore in the recruitment ads.

18

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

Factory has placed all kinds of safety notification in workshops.

Factory has set the system and the safety policy. Factory has set the system and the safety policy.

Now factory is still working with supplier on this case and they are looking for other suppliers or a government safety department to see if they can do the appliance quality checking for them.

All problems have been solved already.

19

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

Factory has made all necessary training to employees.

Factory has forfended all departments using wire of a fan. All machines have been installed with safety guards. In the meantime, the factory has already strictly put the handling program on hold.

HR department will appoint a staff member to be the safety director.

Factory has set up <<worker commissary convertion>>.

20

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

Factory has set up the procedure and already passed the notice to related department heads so as to inform all management and workers of this policy and to prevent the same case in future.

Factory has set up the procedure and already passed the notice to related department heads so as to inform all management and workers of this policy and to prevent the same case in future.

21

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

According to the local <<labor Law>>, workers' OT should not be more than 48 hrs/month. But factory workers' OT are around 90-100 hrs/month during Dec 2007 & Jan 2008. Thus, this may be caused by factory's worst production planning since the beginning of the year 2007. Factory believes this will not happen again and it will be improved after Chinese Lunar New Year (before March 2008). Besides, factory plan to increase more workforce and production lines to solve such situation. Factory hopes the workers' OT will be reduced to 60-70 hrs/month on or before March 31 as well.

According to the local <<labor Law>>, workers' OT should not be more than 48 hrs/month. But factory's workers' OT are around 90-100 hrs/month during Dec 2007 & Jan 2008. Thus, this may be caused by factory's worst production planning since the beginning of the year 2007. Factory believes this will not happen again and it will be improved after Chinese Lunar New Year (before March 2008). Factory plans to increase more workforce and production lines to solve such situation. Factory hopes the workers' OT will be reduced to 60-70 hrs/month on or before March 31 as well.

Factory will grant annual leave as per law.

22

Factory Response (optional)

Company Follow-Up (cite date of followup)

Documentation

Status Completed, Pending, Ongoing

According to the local <<labor Law>>, workers' OT should not be more than 48 hrs/month. But factory's workers' OT are around 90-100 hrs/month during Dec 2007 & Jan 2008. Thus, this may be caused by factory's worst production planning since the beginning of the year 2007. Factory believes this will not happen again and it will be improved after Chinese Lunar New Year (before March 2008). Besides, factory plan to increase more workforce and production lines to solve such situation. Factory hopes the workers' OT will be reduced to 60-70 hrs/month on or before March 31 as well.

According to the local <<labor Law>>, workers' OT should not be more than 48 hrs/month. But factory's workers' OT are around 90-100 hrs/month during Dec 2007 & Jan 2008. Thus, this may be caused by factory's worst production planning since the beginning of the year 2007. Factory believes this will not happen again and it will be improved after Chinese Lunar New Year (before March 2008). Besides, factory plan to increase more workforce and production lines to solve such situation. Factory hopes the workers' OT will be reduced to 60-70 hrs/month on or before March 31 as well.

Payslips will be provided for all workers.

23

FLA Audit Profile Country Name of Factory Independent External Monitoring Organization Date(s) in Facility FLA Affiliated Compan(ies) Number of Workers Product(s) Production Processes FLA Code/Benchmark

China 440015702F Global Standards October 15-16, 2007 Hennes & Mauritz AB 783 underwear sewing, QC, sapling, packing, cutting Compliance Status [Status] Description of noncompliance, risk of Completed, noncompliance or uncorroborated evidence of Pending, On-going noncompliance Updates (Cite Date of Follow-Up) Company Documentation Follow-Up Third-Party Verification External Documentation Verification (Date) Company Verification Follow-Up Company Follow-Up (cite Documentation date of planned or followup visit, if appropriate)

GEN 3: Develop a secure Noncompliance communications channel, in a manner appropriate to the culture and situation, to enable Company employees and employees of contractors and suppliers to report to the Company on noncompliance with the workplace standards, with security that they shall not be punished or prejudiced for doing so. F.1 General Compliance Forced Noncompliance Labor F.4 Employment Noncompliance Terms/Prohibitions

No noncompliance reporting mechanism which allows factory workers to contact the Company.

