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Formula for Calculating Employee Turnover - Excel

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					FLA Audit Profile
Country                                                           Pakistan
Name of Factory                                                   260257628F
Independent External Monitoring Organization                      T-Group Solutions Pvt. Ltd.
Date(s) in Facility                                               August 28-29, 2007
FLA Affiliated Compan(ies)                                        Nike, Inc. & Russell Corp.
Number of Workers                                                 3900
Product(s)                                                        Knits - Tops and Bottoms
Production Processes                                              Knitting - dyeing - cutting - printing - embroidery - sewing - finishing - packing


FLA Code/Benchmark                                                Compliance Status        Describe noncompliance, risk of noncompliance or                List sources/documentation used Cite and describe local and/or Describe notable features
                                                                                           uncorroborated evidence of noncompliance                        for reference and corroborating   country laws used for additional implemented by factory
                                                                                                                                                           evidence (e.g. worker interviews, reference                        management or Company
                                                                                                                                                           factory walkthrough, records
                                                                                                                                                           review, etc.)
1. Code Awareness
GEN 2: Ensure that all Company factories as well as contractors   Noncompliance            Most workers interviewed were not aware of the Code             Interview with workers
and suppliers inform their employees about the workplace                                   Elements
standards orally and through the posting of standards in a
prominent place (in the local languages spoken by employees
and managers) and undertake other efforts to educate
employees about the standards on a regular basis.

GEN 3: Develop a secure communications channel, in a manner Noncompliance                  Nike contact details were not provided in the Code posters Visual inspection and interview
appropriate to the culture and situation, to enable Company                                seen in the work areas. Workers were not aware of any      with workers
employees and employees of contractors and suppliers to report                             confidential non-compliance reporting mechanism
to the Company on noncompliance with the workplace standards,                              implemented by the P.C.
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.9 Employment Records                                            Noncompliance            1.Employment documents were not maintained for Daily            Review of records and Interviews
                                                                                           wage workers except for National identity Cards 2.Daily         with workers and Management.
                                                                                           wage workers were issued a Temporary Entry Pass valid
                                                                                           for 1 week. They were issued a time card for that week
                                                                                           only. Incase they continue to work fresh time cards and
                                                                                           passes were issued with a different registration number
                                                                                           for another week. Hence , every week a fresh time card
                                                                                           and pass were issued
F.13 Worker Ability to Terminate-Freedom of Movement              Noncompliance            1.Factory does not have a policy for Termination. 2.            Review of records and Interviews
                                                                                           Procedure for disciplinary action/ termination is not defined   with workers and Management.
                                                                                           by the factory.


Other                                                             Noncompliance            1.Discrepancies noticed in the total number of employees Review of records and visual
                                                                                           based on department wise breakdown and shift wise           inspection
                                                                                           worker breakdown. As per department wise breakdown,
                                                                                           there were 3766 employees. As per shift breakdown, there
                                                                                           were 3900 employees. As per section wise shift
                                                                                           breakdown with timings, there were 3750
                                                                                           employees.2.During the opening meeting, the
                                                                                           management mentioned that they hired daily wage
                                                                                           workers and currently there were approximately 150 such
                                                                                           workers. However, at 11am the auditors went to the work
                                                                                           areas and none of these workers were available. Review
                                                                                           of the time cards punched revealed that few of these
                                                                                           workers entered the factory between 6 am and 8.30 am.
                                                                                           There were few who worked on the night shifts also. It
                                                                                           appeared that these workers were asked to leave the
                                                                                           facility so that they would not be around during the audit.
                                                                                           3. Some postings were seen in the time office. Workers
                                                                                           did not read these as they had been instructed to swipe
                                                                                           their cards quickly, to avoid over-crowding, while entering
                                                                                           and exiting the factory.
3. Child Labor                                                                                                                                                                                                                           1
FLA Code/Benchmark                                                        Compliance Status   Describe noncompliance, risk of noncompliance or                  List sources/documentation used Cite and describe local and/or Describe notable features
                                                                                              uncorroborated evidence of noncompliance                          for reference and corroborating   country laws used for additional implemented by factory
                                                                                                                                                                evidence (e.g. worker interviews, reference                        management or Company
                                                                                                                                                                factory walkthrough, records
                                                                                                                                                                review, etc.)
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.

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 of abuse.

H&A.2 Discipline/Progressive Discipline                                   Noncompliance       1.Factory does not have a policy for Termination. 2.          Review of records and Interviews
                                                                                              Procedure for disciplinary action/ termination is not defined with workers and Management.
                                                                                              by the factory.




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.

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                                Noncompliance       1.Medical check up of all employees for detecting                 Review of records and interview   Factories Act 1934, section 23 -
                                                                                              contagious disease was not conducted in Jan and July              with Management and workers.      A
                                                                                              2007 as required by Law. 2. Vaccination for Small pox,
                                                                                              Typhoid and Cholera, as required by Law was not done.
                                                                                              The last vaccination done was in Feb 2004 for Hepatitis
                                                                                              (B).
H&S.8 Permits and Certificates                                            Noncompliance       1. Lift inspection Certificate , Lift operator training record,   Visual inspection                 Factories Act 1934 Section 33-
                                                                                              Lift maintenance record were not produced for review in                                             A, Punjab Factories Rules,
                                                                                              spite of repeated requests. 2. Building stability certificate                                       1978; Rule 95(1),Punjab
                                                                                              was available only for new Building ( B2) . This document                                           Factories Rules, 1978; Rule 17
                                                                                              was not available for other buildings.3. Lime wash and                                              & 45,Factories Act, 1934;
                                                                                              painting records not maintained as required by Law.                                                 Section 33-C
                                                                                              4.Factory did not have a pressure plant inspection
                                                                                              certificate as required by Law. 5.Only Chemical test report
                                                                                              of Drinking water was available. Biological test report was
                                                                                              not available as required by Law.




                                                                                                                                                                                                                                              2
FLA Code/Benchmark                            Compliance Status   Describe noncompliance, risk of noncompliance or               List sources/documentation used     Cite and describe local and/or Describe notable features
                                                                  uncorroborated evidence of noncompliance                       for reference and corroborating     country laws used for additional implemented by factory
                                                                                                                                 evidence (e.g. worker interviews,   reference                        management or Company
                                                                                                                                 factory walkthrough, records
                                                                                                                                 review, etc.)
H&S.9 Evacuation Requirements and Procedure   Noncompliance       1. Fire Evacuation Logs did not provide details of number      Visual inspection                   Factories Act, 1934; Section 24
                                                                  of workers present during the evacuation. There were no                                            , Section 25.and Section 33-A.
                                                                  remarks on the responses from emergency teams.2. Few
                                                                  exits had illuminated exit signage which may not be visible
                                                                  in thick smoke owing to poor illumination. High beam
                                                                  emergency lights were not installed above exits and on
                                                                  staircase landings. 3. Aisle and Evacuation route markings
                                                                  were either missing or faded in most work areas. 4.
                                                                  Approach to 2nd Exit from Finishing section in Sampling
                                                                  section located in building no.3 was blocked with
                                                                  garments. 5.Most aisles in all work areas were either
                                                                  partially blocked or completely blocked with garment bins,
                                                                  pedestal fans, tables or other work stations. 6.Side aisles
                                                                  in the printing section were very narrow. There was hardly
                                                                  any space between the tables and side walls. A person
                                                                  could not even walk freely on the aisle.7. Approach to Fire
                                                                  exit from Print Curing section was blocked with Bed Press
                                                                  machine.8. Few Exit doors in the facility open inwards. 9
                                                                  Evacuation plans were missing from most work areas.

H&S.9 Evacuation Requirements and Procedure   Noncompliance       10.Most of the aisles in the cutting section were very      Visual inspection
                                                                  narrow. 11. Auto spreader blocks aisles in the cutting
                                                                  section. 12.Numerous instances noticed where access to
                                                                  passages for workers were completely blocked with
                                                                  garments, tables and bins. These workers were
                                                                  completely caged in their work stations. The auditor was
                                                                  unable to reach these work stations located on the sides
                                                                  of the floor. Approach to these work stations was blocked
                                                                  from both ends. 13. 2nd Exit from sample Section 1 was
                                                                  through a window opening into the cutting section.
                                                                  Wooden steps were provided on both sides of the window.
                                                                  However, when the auditor attempted to cross over, the
                                                                  steps on the cutting side gave away . The steps provided
                                                                  on both the sides were weak and unstable. 14. 2nd Exit
                                                                  from the Sampling section was blocked with tables and a
                                                                  cupboard on the Cutting Side. There was no way that
                                                                  anyone could use this Exit. 15. There was no 2nd exit from
                                                                  thread cutting area in the finishing section located on the
                                                                  3rd floor. The passage was completely blocked with tables.

H&S.9 Evacuation Requirements and Procedure   Noncompliance       16. Air coolers were installed on the Fire Exit from            Visual inspection
                                                                  Sampling section in building no.3. 17. Workers were seen
                                                                  standing on aisles and working in most of the work areas.
                                                                  18. Sample section I had only 1 exit.19. Area in front of
                                                                  Exits from room housing printing tables 1 & 2 was very
                                                                  narrow. 20.There was a drop of approximately 3 feet in the
                                                                  floor level of the area in front of Exit from knitting section.
                                                                  No fencing or guard was installed to prevent accidents
                                                                  during an emergency evacuation. Also no signage was
                                                                  posted near this area to warn workers of the drop in floor
                                                                  level. 21 Electric cable connecting heaters with the mains,
                                                                  in the printing section were loose, close to workers feet
                                                                  and crossing walk ways. 22. Due to constraint of space,
                                                                  factory conducted fire evacuation drills section wise, once
                                                                  every 3 months. The complete factory was evacuated once
                                                                  a year. 23. “Do not use lift incase of fire” signage was not
                                                                  posted near the lifts 24 2 to 3 workers seen working in the
                                                                  same work station .




                                                                                                                                                                                                                  3
FLA Code/Benchmark                                               Compliance Status   Describe noncompliance, risk of noncompliance or                List sources/documentation used Cite and describe local and/or Describe notable features
                                                                                     uncorroborated evidence of noncompliance                        for reference and corroborating   country laws used for additional implemented by factory
                                                                                                                                                     evidence (e.g. worker interviews, reference                        management or Company
                                                                                                                                                     factory walkthrough, records
                                                                                                                                                     review, etc.)
H&S.9 Evacuation Requirements and Procedure                      Noncompliance       25.Few work stations on the sewing floor were                   Visual Inspection
                                                                                     overcrowded with workers caged in with garments and
                                                                                     tables from all sides. They had no access to the passages.
                                                                                     The auditors could not reach few of these work stations

H&S.10 Safety Equipment and First Aid Training                   Noncompliance       1.Instructions for First Aid was not posted near the kits as    Visual inspection                  Punjab Factories Rules, 1978;
                                                                                     required by Law. 2. List of supplies in the First Aid kit did                                      Rule 96(2),Punjab Factories
                                                                                     not meet legal requirements. 3. Approach to few fire                                               Rules, 1978; Rule 96(1) and
                                                                                     extinguishers were seen blocked with garments and fabric                                           Factories Act, 1934; Section 25
                                                                                     bundles.
H&S.11 Personal Protective Equipment                             Noncompliance       1. Excessive floating fiber noticed in the sewing floors.       Visual inspection & interview with Factories Act, 1934; Section 33-
                                                                                     Workers complained of lint on their hair and face which         workers.                           K, Section 33-G, Section 26
                                                                                     was aggravating the sinus and asthma allergy in many                                               and Section 33
                                                                                     instances.2. None of the operators were using the eye
                                                                                     shields installed on over lock machines.3.Tag guns were
                                                                                     not marked. 4.Snap button machine did not have a finger
                                                                                     guard. 5. Band knife operator uses mesh gloves only on 1
                                                                                     hand. 6. Few workers in the dyeing section were not using
                                                                                     ear plugs, gloves and appropriate shoes. 7. Over lock
                                                                                     operators were not using respiratory masks. Excessive
                                                                                     floating fiber were seen in the area which was also noticed
                                                                                     on workers’ hair.
H&S.13 Chemical Management and Training                          Noncompliance       1. Chemical storage area in the dyeing section was open         Visual inspection
                                                                                     and easily accessible to employees. 2.Containers with
                                                                                     chemicals used for Printing were lying open near the
                                                                                     printing tables.
H&S.17 Ventilation/Electrical/Facility Installation and Maintenance Noncompliance    1. Few open electric junction boxes noticed. 2.Few            Visual inspection                    Factories Act, 1934; Section 15
                                                                                     Pedestal fans were connected to the mains without a plug.                                          & Section 19.Factories Act,
                                                                                     3.Temperatures recorded in the facility were ranging from                                          1934; Section 33-N
                                                                                     95 to 110 degrees F. 4. Ventilation was very poor in the
                                                                                     work areas. 5.Lighting levels recorded was ranging
                                                                                     between 52 lux to 230 lux on few sewing machines and
                                                                                     285 lux in the print curing section . Lighting Level recorded
                                                                                     on few checking stations in the finishing sections was 410
                                                                                     to 480 lux. 6. Excessive lint seen on all electrical
                                                                                     installations.7. Review of Accident register revealed
                                                                                     instances of many workers being sent to Hospital for
                                                                                     falling unconscious.
H&S.18 Machinery Maintenance and Worker Training                 Noncompliance       1.Needle guards were missing from few sewing machines. Visual inspection                           Factories Act, 1934; Section 26
                                                                                     Few had been tampered rendering them ineffective. 2. Belt
                                                                                     guards were missing from most sewing machines 3. Pedal
                                                                                     Mats were missing from most sewing machines. Many
                                                                                     workers were noticed operating these machines bare feet.

H&S.20 Bodily Strain                                             Noncompliance       1 .Few workers with standing jobs were seen wearing high        Visual inspection
                                                                                     heeled footwear. 2. Workers were provided with hard
                                                                                     stools to sit on .

H&S.22 Sanitation in Factory Facilities                          Noncompliance       1. Water Seepage was noticed on the walls in the finishing Visual inspection                       Factories Act, 1934; Section 13
                                                                                     area in Sampling section located in building no. 3. 2.
                                                                                     Fabric was seen kept on the floor in the cutting section .3.
                                                                                     Fabric was seen kept on the floor in the cutting section.
                                                                                     4.Excessive amount of waste material comprising of cut
                                                                                     ends and cartons were seen piled up near building three.
                                                                                     5.Housekeeping standards were poor. All work areas were
                                                                                     littered with cut ends of fabric.

H&S.23 Toilets                                                   Noncompliance       Number of toilets for Males were inadequate.                    Visual inspection                  Factories Act, 1934; Section 21

H&S.25 Food Preparation                                          Noncompliance       Factory did not have a Canteen as required by Law.              Visual inspection                  West Pakistan Factories
                                                                                                                                                                                        Canteen Rules, 1959
                                                                                                                                                                                                                                   4
FLA Code/Benchmark                                                     Compliance Status   Describe noncompliance, risk of noncompliance or             List sources/documentation used     Cite and describe local and/or Describe notable features
                                                                                           uncorroborated evidence of noncompliance                     for reference and corroborating     country laws used for additional implemented by factory
                                                                                                                                                        evidence (e.g. worker interviews,   reference                        management or Company
                                                                                                                                                        factory walkthrough, records
                                                                                                                                                        review, etc.)
H&S.26 Drinking Water                                                  Noncompliance       Cool drinking water was not available as required by Law.    Visual inspection                   Factories Act, 1934; Section 20

Other                                                                  Noncompliance       1.Factory did not have Welfare and Safety officers as        Interview with Management           Factories Act, 1934; Section 24-
                                                                                           required by Law.2.. Review of record of grievances                                               A , Punjab Factories Rules,
                                                                                           received in the Suggestion / Grievance boxes for Aug 07                                          1978; Rule 38 and West
                                                                                           revealed that workers felt uncomfortable to use the PPE                                          Pakistan Industrial &
                                                                                           due to excessive heat on the production floors. Drinking                                         Commercial Employment
                                                                                           water points provided for ladies was also being used by                                          (Standing Order) Ordinance,
                                                                                           male workers.3.Particulars of Room ( Working space in                                            1968; Section 10-B
                                                                                           work areas ) - FORM I (Rule 38 ) was not being
                                                                                           maintained as required by Law 4.Factory did not have a
                                                                                           group insurance for Death , Partial , Full , Temporary and
                                                                                           Permanent disability and fortnight income benefit for
                                                                                           employees, as required by Law

7. Freedom of Association and Collective Bargaining

Employers will recognize and respect the right of employees to
freedom of association and collective bargaining.

FOA.5 Employer Interference/Constitution, Elections,                   Noncompliance        As per the Management the representatives in the Joint      Interview with Management
Administration, Activities and Programs                                                    Worker management committees had been nominated by
                                                                                           the Management. .

FOA.14 Severance Pay                                                   Noncompliance       Terminal dues were not being paid within the time            Review of records and interview     West Pakistan Industrial &
                                                                                           stipulated by the local law                                  with Management.                    Commercial Employment
                                                                                                                                                                                            (Standing Orders) Ordinance,
                                                                                                                                                                                            1969; Section 12

FOA.26 Grievance Procedure                                             Risk of             Workers interviewed were not aware of any worker      Interview with workers
                                                                       noncompliance       committees or Joint Worker – Management committees. 




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       Review of Time Records of Security Guards revealed that      Review of records                   Factories Act, 1934; Section 34
                                                                                           on few occasions they had worked for 16 to 24 hours per                                          & 47
                                                                                           day continuously



HOW.2 Rest Day                                                         Noncompliance       1.Review of documents collected from the Production floor Review of records and interview        Factories Act, 1934; Section 35
                                                                                           revealed that factory had been working on all weekly rest  with workers and Management           and 35 A.
                                                                                           days over the past 3 months. 2. Factory did not provide a
                                                                                           Compensatory off, for work done on rest days. 3. Instances
                                                                                           noticed where few workers had worked 12 to 13 days
                                                                                           continuously without a day of rest. 4. Most workers
                                                                                           interviewed stated that they do not get a weekly off




                                                                                                                                                                                                                                         5
FLA Code/Benchmark                                                    Compliance Status   Describe noncompliance, risk of noncompliance or          List sources/documentation used Cite and describe local and/or Describe notable features
                                                                                          uncorroborated evidence of noncompliance                  for reference and corroborating   country laws used for additional implemented by factory
                                                                                                                                                    evidence (e.g. worker interviews, reference                        management or Company
                                                                                                                                                    factory walkthrough, records
                                                                                                                                                    review, etc.)
HOW.6 Time Recording System                                           Noncompliance       1.Daily wage workers were issued a Temporary Entry Pass Review of records and interview
                                                                                          valid for 1 week. They were issued a time card for that   with Management.
                                                                                          week only. Incase they continued to work, fresh time card
                                                                                          and pass were issued with a different registration number
                                                                                          for another week. Hence, every week a fresh time card
                                                                                          and pass was issued.2.The auditors had access to the
                                                                                          main server after repeated requests. Review of options in
                                                                                          the software revealed a software menu link which said
                                                                                          “Reports – Actual OT”. When opened, this file had data
                                                                                          pertaining to actual hours of work. . On investigating
                                                                                          further, the Management stated that they officially
                                                                                          reflected only 2 hours of OT per day . This is to comply
                                                                                          with requirements of few brands that the factory produces
                                                                                          for. OT hours worked beyond 2 hours a day were
                                                                                          recorded separately and compensated through a voucher.
                                                                                          This practice was not disclosed during interview with the
                                                                                          Management.
HOW.8 Overtime/Reduced Mandated Overtime                              Noncompliance       Review of actual time records collected from the main     Review of records.                Factories Act, 1934; Section 34
                                                                                          server, revealed that Housekeeping workers & Security
                                                                                          Guards worked more than 60 hours a week. Few piece
                                                                                          rated workers had worked up to 148 hours of overtime in
                                                                                          July 07 and had worked up to 82.5 hours per week.