See below. Labor contract. Article 8. If workers quit the factory before the end of contracts, the factory will deduct workers' wages for one month as fees for breach of faith. Forced OT at night in the factory. During inspection, the auditor saw a task sheet posted in bulletin board on second floor for Line H saying that: 1. Workers who could not finish tasks must all work till 12am; 2. The factory would not count pieces that workers made during the day, if workers left workplace without prior approval. It was written on a bulletin board that a worker left the factory early. The auditor interviewed this worker and this worker reported that workers worked till 11pm that night, but [the worker] left the factory at 10:30pm. There is no procedure for ensuring there is no forced labor in the factory. See below. No age verification policy and procedure. There is no other method to check workers' real age other than checking ID cards. The factory provides physical examinations to juvenile workers twice a year, but the examinations did not specify juvenile workers. No system for identifying work stations and operations that are inappropriate for young workers according to applicable laws. No procedures to ensure that child labor is not in use.

F.14 Forced Overtime

Noncompliance

Other

CL.1 General Compliance Child Labor CL.3 Proof of Age Documentation Risk of noncompliance CL.4 Other Means of Age Risk of Verification noncompliance CL.6 Employment of Young Noncompliance Workers CL.8 Young Worker Identification Risk of System noncompliance Other Risk of noncompliance

Risk of noncompliance Noncompliance

24

FLA Code/Benchmark

Compliance Status

[Status] Description of noncompliance, risk of Completed, noncompliance or uncorroborated evidence of Pending, On-going noncompliance

Updates (Cite Date of Follow-Up) Company Documentation Follow-Up

Third-Party Verification External Documentation Verification (Date)

Company Verification Follow-Up Company Follow-Up (cite Documentation date of planned or followup visit, if appropriate)

H&A.1 General Compliance Harassment and Abuse H&A.3 Discipline/Review of Disciplinary Action

Risk of noncompliance Risk of noncompliance

See below. No appeal system for workers to have disciplinary action imposed on them reviewed by someone at a higher managerial position than the manager who imposed the disciplinary action. No disciplinary policy for management who engages in any physical, sexual, psychological or verbal violence, harassment or abuse. No harassment and abuse procedure. See below. It is written in factory's recruitment ad at the gate of the factory that the factory recruits workers between 18 to 25 years old. The management explained that due to the particularities of underwear industry, the factory usually just hires female workers, male workers normally work in packing and cutting departments and warehouse. No nondiscrimination procedure. See below. The factory is short of poster on warning or prescription signs such as ①No warning signs of excessive noise and notice of wearing ear protection before entering the generator room were posted. ② No warning sign against use of lifts during fire is posted near elevator doors. ③No posters of indicating PPE use were found in the factory. The factory has no written health and safety policy. The factory has no H&S management system which includes: ① procedures that enable workers to raise H&S concerns, ②procedures reporting right handling of incident or accident (including near miss incident) , ③procedures that ensure the system are regularly tested and reviewed and continuously developed. Two generators and two air tanks (compressing equipment) that have been used for at least 5 months are not registered in the local safety monitoring department for special appliance quality.

H&A.16 Punishment of Abusive Workers/Supervisors/Managers

Risk of noncompliance

Other

D.1 General Compliance NonDiscrimination D.3 Recruitment and Noncompliance Employment Practices (Job Advertisements, Job Descriptions and Evaluation Policies)

Risk of noncompliance Noncompliance

Other

H&S.1 General Compliance Health and Safety H&S.2 Document Noncompliance Maintenance/Worker Accessibility and Awareness

Risk of noncompliance Noncompliance

H&S.3 Written Health and Safety Policy H&S.5 Health and Safety Management System

Risk of noncompliance Risk of noncompliance

H&S.8 Permits and Certificates

Noncompliance

25

FLA Code/Benchmark

Compliance Status

[Status] Description of noncompliance, risk of Completed, noncompliance or uncorroborated evidence of Pending, On-going noncompliance

Updates (Cite Date of Follow-Up) Company Documentation Follow-Up

Third-Party Verification External Documentation Verification (Date)

Company Verification Follow-Up Company Follow-Up (cite Documentation date of planned or followup visit, if appropriate)

H&S.9 Evacuation Requirements Noncompliance and Procedure

H&S.10 Safety Equipment and First Aid Training H&S.17 Ventilation/Electrical/Facility Installation and Maintenance H&S.18 Machinery Maintenance and Worker Training