HOW.12 Extraordinary Business Circumstance/Overtime                   Noncompliance       Though workers signed on the consent form for working         Review of records
Explanation                                                                               overtime, hours of overtime work to be done were not
                                                                                          mentioned on these sheets
HOW.13 Public Holidays                                                Noncompliance       Factory had worked on a national holiday ( Aug 14, 07 –       Review of records and interview   Factories Act, 1934; Section 35-
                                                                                          Independence Day ).                                           with workers.                     A
HOW.18 Annual Leave/Wage Payments                                     Noncompliance       Yearly and half yearly returns for Holiday with pay was not   Review of records and interview   Punjab Factories Rules, 1978;
                                                                                          maintained as required by Law.                                with Management.                  Rule 135(1) & (2)

HOW.20 Sick Leave/Restrictions                                        Noncompliance        Factory provided sick Leave for 8 days instead of 16 days    Review of records and interview   Factories Act, 1934; Section 49-
                                                                                          a year as required by Law                                     with Management and workers.      H

Other                                                                 Noncompliance       1.Information on Actual shift timings of workers could not    Interview with Management &       Factories Act, 1934; Section 39
                                                                                          be produced till the end of the audit on day two. 2.Though    visual inspection.
                                                                                          the Management stated that few sections work on 3 shifts
                                                                                          i.e. from 6 am to 2pm, 2pm to 10 pm and from 10 pm to
                                                                                          6am, few workers were seen entering the factory at 3 pm.
                                                                                          The management later stated that the cutting section
                                                                                          worked on 3 shifts from 7 am to 3 pm, 3pm to 11pm and
                                                                                          from 11pm to 7 am.
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.




                                                                                                                                                                                                                                  6
FLA Code/Benchmark                                        Compliance Status   Describe noncompliance, risk of noncompliance or            List sources/documentation used     Cite and describe local and/or Describe notable features
                                                                              uncorroborated evidence of noncompliance                    for reference and corroborating     country laws used for additional implemented by factory
                                                                                                                                          evidence (e.g. worker interviews,   reference                        management or Company
                                                                                                                                          factory walkthrough, records
                                                                                                                                          review, etc.)
WBOT.2 Minimum Wage                                       Noncompliance       1.Calculation of wages for days worked did not comply       Review of records and interview     Pakistan Minimum Wages for
                                                                              with legal requirement. Factory calculated wages based on with Management.                      Unskilled Workers Act, 1969;
                                                                              number of days in the month instead of 26 as specified by                                       Section 3 Definition of Month,
                                                                              the local law. 2. Minimum Wages were not being paid as                                          Min. Wage Board Notification
                                                                              per skill levels, notified by the local minimum wage board.                                     dated 13-06-2007
                                                                              E.g. Few Packers were being designated as loaders and
                                                                              were being paid Rs 4600 ( unskilled wages ) instead of
                                                                              being paid Rs 4753 (Semi skilled ).Similarly the Quality
                                                                              checker was being paid Rs 4600 (Unskilled wage) instead
                                                                              Rs 5137.3. Review of wage records for stitchers (Piece
                                                                              rated) revealed that they were being paid an unskilled
                                                                              wage of Rs 4600 as total wage.

WBOT.4 Timely Payment of Wages                            Noncompliance       Night allowance being paid to night shift workers and        Review of records                  Payment of Wages Act, 1936;
                                                                              production incentives being paid to all workers did not                                         Section 5
                                                                              reflect on wage records. These were being paid through a
                                                                              separate pay sheet. There was no fixed date for payment
                                                                              of these incentives.

WBOT.5 Holidays, Leave, Legal Benefits and Bonuses        Noncompliance       1.Factory provided Sick Leave for 8 days instead of 16       Review of records                  Factories Act, 1934; Section 49-
                                                                              days as required by Law. 2. Daily wage workers (                                                H
                                                                              approximately 150 workers ) were being frequently rotated
                                                                              and their time cards and gate-pass were changed every
                                                                              week. This was being done with the intent of ensuring that
                                                                              mandatory benefits were not provided to these workers.

WBOT.8 Calculation Basis for Overtime Payments            Noncompliance       1.Calculation for Overtime compensation did not comply        Review of records and interview   Pakistan Minimum Wages for
                                                                              with legal requirements. Factory calculated OT                with Management                   Unskilled Workers Act, 1969;
                                                                              compensation by multiplying 80 % of gross salary by 12                                          Section 3
                                                                              months and then divided the result by 313 working days X
                                                                              8 hours X 2. By law, full gross salary should be divided by
                                                                              208 hours X 2 (i.e. at twice the ordinary rate of pay). Based
                                                                              on the calculation adopted by the factory the worker was
                                                                              being compensated at a lower rate than applicable. E.g. If
                                                                              a worker was earning Rs 4600, he was being paid
                                                                              overtime at the rate of Rs 35.27 per hour instead of Rs
                                                                              44.23. 2. Pay records for July 2007 of piece rated workers
                                                                              being shown on Salary basis revealed inaccurate
                                                                              calculation for OT compensation. This calculation was
                                                                              based on an unskilled wage and not on wage applicable
                                                                              as per skill category.
WBOT.12 Overtime Compensation for Piece Rates and Other   Noncompliance       1.Till June 07, wages for tailors were being paid on piece    Review of records                 Min. Wage Board Notification
Incentive Schemes                                                             rate basis. Effective July07, these workers were being paid                                     dated 13-06-2007
                                                                              on a monthly salary basis. As per the management, these
                                                                              workers were shown on a monthly salary though they
                                                                              continued to work on piece rate basis. Their OT
                                                                              compensation was being calculated based on a monthly
                                                                              salary.The difference between the earnings and actual
                                                                              piece rate earnings was paid as incentive. So far there was
                                                                              no appropriately defined basis for calculating the incentive
                                                                              being paid.This system was being introduced to comply
                                                                              with legal requirements for OT compensation. However,
                                                                              since actual work was based on a piece-rate system
                                                                              calculation of compensation for overtime was not legally
                                                                              compliant. 2. Pay records for July 2007 of piece rated
                                                                              workers being shown on Salary basis revealed inaccurate
                                                                              calculation for OT compensation. This calculation was
                                                                              based on an unskilled wage and not on wage applicable
                                                                              as per skill category



                                                                                                                                                                                                                           7
FLA Code/Benchmark                                         Compliance Status   Describe noncompliance, risk of noncompliance or           List sources/documentation used     Cite and describe local and/or Describe notable features
                                                                               uncorroborated evidence of noncompliance                   for reference and corroborating     country laws used for additional implemented by factory
                                                                                                                                          evidence (e.g. worker interviews,   reference                        management or Company
                                                                                                                                          factory walkthrough, records
                                                                                                                                          review, etc.)
WBOT.13 Deposit of Legally Mandated Deductions             Noncompliance       1. Legally mandated benefits of Employee Old Age Benefit Review of records and interview       Employee Old-Age Benefit Act,
                                                                               and Social Security were not being extended to Daily       with management.                    1976
                                                                               Wage Workers. The Factory was not contributing towards
                                                                               these benefits as required by Law. 2. Member application,
                                                                               declaration of share, nomination for minor / non minor for
                                                                               Provident benefits was not maintained in the facility.

WBOT.17 Accurate Calculation and Recording of Wage         Noncompliance       Till June 07 wages for tailors were being paid on piece rate Review of records and interview
Compensation                                                                   basis. Effective July 07, these workers were being paid on with Management.
                                                                               a monthly salary basis. As per the management, these
                                                                               workers were being shown on a monthly salary though
                                                                               they continue to work on piece rate basis. Their OT
                                                                               compensation was being calculated based on a monthly
                                                                               salary. The difference between the earnings and actual
                                                                               piece rate earnings was paid as incentive. However, there
                                                                               was no formula for calculating the incentive being paid.
                                                                               This system was being introduced to comply with legal
                                                                               requirements for OT compensation as stated by the
                                                                               management. However, this methodology does not meet
                                                                               legal standards for piece-rate earnings.

WBOT.18 Accurate Length of Service Calculation             Noncompliance       Daily wage workers were issued a Temporary Entry Pass        Review of records
                                                                               valid for 1 week. They were issued a time card for that
                                                                               week only. Incase they continued to work fresh time card
                                                                               and pass were issued with a different registration number
                                                                               for another week. Hence , every week a fresh time card
                                                                               and pass were issued. Hence actual length of service
                                                                               could not be verified.
WBOT.20 Payroll Record Maintenance/Worker Acknowledgement Noncompliance        Interviews with Daily wage loaders and loading supervisor    Review of records and interview
                                                                               revealed that the loading supervisor would collect the       with workers.
                                                                               wages of these loaders from the accounts department by
                                                                               signing on the Daily wages attendance / Payment sheet.
                                                                               He would then disburse the wages. These sheets did not
                                                                               reflect details of wages paid to individual loaders.
                                                                               However, workers had acknowledged receipt of wages.
                                                                               Amount received was not mentioned anywhere . Same
                                                                               system for daily wage workers was being followed for
                                                                               workers working in the Waste store, Inverter Section,
                                                                               General store, Fabric Store and Housekeeping workers.
                                                                               Many payment sheets had entries reflecting “Wages for
                                                                               double duty”. Management could not provide any
                                                                               explanation for this “Double Duty”.
WBOT.21 Record Maintenance                                 Noncompliance       1.Record of service was not maintained for employees as      Review of records                 Employment (Record of
                                                                               required by Law.2. Audit reports for Provident Fund                                            Service) Act, 1951,
                                                                               accounts for fiscal years 2005 – 06 and 2006-07 were not
                                                                               available. As per the Law, these should be maintained in
                                                                               the facility.3. Member application, declaration of share ,
                                                                               nomination for minor / non minor for Provident benefits
                                                                               were not maintained in the facility

WBOT.26 Pay Statement                                      Noncompliance       Daily wage workers did not receive a wage slip.              Interview with workers and        West Pakistan Minimum
                                                                                                                                            Management.                       Wages Rules, 1962; Section
                                                                                                                                                                              19(2)
Other                                                      Noncompliance        1 Factory was not registered with Government              Review of records and interview     Apprenticeship Ordinance,       1.Factory has a worker
                                                                               Apprenticeship Institute as required by Law. 2.Factory had with Management.                    1962,Punjab Fair Price Shop     incentive scheme
                                                                               not provided a fair price shops required by law. 3.Worker                                      (Factories) Ordinance, 1971     2.Factory provides pick
                                                                               Welfare fund had not been established as required by Law.                                      and Worker Welfare Fund         and drop facility for
                                                                                                                                                                              Ordinance, 1971                 female workers.
10. Miscellaneous
Subcontracting, homework and other issues not covered by
above benchmarks and code requirements.
                                                                                                                                                                                                                            8
FLA Code/Benchmark   Compliance Status   Describe noncompliance, risk of noncompliance or                  List sources/documentation used     Cite and describe local and/or Describe notable features
                                         uncorroborated evidence of noncompliance                          for reference and corroborating     country laws used for additional implemented by factory
                                                                                                           evidence (e.g. worker interviews,   reference                        management or Company
                                                                                                           factory walkthrough, records
                                                                                                           review, etc.)
Other                Noncompliance       1.Abstract of the Local Labour Law were not posted .2.            Visual inspection.                  Factories Act, 1934            1.Factory organizes inter
                                         Towards the end of day two of the audit a person was                                                                                 department Cricket
                                         seen walking into the factory with a polybag containing cut                                                                          Matches. 2.Factory
                                         pieces. He was carrying a material transfer document                                                                                 extends financial
                                         which stated that the pieces were being transferred from                                                                             assistance for natural
                                         unit - Cutting 3 . On further investigation , it was found that                                                                      calamities.
                                         cutting was being done in a building opposite the factory
                                         across the road. One of the auditors walked into the
                                         building with the worker and noticed cutting operations in
                                         progress and a store. Usage of this building was neither
                                         disclosed by the Management during the opening meeting
                                         nor during the audit procedure. Although this unit was not
                                         covered in the audit a brief walk through revealed
                                         numerous Health & Safety flaws.




                                                                                                                                                                                            9
FLA Audit Profile
Country                                                                    Pakistan
Name of Factory                                                            260257628F
Independent External Monitoring Organization                               T-Group Solutions Pvt. Ltd.
Date(s) in Facility                                                        August 28-29, 2007
FLA Affiliated Compan(ies)                                                 Nike, Inc. & Russell Corp.
Number of Workers                                                          3900
Product(s)                                                                 Knits - Tops and Bottoms
Production Processes                                                       Knitting - dyeing - cutting - printing - embroidery - sewing - finishing - packing

FLA Code/Benchmark                                                         Compliance Status                                                                                    Remediation                                                                                                                                                                                       Status
                                                                                                        Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                            Target            Factory Response          Company Follow-Up (March 12, 2008)                                Documentation   Completed, Pending,
                                                                                                        uncorroborated evidence of noncompliance               Internal Audit                                                                       Completion Date   (optional)                                                                                                  On-going
                                                                                                                                                               Findings
                                                                                                                                                               (optional)

GEN 2: Ensure that all Company factories as well as contractors and           Noncompliance             Most workers interviewed were not aware of the Code                     Code of Conduct posters are posted and provided in training         Done                                        3-12-08. COC posters are prominently posted and contents                          Completed
suppliers inform their employees about the workplace standards orally and                               Elements                                                                and worker's handbook. Induction training is mandatory for                                                      are incorporated in induction training and workers handbook.
through the posting of standards in a prominent place (in the local languages                                                                                                   each employee on the first day of employment. All contents of
spoken by employees and managers) and undertake other efforts to                                                                                                                handbook are read for illiterate workers.
educate employees about the standards on a regular basis.

GEN 3: Develop a secure communications channel, in a manner appropriate Noncompliance                   Nike contact details were not provided in the Code                      Contact details missed by Nike and ****Name of the Factory*** Done                                                                                                                                Completed
to the culture and situation, to enable Company employees and employees                                 posters seen in the work areas. Workers were not                        and both remediated for correction. Nike local contact
of contractors and suppliers to report to the Company on noncompliance                                  aware of any confidential non-compliance reporting                      numbers have been posted on all Code of Conduct posters in
with the workplace standards, with security that they shall not be punished or                          mechanism implemented by the P.C.                                       the factory.
prejudiced for doing so.


F.9 Employment Records                                                     Noncompliance                1.Employment documents were not maintained for                          1. To conduct payroll as per law. 2. Proper documentation.          11/1/2007         Due to high turnover.     3-12-08.                                                                          Completed
                                                                                                        Daily wage workers except for National identity Cards                                                                                                                                   1) Personnel files for daily workers are being maintained which
                                                                                                        2.Daily wage workers were issued a Temporary Entry                                                                                                                                      contain all the information relating to an individual's service
                                                                                                        Pass valid for 1 week. They were issued a time card                                                                                                                                     2) Factory has worked on development of a policy for
                                                                                                        for that week only. Incase they continue to work fresh                                                                                                                                  streamlining daily workers. Daily workers are only employed
                                                                                                        time cards and passes were issued with a different                                                                                                                                      for a period of 2-4 days for loading activities at the time of
                                                                                                        registration number for another week. Hence , every                                                                                                                                     shipments. Factory now has an active defined policy for
                                                                                                        week a fresh time card and pass were issued                                                                                                                                             management of these workers including their timekeeping,
                                                                                                                                                                                                                                                                                                wage payments, and social benefits provided. No issues noted
                                                                                                                                                                                                                                                                                                in records review from Jan 08 onwards.




F.13 Worker Ability to Terminate-Freedom of Movement                       Noncompliance                1.Factory does not have a policy for Termination. 2.                    1. Termination policy will be put into policy. 2. To be a part of   11/1/2007                                   3-12-08. Factory has developed a disciplinary and termination                     Completed
                                                                                                        Procedure for disciplinary action/ termination is not                   the termination policy.                                                                                         policy. The same has been communicated to workers by
                                                                                                        defined by the factory.                                                                                                                                                                 display on the factory notice board.


Other                                                                      Noncompliance                1.Discrepancies noticed in the total number of                          1. The factory uses 150 wage rate workers during high peak      11/1/2007             Factory uses daily wage   3-12-08. 1.) Detailed shift wise breakdown has been prepared                      Completed
                                                                                                        employees based on department wise breakdown and                        production                                                                            worker in excess of 150   with total number of workers working the factory.
                                                                                                        shift wise worker breakdown. As per department wise                     2. Proper documentation. Factory has reduced daily wage                                                         2.) Effective 11/1/07 all daily wage workers have been
                                                                                                        breakdown ,there were 3766 employees. As per shift                      workers. Complete tracking from HR department to their                                                          absorbed as permanent workers. If there is a need for
                                                                                                        breakdown , there were 3900 employees. As per                           payment record is computerized.                                                                                 temporary worker, proper documentation is made including
                                                                                                        section wise shift breakdown with timings, there were                   3. Postings adequately displayed in time office. Additional                                                     appointment contract, payment record, attendance and
                                                                                                        3750 employees.2.During the opening meeting, the                        postings placed in Production Halls. Local law requires posting                                                 payment slip.
                                                                                                        management mentioned that they hired daily wage                         at main entrance, thus posted in time office.
                                                                                                        workers and currently there were approximately 150
                                                                                                        such workers. However, at 11am the auditors went to
                                                                                                        the work areas and none of these workers were
                                                                                                        available . Review of the time cards punched revealed
                                                                                                        that few of these workers entered the factory between 6
                                                                                                        am and 8.30 am . There were few who worked on the
                                                                                                        night shifts also . It appeared that these workers were
                                                                                                        asked to leave the facility so that they would not be
                                                                                                        around during the audit. 3. Some postings were seen in
                                                                                                        the time office. Workers did not read these as they had
                                                                                                        been instructed to swipe their cards quickly, to avoid
                                                                                                        over-crowding, while entering and exiting the factory.


H&A.2 Discipline/Progressive Discipline                                    Noncompliance                1.Factory does not have a policy for Termination. 2.                    1. Termination policy will be put into policy. 2. To be a part of   11/1/2007                                   3-12-08. Factory has formulated and implemented a                                 Completed
                                                                                                        Procedure for disciplinary action/ termination is not                   the termination policy.                                                                                         termination policy.
                                                                                                        defined by the factory.

H&S.1 General Compliance Health and Safety                                 Noncompliance                1.Medical check up of all employees for detecting                       1. Factory has established in-house clinic for regular checkup      1/1/2008                                    3-12-08. 1.) It is now a regular practice and all the workers                     Completed
                                                                                                        contagious disease was not conducted in Jan and July                    of all employees. 2. Vaccination process to be conducted                                                        are being checked at newly established clinic. The whole lot of
                                                                                                        2007 as required by Law. 2. Vaccination for Small pox,                  upon consultation with pharmaceutical companies.                                                                works is expected to be checked once by the end and of
                                                                                                        Typhoid and Cholera, as required by Law was not done.                                                                                                                                   March 08 after which we will start checkups once gain and so
                                                                                                        The last vaccination done was in Feb 2004 for Hepatitis                                                                                                                                 on.
                                                                                                        (B).                                                                                                                                                                                    2.) Vaccination completed.
H&S.8 Permits and Certificates                                             Noncompliance                1. Lift inspection Certificate , Lift operator training                 1. Lift inspection certificate provided at closing meeting.         12/31/2007                                  3-12-08 1.) Lift certificate available and confirmed in closing                   Ongoing
                                                                                                        record, Lift maintenance record were not produced for                   2. Noted. Will be obtained.                                                                                     meeting.
                                                                                                        review in spite of repeated requests. 2. Building stability             3. Painting completed; records to be maintained.                                                                2.) Certificates available for both buildings.
                                                                                                        certificate was available only for new Building ( B2) .                 4. No government authority performs pressure plant                                                              3.) - 3-12-08 confirmed painting as required per law.
                                                                                                        This document was not available for other buildings.3.                  inspections. 5. Noted. Will be obtained.                                                                        4.) - 3-12-08. Will be checked with relevant authority. Boilers
                                                                                                        Lime wash and painting records not maintained as                                                                                                                                        have been annually inspected. As per auditors request, we
                                                                                                        required by Law. 4.Factory did not have a pressure                                                                                                                                      have checked with government, they do not do any inspection
                                                                                                        plant inspection certificate as required by Law. 5.Only                                                                                                                                 for Air Compressors.
                                                                                                        Chemical test report of Drinking water was available.                                                                                                                                   5.) - Biological test pending.
                                                                                                        Biological test report was not available as required by
                                                                                                        Law.