Noncompliance Noncompliance

There are poor performances on emergency requirements and procedures, for instance, ①Not any plan for the evacuation of workers is posted in the factory; ②10 emergency lights randomly tested are not functioning; ③Emergency signs installed near exit doors and passages are not illuminated with an internal light source backed up by battery; ④There is no loudspeaker in each workshop, only installed in stairways; ⑤ The sound of fire alarm is very similar to the bell that rings at the end of the work shift; ⑥No fire prevention training provided for workers in the factory. No workers on site received fire-fighting training nor had fire-fighting skills. Wire of a fan was found in damp area in cook room. Some machines are in short of safety guards, for example, ①30% dynamoelectric sewing machines were short of needle guards in 2/F, 3/F; ②At least 20% of overlock machines' needle guards were taken down or used for other purpose in 2/F. ③2 punching machines with 2-hand operation system tested were just partly functioning: two press buttons were without time-order control, which makes it easy for workers to control these machines with one hand. The factory has no administrative body for production safety or full-time personnel for the administration of production safety. See below. There are no procedures related to freedom of association and collective bargaining. See below. 0 The factory provides fake time records to auditors. Workers interviewed reported OT at night from 10pm to 12am. During visual inspection, the auditor saw a task sheet posted in bulletin board on second floor for Line H saying that: 1. Workers who could not finish tasks must all work till 12am; 2. The factory would not count pieces that workers made during the day, if workers left workplaces without prior approval. It was written in bulletin board of third floor for Line K that all workers will work till 12am tonight (October 13th). While management interview and records review all indicated that workers worked 2 hours at most per night. It was written in a bulletin board that a worker left the factory early, so the auditor interviewed this worker. This worker reported that workers worked till 11pm that night, but [the worker] left the factory at 10:30pm.

Noncompliance

Other

Noncompliance

FOA.1 General Compliance Freedom of Association Other HOW.1 General Compliance Hours of Work HOW.6 Time Recording System

Risk of noncompliance Risk of noncompliance Noncompliance Noncompliance

26

FLA Code/Benchmark

Compliance Status

[Status] Description of noncompliance, risk of Completed, noncompliance or uncorroborated evidence of Pending, On-going noncompliance

Updates (Cite Date of Follow-Up) Company Documentation Follow-Up

Third-Party Verification External Documentation Verification (Date)

Company Verification Follow-Up Company Follow-Up (cite Documentation date of planned or followup visit, if appropriate)

HOW.8 Overtime/Reduced Mandated Overtime HOW.10 Overtime/Calculation over Period Longer than One Week

Risk of noncompliance Noncompliance

Through records review, the auditor found that this worker was a juvenile worker. Another juvenile worker interviewed also reported OT on Saturdays and at night. Thus, the auditor could make the conclusion that juvenile workers worked the same working hours as other normal workers, while not no OT for juvenile workers as indicated in the time records. No voluntary OT system. Some workers in each department worked from 36 to 80 OT hours in August and October 2006. Some workers in sewing department worked over 36 OT hours in January and March 2007. Many workers in each department worked over 36 OT hours in September, November, December 2006 and April to August of 2007. Although the factory receives comprehensive working certificate issued by local government, through reviewing time records from August 2006 to August 2007, we saw the average working hours per month still exceeded 36 hours. Workers do not have all national holidays off as per law. Workers interviewed reported that workers had one day off for Labor Day only. During visual inspection, the auditor found a worker's piece count sheet in sewing department on third floor indicating that this worker worked on October 2nd and 3rd. The factory does not pay for annual leave in advance, while in the fixed pay date. See below.

HOW.13 Public Holidays

Noncompliance

HOW.18 Annual Leave/Wage Payments WBOT.1 General Compliance Wages, Benefits and Overtime Compensation WBOT.10 Premium/Overtime Compensation

Noncompliance Noncompliance

Uncorroborated noncompliance

Because the factory provided the auditor with fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was fake. Furthermore, wages that normal workers reported to the auditor during interview were almost the same as what were recorded in payroll. Thus, the auditor could only say that either the factory paid OT less than required as per regulations or no OT compensation for some OT hours. Because the factory provided the auditor with fake time records, and the payroll was calculated according to those time records, it was very obvious that the payroll was also fake. No pay slips provided to workers.

WBOT.19 False Payroll Records Noncompliance

WBOT.26 Pay Statement

Noncompliance

27


				
DOCUMENT INFO