                                                                                                                                                                                                                                                                                                                                                                                      10
FLA Code/Benchmark                               Compliance Status                                                                           Remediation                                                                                                                                                                                 Status
                                                                     Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                           Target            Factory Response   Company Follow-Up (March 12, 2008)                                  Documentation   Completed, Pending,
                                                                     uncorroborated evidence of noncompliance               Internal Audit                                                                      Completion Date   (optional)                                                                                             On-going
                                                                                                                            Findings
                                                                                                                            (optional)

H&S.9 Evacuation Requirements and Procedure      Noncompliance       1. Fire Evacuation Logs did not provide details of                      1. Evacuation plan implemented with proper documentation.          12/31/2007                           3-12-08 1.) Will be done.                                                           Ongoing
                                                                     number of workers present during the evacuation.                        2. Factory will add additional emergency lighting.                                                      2.) Emergency light installed at all relevant points.
                                                                     There were no remarks on the responses from                             3. Routine re-marking will be executed.                                                                 3.) All access points are marked as per requirements. Excess
                                                                     emergency teams.2. Few exits had illuminated exit                       4 & 5. Removed immediately.                                                                             traffic does require frequent fresh markings.
                                                                     signage which may not be visible in thick smoke owing                   6. Removed tables. Will work on space restraint.                                                        4.) Removed immediately.
                                                                     to poor illumination. High beam emergency lights were                   7. Removed immediately.                                                                                 6.) Work has been stopped in that section as is requires major
                                                                     not installed above exits and on staircase landings. 3.                 8. All exits lead outside of building. All opening inwards from                                         construction changes for proper aisles.
                                                                     Aisle and Evacuation route markings were either                         inside building to be corrected.                                                                        7.) Removed immediately.
                                                                     missing or faded in most work areas. 4. Approach to                     9. Evacuation plans have now been posted.                                                               8.) Ensured that all exits leading to outside the building open
                                                                     2nd Exit from Finishing section in Sampling section                                                                                                                             outward. A few exits open inwards, which will be corrected.
                                                                     located in building no.3 was blocked with garments.                                                                                                                             Re-designed door openings.
                                                                     5.Most aisles in all work areas were either partially                                                                                                                           9.) Evacuation palns have been posted throughout the factory.
                                                                     blocked or completely blocked with garment bins,                                                                                                                                As discussed during closing meeting two missing plans have
                                                                     pedestal fans, tables or other work stations. 6.Side                                                                                                                            been replaced.
                                                                     aisles in the printing section were very narrow. There                                                                                                                          12.) Removed completely and noted for future compliance.
                                                                     was hardly any space between the tables and side
                                                                     walls. A person could not even walk freely on the                                                                                                                                                             14.) Thread cutting workers are
                                                                     aisle.7. Approach to Fire exit from Print Curing section                                                                                                                        sitting in the main production hall which has 2 proper exits.
                                                                     was blocked with Bed Press machine.8. Few Exit doors                                                                                                                            Poly bags obstructing the free movement have been removed.
                                                                     in the facility open inwards. 9 Evacuation plans were                                                                                                                           16.) This is no longer used as a fire exit because a new
                                                                     missing from most work areas.                                                                                                                                                   second exits has been created. Old sign of fire exit created
                                                                                                                                                                                                                                                     confusion, which has been removed. Exit permanently closed
                                                                                                                                                                                                                                                     as a new exit has been made.
                                                                                                                                                                                                                                                     20.) The ramp is for amterials exit/entry only. There are 3 other
                                                                                                                                                                                                                                                     exits (one with stairs and two with ramps) for worker
                                                                                                                                                                                                                                                     movement. The platform beyond the exit has a spread of 5
                                                                                                                                                                                                                                                     feet followed by stable slope, which makes it reasonably safe
                                                                                                                                                                                                                                                     to use as and when required.
                                                                                                                                                                                                                                                     21.) An overhead string with rings has been provided to hold
H&S.9 Evacuation Requirements and Procedure      Noncompliance       10.Most of the aisles in the cutting section were very                  10. Aisles will be modified.                                                                                                                                                                Ongoing
                                                                     narrow. 11. Auto spreader blocks aisles in the cutting                  11. Removal of old aisles marks.
                                                                     section. 12.Numerous instances noticed where access                     12. Removed immediately.
                                                                     to passages for workers were completely blocked with                    13. To make proper exit.
                                                                     garments, tables and bins. These workers were                           14. Removal of blocked aisles
                                                                     completely caged in their work stations. The auditor                    15. Thread cutting workers sit in main production hall. Poly
                                                                     was unable to reach these work stations located on                      bags obstructions are caused by movement prior to cutting.
                                                                     the sides of the floor. Approach to these work stations
                                                                     was blocked from both ends. 13. 2nd Exit from sample
                                                                     Section 1 was through a window opening into the
                                                                     cutting section. Wooden steps were provided on both
                                                                     sides of the window. However, when the auditor
                                                                     attempted to cross over, the steps on the cutting side
                                                                     gave away . The steps provided on both the sides were
                                                                     weak and unstable. 14. 2nd Exit from the Sampling
                                                                     section was blocked with tables and a cupboard on the
                                                                     Cutting Side. There was no way that anyone could use
                                                                     this Exit. 15. There was no 2nd exit from thread cutting
                                                                     area in the finishing section located on the 3rd floor.
                                                                     The passage was completely blocked with tables.


H&S.9 Evacuation Requirements and Procedure      Noncompliance       16. Air coolers were installed on the Fire Exit from                    16. Exit is no longer needed; as second exit was created.                                               3-12-08 overhead string with rings has been provided to hold                        Ongoing
                                                                     Sampling section in building no.3. 17 Workers were                      17. Removal of old aisles marks.                                                                        the pipe in while in use.
                                                                     seen standing on aisles and working in most of the                      18. Second exit as noted. Proper exit created.
                                                                     work areas. 18.Sample section I had only 1 exit.19.                     19. Noted. Exit is adequate for 5 workers.
                                                                     Area in front of Exits from room housing printing tables                20. This exit is only for exit/entry of materials.
                                                                     1 & 2 was very narrow. 20 There was a drop of                           21. Electrical safety policies will be reviewed and implemented.
                                                                     approximately 3 feet in the floor level of the area in front            22. Fire evacuation policy noted.
                                                                     of Exit from knitting section. No fencing or guard was                  23. Fire signage posted inside of lift along control panel.
                                                                     installed to prevent accidents during an emergency                      24. Factory will review policy and update.
                                                                     evacuation. Also no signage was posted near this area
                                                                     to warn workers of the drop in floor level. 21 Electric
                                                                     cable connecting heaters with the mains, in the printing
                                                                     section were loose, close to workers feet and crossing
                                                                     walk ways. 22. Due to constraint of space, factory
                                                                     conducted fire evacuation drills section wise, once
                                                                     every 3 months. The complete factory was evacuated
                                                                     once a year. 23. “Do not use lift incase of fire” signage
                                                                     was not posted near the lifts 24 2 to 3 workers seen
                                                                     working in the same work station .

H&S.9 Evacuation Requirements and Procedure      Noncompliance       25.Few work stations on the sewing floor were                           25. All work stations have been cleared for easy accessibility.                                                                                                                             Completed
                                                                     overcrowded with workers caged in with garments and                     Increased Committee meetings and regular follow-up by
                                                                     tables from all sides. They had no access to the                        members. Close monitoring by Nike representatives.
                                                                     passages. The auditors could not reach few of these
                                                                     work stations

H&S.10 Safety Equipment and First Aid Training   Noncompliance       1.Instructions for First Aid is not posted near the kits as             1. First aid instructions posted immediately. Confirmed 3-12-      Done                                 3-12-08 1.) Posted instructions near first aid boxes.                               Completed
                                                                     required by Law. 2. List of supplies in the First Aid kit               08.                                                                                                     2.) Maintaining as per law and Doctor's advice.
                                                                     do not meet legal requirements. 3. Approach to few fire                 2. First aid supplies to be updated. 3-12-08, being maintained                                          3.) ESH committee members have been asked to take care
                                                                     extinguishers were seen blocked with garments and                       per law and Doctor's advice.                                                                            of it and situation has improved a lot.
                                                                     fabric bundles.                                                         3. Blocked areas removed immediately.




                                                                                                                                                                                                                                                                                                                                             11
FLA Code/Benchmark                                                    Compliance Status                                                                           Remediation                                                                                                                                                                                       Status
                                                                                          Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                           Target            Factory Response           Company Follow-Up (March 12, 2008)                                Documentation   Completed, Pending,
                                                                                          uncorroborated evidence of noncompliance               Internal Audit                                                                      Completion Date   (optional)                                                                                                   On-going
                                                                                                                                                 Findings
                                                                                                                                                 (optional)

H&S.11 Personal Protective Equipment                                  Noncompliance       1. Excessive floating fiber noticed in the sewing floors.               1. Vacuum cleaners provided. Ventilation to be reviewed.           Done                                         3-12-08                                                                           Completed
                                                                                          Workers complained of lint on their hair and face which                 2. Refresher training for proper use of PPEs to be provided.                                                    1.) has been ensured that all workers wear masks. ESH
                                                                                          was aggravating the sinus and asthma allergy in many                    3. Tag guns will be properly marked.                                                                            committee members have also been assigned to take care of
                                                                                          instances.2. None of the operators were using the eye                   4. Finger guard will be provided.                                                                               it.
                                                                                          shields installed on over lock machines.3.Tag guns                      5. & 6. Provided appropriate PPEs in all departments and will                                                   3.) Individual tag guns have been provided to packing workers
                                                                                          were not marked. 4.Snap button machine did not have                     provide refresher training.                                                                                     which are properly marked. Any removed mark shall be
                                                                                          a finger guard. 5. Band knife operator uses mesh                        7. Operators provided with proper masks and trained for                                                         replaced.
                                                                                          gloves only on 1 hand. 6. Few workers in the dyeing                     protection. Refresher of training will be provided.                                                             6.) Factory has provided proper PPEs in all departments.
                                                                                          section were not using ear plugs, gloves and                                                                                                                                            Training has also been given to all the workers. Regular
                                                                                          appropriate shoes. 7. Over lock operators were not                                                                                                                                      refresher trainings on use of PPE are also given. Further
                                                                                          using respiratory masks. Excessive floating fiber were                                                                                                                                  refresher training is being imparted to eliminate such type of
                                                                                          seen in the area which was also noticed on workers’                                                                                                                                     rare occurrences.
                                                                                          hair.                                                                                                                                                                                   7.) Overlock operators are provided masks and are trained to
                                                                                                                                                                                                                                                                                  wear these masks for protection against fluff but in some
                                                                                                                                                                                                                                                                                  cases workers take the mask off to communicate with fellow
                                                                                                                                                                                                                                                                                  workers and then continue to keep them off. We are
                                                                                                                                                                                                                                                                                  encouraging and re-training the workers to wear masks.




H&S.13 Chemical Management and Training                               Noncompliance       1. Chemical storage area in the dyeing section was                      1. Chemical area was accessed only the appropriate                 Done              Chemical store is          3-12-08. 1.) Accessible to dyeing employees only. Authorized                      Completed
                                                                                          open and easily accessible to employees. 2.Containers                   employees. 2. Containers contained glue for the printing                             located between relative   entry display boards are placed.
                                                                                          with chemicals used for Printing were lying open near                   process. Workers trained for proper usage.                                           chemical sections.
                                                                                          the printing tables.

H&S.17 Ventilation/Electrical/Facility Installation and Maintenance   Noncompliance       1. Few open electric junction boxes noticed. 2.Few                      1. Noted. Action taken.                                            Done or 1/1/08                               3-12-08. 1. Boxes closed immediately. Supervisors of area                         Ongoing
                                                                                          Pedestal fans were connected to the mains without a                     2. Noted. Action taken.                                                                                         have been directed accordingly.
                                                                                          plug. 3.Temperatures recorded in the facility were                      3. Temperatures not consistent across factory floors or                                                         2. ESH committees have been asked to look at these issues
                                                                                          ranging from 95 to 110 degrees F. 4. Ventilation was                    throughout the year.                                                                                            and report to the management.
                                                                                          very poor in the work areas. 5.Lighting levels recorded                 4. Continuous improvement in ventilation system.                                                                3. This finding is not consistent across all factory floors,
                                                                                          was ranging between 52 lux to 230 lux on few sewing                     5. Alignment of light to be assigned.                                                                           throughout year. Factory has improved cooling system.
                                                                                          machines and 285 lux in the print curing section .                      6. Brushed fabric. Add vacuum process.                                                                          4. Modifications are being made to improve the efficiency of
                                                                                          Lighting Level recorded on few checking stations in the                 7. Total of 7 accidents in 2007; 0.035% total. Documentation                                                    the system. Additional air washers are being added to improve
                                                                                          finishing sections was 410 to 480 lux. 6. Excessive lint                will be implemented.                                                                                            the air circulation/cooling. The job as been awarded and the
                                                                                          seen on all electrical installations.7. Review of Accident                                                                                                                              vendor has promised to complete the job latest by 4/30/08.
                                                                                          register revealed instances of many workers being                                                                                                                                       5. The reading will be impaired on those few check points
                                                                                          sent to Hospital for falling unconscious.                                                                                                                                               since they were taken next to an inventory of black color
                                                                                                                                                                                                                                                                                  garments. Lighting levels are maintained at and above the
                                                                                                                                                                                                                                                                                  required levels consistently rechecked the lighting levels.
                                                                                                                                                                                                                                                                                  Some engineering modifications are being made to improve
                                                                                                                                                                                                                                                                                  light level where required which is expected to be completed
                                                                                                                                                                                                                                                                                  by 3/31/08.
                                                                                                                                                                                                                                                                                  6. Injury/illness will be tracked and analyzed.

H&S.18 Machinery Maintenance and Worker Training                      Noncompliance       1.Needle guards were missing from few sewing                            1. Noted. To be immediately corrected.                             Done                                         3-12-08 1.) - Needle guards and eye guards have been                              Completed
                                                                                          machines. Few had been tampered rendering them                          2. Attending to the few missing belt guards.                                                                    replaced.
                                                                                          ineffective. 2. Belt guards were missing from most                      3. Noted. Pedal mats to be added.                                                                               2.) they are present on most machines. We are immediately
                                                                                          sewing machines 3. Pedal Mats were missing from                                                                                                                                         attending to the few missing ones. Belt guards, pulley guards
                                                                                          most sewing machines. Many workers were noticed                                                                                                                                         have been replaced.
                                                                                          operating these machines bare feet.                                                                                                                                                     3.) Pedal mats are being replaced. Workers have been
                                                                                                                                                                                                                                                                                  instructed to ensure not to operate machines bare foot.




H&S.20 Bodily Strain                                                  Noncompliance       1 .Few workers with standing jobs were seen wearing                     1. Awareness/training will be implemented for proper footwear. 1/1/2008                                         3-12-08 - 1.) Awareness training has been given to lady                           Ongoing
                                                                                          high heeled footwear. 2. Workers were provided with                     2. Noted. Will review.                                                                                          workers housed to wear high heels. Moreover ESH
                                                                                          hard stools to sit on .                                                                                                                                                                 committee members have also been instructed to take care of
                                                                                                                                                                                                                                                                                  it in their respective departments.
                                                                                                                                                                                                                                                                                  2.) Factory working on same.
H&S.22 Sanitation in Factory Facilities                               Noncompliance       1. Water Seepage was noticed on the walls in the                        1. Noted. Will repaint.                                                              Heavy rains due to         3-12-08. 3.) Only work in process packed fabric is kept in                        Ongoing
                                                                                          finishing area in Sampling section located in building no.              2. Only work that is in process is placed on floor. Noted.                           monsoon season.            cutting area. It is only taken out of the polybag just before
                                                                                          3. 2. Fabric was seen kept on the floor in the cutting                  3. Repeat from #2.                                                                                              spreading on the table. 4.) Waste material is removed at the
                                                                                          section .3. Fabric was seen kept on the floor in the                    4. Waste material is discarded at the end of each shift.                                                        end of every shift.
                                                                                          cutting section.                                                        Confirmed 3-12-08.                                                                                              5.) Noted and will work for immediate improvement.
                                                                                          4.Excessive amount of waste material comprising of cut                  5. Noted and immediate improvement made. 3-12-08.
                                                                                          ends and cartons were seen piled up near building
                                                                                          three. 5.Housekeeping standards were poor. All work
                                                                                          areas were littered with cut ends of fabric.
H&S.23 Toilets                                                        Noncompliance       Number of toilets for males were inadequate.                            Noted. Plan in place to upgrade after recent worker increase.      Done                                                                                                                           Completed

H&S.25 Food Preparation                                               Noncompliance       Factory did not have a Canteen as required by Law.                      Currently the factory has a space restraint. Public canteens are                                                3-12-08. Factory would want to do it properly, but currently we                   Ongoing
                                                                                                                                                                  available to workers during break time within 59 meters                                                         cannot due to space constraints. However public canteens are
                                                                                                                                                                  outside of factory.                                                                                             available at less than 100 meters from the factory and workers
                                                                                                                                                                                                                                                                                  are freely allowed to go outside during break.




H&S.26 Drinking Water                                                 Noncompliance       Cool drinking water was not available as required by                    Water system is to be upgraded by central chiller, which is now Done                                            3-12-08. Drinking water stations have been provided outside                       Completed
                                                                                          Law.                                                                    functional.                                                                                                     the production floor.




                                                                                                                                                                                                                                                                                                                                                                        12
FLA Code/Benchmark                                                     Compliance Status                                                                               Remediation                                                                                                                                                                               Status
                                                                                               Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                         Target            Factory Response   Company Follow-Up (March 12, 2008)                                  Documentation   Completed, Pending,
                                                                                               uncorroborated evidence of noncompliance               Internal Audit                                                                    Completion Date   (optional)                                                                                             On-going
                                                                                                                                                      Findings
                                                                                                                                                      (optional)

Other                                                                  Noncompliance           1.Factory did not have Welfare and Safety officers as                   1. As per law, welfare officer is assigned.                    Done                                   3-12-08.                                                                            Ongoing
                                                                                               required by Law.2.. Review of record of grievances                      2. Record or grievances posted and provided. Workers have                                             2.) All grievances received are reviewed and recorded.
                                                                                               received in the Suggestion / Grievance boxes for Aug                    been re-trained to wear PPE during required work only.                                                Remedial action taken and posted on the notice boards in
                                                                                               07 revealed that workers felt uncomfortable to use the                  Workers in dying section required to wear PPE only at the time                                        production halls for workers awareness. However
                                                                                               PPE due to excessive heat on the production floors.                     of loading/unloading of the lot and dosing of chemicals.                                              management advices to provide more regular impact training
                                                                                               Drinking water points provided for ladies was also being                3. Noted and will implement by training and observation.                                              to build awareness among workers on grievance channels
                                                                                               used by male workers.3.Particulars of Room ( Working                    4. As per provisions as such liability the amount paid by the                                         available and its functioning.
                                                                                               space in work areas ) - FORM I (Rule 38 ) was not                       company.                                                                                              3.) Will be done.
                                                                                               being maintained as required by Law 4.Factory did not                                                                                                                         4.) As per provisions in Section 10-B (2) and (4) in case of any
                                                                                               have a group insurance for Death , Partial , Full ,                                                                                                                           such liability the amount is paid by the company. This is being
                                                                                               Temporary and Permanent disability and fortnight                                                                                                                              strictly adhered to by the factory. According to the law, factory
                                                                                               income benefit for employees, as required by Law                                                                                                                              either has to have Group Insurance or pay the equivalent
                                                                                                                                                                                                                                                                             amount as compensation covered by Group Insurance.
                                                                                                                                                                                                                                                                             Factory is following the law and has the examples when in past
                                                                                                                                                                                                                                                                             it has paid such compensations.




FOA.5 Employer Interference/Constitution, Elections, Administration,   Noncompliance            As per the Management the representatives in the                       List of the members have been posted along with                    Done                               3-12-08. Factory will look into the same and follow the process                     Ongoing
Activities and Programs                                                                        Joint Worker management committees had been                             photographs. No conclusive response at this point in time. It is                                      in next round of selection of committee members.
                                                                                               nominated by the Management. .                                          unprecedented requirement in Pakistan Government and there
                                                                                                                                                                       is no instance of such or similar practice in the industry.
                                                                                                                                                                       Nonetheless, since this is a compliance and labor laws
                                                                                                                                                                       requirement the factory is deliberating with consultants for long-
                                                                                                                                                                       term sustainable solution.
FOA.14 Severance Pay                                                   Noncompliance           Terminal dues were not being paid within the time                       Final dues to be paid to each and every employee after             Done                               3-12-08. Final dues are paid to each and every employee after                       Ongoing
                                                                                               stipulated by the local law                                             clearance to individual's service.                                                                    their clearance from all the departments. This at times takes
                                                                                                                                                                                                                                                                             more time than stipulated. Factory to work on system to
                                                                                                                                                                                                                                                                             ensure that all full and final settlements are cleared in
                                                                                                                                                                                                                                                                             stipulated time.
FOA.26 Grievance Procedure                                             Risk of noncompliance   Workers interviewed were not aware of any worker                        List of the members have been posted along with                  Done                                 3-12-08. Factory to work on strengthening their training and                        Ongoing
                                                                                               committees or Joint Worker – Management                                 photographs. Half of the committee is comprised of factory                                            education programs. Factory working on developing an HR
                                                                                               committees.                                                             workers. Committee meetings at least monthly. Grievances                                              team that can manage the training more effectively.
                                                                                                                                                                       and remediation are discussed and action agreed.
                                                                                                                                                                       Proceedings posted for workers information.

HOW.1 General Compliance Hours of Work                                 Noncompliance           Review of Time Records of Security Guards revealed                      There are 0 cases of any worker warning in excess of 16 hours 1/1/2008                                3-12-08. No excessive OT noted for any security guard from                          Completed
                                                                                               that on few occasions they had worked for 16 to 24                      and for isolated cases for some working up to 16 hours in 2                                           1/08.
                                                                                               hours per day continuously                                              shifts. Such instances only occur in departments that are
                                                                                                                                                                       running 24 hours in three shifts and are caused when the next
                                                                                                                                                                       shift workers/guards do not show up for duty. Working to
                                                                                                                                                                       control such happenings.

HOW.2 Rest Day                                                         Noncompliance           1.Review of documents collected from the Production                     1. Factory continues to progressively reduce OT and from Feb 3/1/2008                                 3-12-08. 1.) Factory has been working progressively reducing                        Ongoing
                                                                                               floor revealed that factory had been working on all                     2008 all excessive OT has been controlled.                                                            OT and from Feb 08 all excessive OT has been controlled at
                                                                                               weekly rest days over the past 3 months. 2. Factory did                 2. Factory is providing 7th day of rest for all workers.                                              the factory.
                                                                                               not provide a Compensatory off, for work done on rest                   Exceptions noted. Factory is continuing to remediate with an                                          2, 3 & 4.) Factory has been able to control working on weekly
                                                                                               days. 3. Instances noticed where few workers had                        effective reliever system. (3/12/08)                                                                  offs and now all workers are getting one day off in 7.
                                                                                               worked 12 to 13 days continuously without a day of                      3. Piece rate has been converted to permanent. Implementing                                           Exceptions noted where some workers are still working for
                                                                                               rest. 4. Most workers interviewed stated that they do                   system to eliminate isolated cases.                                                                   weekly offs and no compensatory offs provided. Factory still
                                                                                               not get a weekly off                                                    4. Same as above.                                                                                     working on continued remediation.




HOW.6 Time Recording System                                            Noncompliance           1.Daily wage workers were issued a Temporary Entry                      1. Practice due to extraordinary work conditions. Proper         Done                                 3-12-08. 2.) Factory has maintained separate sheets for                             Completed
                                                                                               Pass valid for 1 week. They were issued a time card for                 documentation will be maintained. 2. The OT documentation                                             workers to have better understanding of OT hours and
                                                                                               that week only. Incase they continued to work, fresh                    will be corrected for October salary. Reduction in the number                                         payment. However as advised the practice has been
                                                                                               time card and pass were issued with a different                         of such workers has been able to reestablish a system of                                              discontinued and from 10/07 all payment made in full on wage
                                                                                               registration number for another week. Hence, every                      proper documentation of daily wage workers. Bar coded gate                                            slip.
                                                                                               week a fresh time card and pass was issued.2.The                        passes are made and job contract is signed of each worker.
                                                                                               auditors had access to the main server after repeated                   Attendance is recorded through bar code scanning and the
                                                                                               requests. Review of options in the software revealed a                  payment is calculated on basis of this attendance and wage
                                                                                               software menu link which said “Reports – Actual OT”.                    slip issued.
                                                                                               When opened, this file had data pertaining to actual
                                                                                               hours of work. . On investigating further, the
                                                                                               Management stated that they officially reflected only 2
                                                                                               hours of OT per day . This is to comply with
                                                                                               requirements of few brands that the factory produces
                                                                                               for. OT hours worked beyond 2 hours a day were
                                                                                               recorded separately and compensated through a
                                                                                               voucher. This practice was not disclosed during
                                                                                               interview with the Management.
HOW.8 Overtime/Reduced Mandated Overtime                               Noncompliance           Review of actual time records collected from the main                   Factory will properly monitor all OT for all shifts and will  Done                                    3-12-08. OT for rest while piece rated workers have been                            Completed
                                                                                               server, revealed that Housekeeping workers & Security                   continue to work to improve processes as per the legal limit.                                         controlled and excessive OT has progressively reduced from
                                                                                               Guards worked more than 60 hours a week. Few piece                      Reduction in the number of such workers has been able to                                              Nov 07 onwards. Nil excessive OT recorded for month of Feb
                                                                                               rated workers had worked up to 148 hours of overtime                    reestablish a system of proper documentation of daily wage                                            08. OT for security and housekeeping also controlled and no
                                                                                               in July 07 and had worked up to 82.5 hours per week.                    workers. Bar coded gate passes are made and job contract is                                           excessive OT noted since Jan 08.
                                                                                                                                                                       signed of each worker. Attendance is recorded through bar
                                                                                                                                                                       code scanning and the payment is calculated on basis of this
                                                                                                                                                                       attendance and wage slip issued.

HOW.12 Extraordinary Business Circumstance/Overtime Explanation        Noncompliance           Though workers signed on the consent form for working                   Noted. Will add hours.                                           12/1/2007                            3-12-08. From Feb 08 factory has added a column for                                 Completed
                                                                                               overtime, hours of overtime work to be done were not                                                                                                                          estimated OT hours in the OT consent form. Workers are now
                                                                                               mentioned on these sheets                                                                                                                                                     informed of the OT hours they are expected to work at the
                                                                                                                                                                                                                                                                             time of signing the consent form.

HOW.13 Public Holidays                                                 Noncompliance           Factory had worked on a national holiday ( Aug 14, 07                   In extraordinary workloads and to meet deadlines the factory     12/31/2007                           3-12-08. In order to meet deadlines factory was operational on                      Ongoing
                                                                                               – Independence Day ).                                                   was operational on said holiday. Factory will improve to work                                         Aug 14. All workers were paid OT and compensatory leave as
                                                                                                                                                                       zero scheduled Sundays.                                                                               per law. Factory assured that going future all voluntary
                                                                                                                                                                                                                                                                             consents will be maintained.
HOW.18 Annual Leave/Wage Payments                                      Noncompliance           Yearly and half yearly returns for Holiday with pay was                 Noted with corrective action.                                    1/1/2008                             3-12-08. As per factory the same is maintained on computer                          Completed
                                                                                               not maintained as required by Law.                                                                                                                                            systems in same format as required by law.




                                                                                                                                                                                                                                                                                                                                                                     13
FLA Code/Benchmark                                                  Compliance Status                                                                           Remediation                                                                                                                                                                                          Status
                                                                                        Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                             Target            Factory Response            Company Follow-Up (March 12, 2008)                                Documentation   Completed, Pending,
                                                                                        uncorroborated evidence of noncompliance               Internal Audit                                                                        Completion Date   (optional)                                                                                                    On-going
                                                                                                                                               Findings
                                                                                                                                               (optional)

HOW.20 Sick Leave/Restrictions                                      Noncompliance       Factory provided sick Leave for 8 days instead of 16                    Implement the revisions required by local law.                       Done                                                                                                                            Completed
                                                                                        days a year as required by Law


Other                                                               Noncompliance       1.Information on Actual shift timings of workers could                  1. All shift schedules were provided at opening meeting with         Done              Shifts vary to control      3-12-08 Department wise shifts list has been prepared and                         Ongoing
                                                                                        not be produced till the end of the audit on day two.                   the exception of one, which was later provided. 2. In order to                         traffic at factory gates.   factory is working on consolidating some shifts. As it is a
                                                                                        2.Though the Management stated that few sections                        control traffic at entry gates, schedules were staggered.                                                          vertical unit working on continuous production model with
                                                                                        work on 3 shifts i.e. from 6 am to 2pm, 2pm to 10 pm                    Provided display of shift schedule for all the departments.                                                        different processes like spinning, knitting, dyeing and
                                                                                        and from 10 pm to 6am, few workers were seen                                                                                                                                               garmenting, factory has to maintain different shifts.
                                                                                        entering the factory at 3 pm. The management later                                                                                                                                         Management has been suggested to try to consolidate shifts if
                                                                                        stated that the cutting section worked on 3 shifts from 7                                                                                                                                  same is possible
                                                                                        am to 3 pm, 3pm to 11pm and from 11pm to 7 am.

WBOT.2 Minimum Wage                                                 Noncompliance       1.Calculation of wages for days worked did not comply                   1. Wages to be paid as per law with the 26-day payroll         Done                                                3-12-08. #1-OT rate calculation corrected to comply with local                    Completed
                                                                                        with legal requirement. Factory calculated wages based                  formula, this wage calculation has been applied with effect on                                                     law requirements. From 11/07 wages onwards factory
                                                                                        on number of days in the month instead of 26 as                         October 2007 onwards. Minimum wage for skilled workers                                                             calculates OT rate on 26 days instead of number of days.
                                                                                        specified by the local law. 2. Minimum Wages were not                   was announced on August 30, 2007. 2. Revise minimum wage                                                           Government notification was announced on 8/30/07, which has
                                                                                        being paid as per skill levels, notified by the local                   to reflect skill levels and to be implemented. 3. Revised                                                          been implemented in 09/07. Arrears were also paid
                                                                                        minimum wage board. E.g. Few Packers were being                         minimum wage to reflect skill levels and to be implemented.                                                        accordingly.
                                                                                        designated as loaders and were being paid Rs 4600 (
                                                                                        unskilled wages ) instead of being paid Rs 4753 (Semi
                                                                                        skilled ).Similarly the Quality checker was being paid Rs
                                                                                        4600 (Unskilled wage) instead Rs 5137.3. Review of
                                                                                        wage records for stitchers (Piece rated) revealed that
                                                                                        they were being paid an unskilled wage of Rs 4600 as
                                                                                        total wage.

WBOT.4 Timely Payment of Wages                                      Noncompliance       Night allowance being paid to night shift workers and                   Night allowance is paid along with salary as production              Done                                          3-12-08. Night allowance was only paid as an incentive for                        Completed
                                                                                        production incentives being paid to all workers did not                 incentive. Will implement single sheet documentation.                                                              workers working in non-rotational night shift. It was paid on
                                                                                        reflect on wage records. These were being paid through                                                                                                                                     separate sheet for workers to understand this incentive easily.
                                                                                        a separate pay sheet. There was no fixed date for                                                                                                                                          From November salary onwards all incentives paid on single
                                                                                        payment of these incentives.                                                                                                                                                               wage slip along with regular wages.




WBOT.5 Holidays, Leave, Legal Benefits and Bonuses                  Noncompliance       1.Factory provided Sick Leave for 8 days instead of 16                  1. Sick leaves will be implemented as per the local law. 2. Due Done                                               3-12-08. 1.) From Nov 07 onwards 16 days sick leave with half                     Completed
                                                                                        days as required by Law. 2. Daily wage workers (                        to high turnover for daily wage workers. Contributions will be                                                     pay is being provided.
                                                                                        approximately 150 workers ) were being frequently                       applied as per law. Wages to be paid as per law with the 26-
                                                                                        rotated and their time cards and gate-pass were                         day payroll formula, this wage calculation has been applied
                                                                                        changed every week. This was being done with the                        with effect from October 2007 onwards. Minimum wage for
                                                                                        intent of ensuring that mandatory benefits were not                     skilled workers was announced on August 30, 2007.
                                                                                        provided to these workers.
WBOT.8 Calculation Basis for Overtime Payments                      Noncompliance       1.Calculation for Overtime compensation did not                         1. Formula has been reviewed by governmental agency.                 Done                                          3-12-08. OT payments have been corrected to comply with                           completed
                                                                                        comply with legal requirements. Factory calculated OT                   Follow-up forthcoming.                                                                                             local law requirements. Per hour OT rate now calculated by
                                                                                        compensation by multiplying 80 % of gross salary by 12                  2. Implementation as per local law.                                                                                dividing gross wages 208 and then multiplied by premium rate
                                                                                        months and then divided the result by 313 working days                                                                                                                                     i.e. 2 times.
                                                                                        X 8 hours X 2. By law, full gross salary should be
                                                                                        divided by 208 hours X 2 (i.e. at twice the ordinary rate
                                                                                        of pay). Based on the calculation adopted by the factory
                                                                                        the worker was being compensated at a lower rate than
                                                                                        applicable. E.g. If a worker was earning Rs 4600, he
                                                                                        was being paid overtime at the rate of Rs 35.27 per
                                                                                        hour instead of Rs 44.23. 2. Pay records for July 2007
                                                                                        of piece rated workers being shown on Salary basis
                                                                                        revealed inaccurate calculation for OT compensation.
                                                                                        This calculation was based on an unskilled wage and
                                                                                        not on wage applicable as per skill category.


WBOT.12 Overtime Compensation for Piece Rates and Other Incentive   Noncompliance       1.Till June 07, wages for tailors were being paid on                    This calculation is being further reviewed. It is to reaffirm that   Ongoing                                       3-12-08. The factory is not in noncompliance with any law as                      Completed
Schemes                                                                                 piece rate basis. Effective July07, these workers were                  these workers are now employed without exception. Incentive                                                        they are paying both minimum wages as well as OT wages in
                                                                                        being paid on a monthly salary basis. As per the                        calculation is based on production.                                                                                accordance with law. As advised by auditors they are looking
                                                                                        management, these workers were shown on a monthly                                                                                                                                          at streamlining the incentive program. Factory is working with
                                                                                        salary though they continued to work on piece rate                                                                                                                                         an external consultant to develop more effective incentive
                                                                                        basis. Their OT compensation was being calculated                                                                                                                                          based payment systems based on to worker efficiencies and
                                                                                        based on a monthly salary.The difference between the                                                                                                                                       improved production planning to elevate productivity and also
                                                                                        earnings and actual piece rate earnings was paid as                                                                                                                                        help workers increase their earned wages.
                                                                                        incentive. So far there was no appropriately defined                                                                                                                                       #2-Notification of min. wage for different skill levels was
                                                                                        basis for calculating the incentive being paid.This                                                                                                                                        announced on August 30, 07. Factory adjusted its wages with
                                                                                        system was being introduced to comply with legal                                                                                                                                           Oct 07 salary accordingly and paid arrears for all adjusted
                                                                                        requirements for OT compensation. However, since                                                                                                                                           salaries.
                                                                                        actual work was based on a piece-rate system
                                                                                        calculation of compensation for overtime was not legally
                                                                                        compliant. 2. Pay records for July 2007 of piece rated
                                                                                        workers being shown on Salary basis revealed
                                                                                        inaccurate calculation for OT compensation. This
                                                                                        calculation was based on an unskilled wage and not on
                                                                                        wage applicable as per skill category


WBOT.13 Deposit of Legally Mandated Deductions                      Noncompliance       1. Legally mandated benefits of Employee Old Age                        1. Will follow law and implement immediately.                        Done                                          3-12-08. 1.) -Factory is now contributing towards legally                         Completed
                                                                                        Benefit and Social Security were not being extended to                  2. According to law there is no concept of nomination; rather                                                      mandated benefits for daily wage workers also from
                                                                                        Daily Wage Workers. The Factory was not contributing                    inheritance. Factory feels it is being implemented.                                                                December 07 onwards.
                                                                                        towards these benefits as required by Law. 2. Member
                                                                                        application, declaration of share, nomination for minor /
                                                                                        non minor for Provident benefits was not maintained in
                                                                                        the facility.




                                                                                                                                                                                                                                                                                                                                                                         14
FLA Code/Benchmark                                                Compliance Status                                                                           Remediation                                                                                                                                                                              Status
                                                                                      Description of noncompliance, risk of noncompliance or Company          Company Remediation Plan                                         Target            Factory Response   Company Follow-Up (March 12, 2008)                                 Documentation   Completed, Pending,
                                                                                      uncorroborated evidence of noncompliance               Internal Audit                                                                    Completion Date   (optional)                                                                                            On-going
                                                                                                                                             Findings
                                                                                                                                             (optional)

WBOT.17 Accurate Calculation and Recording of Wage Compensation   Noncompliance       Till June 07 wages for tailors were being paid on piece                 Calculations will be maintained accurately with documentation.   Ongoing                                                                                                                 Ongoing
                                                                                      rate basis. Effective July 07, these workers were being
                                                                                      paid on a monthly salary basis. As per the
                                                                                      management, these workers were being shown on a
                                                                                      monthly salary though they continue to work on piece
                                                                                      rate basis. Their OT compensation was being
                                                                                      calculated based on a monthly salary. The difference
                                                                                      between the earnings and actual piece rate earnings
                                                                                      was paid as incentive. However, there was no formula
                                                                                      for calculating the incentive being paid. This system was
                                                                                      being introduced to comply with legal requirements for
                                                                                      OT compensation as stated by the management.
                                                                                      However, this methodology does not meet legal
                                                                                      standards for piece-rate earnings.

WBOT.18 Accurate Length of Service Calculation                    Noncompliance       Daily wage workers were issued a Temporary Entry                        Practice occurred during high work load. Immediate action.       Done.                                3-12-08. Factory is ensuring that every worker is issued a                         Completed
                                                                                      Pass valid for 1 week. They were issued a time card                                                                                                                           punch card the day he joins the factory, accurate time keeping
                                                                                      for that week only. Incase they continued to work fresh                                                                                                                       is recorded from first day itself.
                                                                                      time card and pass were issued with a different
                                                                                      registration number for another week. Hence , every
                                                                                      week a fresh time card and pass were issued. Hence
                                                                                      actual length of service could not be verified.

WBOT.20 Payroll Record Maintenance/Worker Acknowledgement         Noncompliance       Interviews with Daily wage loaders and loading                          When the worker has worked for more than one department          Done.                                3-12-08. Factory has worked on development of a policy for                         Completed
                                                                                      supervisor revealed that the loading supervisor would                   he is considered "double duty". Practice to be removed.                                               streamlining daily workers. Daily workers are only employed
                                                                                      collect the wages of these loaders from the accounts                                                                                                                          for a period of 2-4 days for loading activities at the time of
                                                                                      department by signing on the Daily wages attendance /                                                                                                                         shipments. Factory now has an active defined policy for
                                                                                      Payment sheet. He would then disburse the wages.                                                                                                                              management of these workers including their timekeeping,
                                                                                      These sheets did not reflect details of wages paid to                                                                                                                         wage payments, and social benefits provided. No issues noted
                                                                                      individual loaders. However, workers had                                                                                                                                      in records review from Jan 08 onwards.
                                                                                      acknowledged receipt of wages. Amount received was
                                                                                      not mentioned anywhere . Same system for daily wage
                                                                                      workers was being followed for workers working in the
                                                                                      Waste store, Inverter Section, General store, Fabric
                                                                                      Store and Housekeeping workers. Many payment
                                                                                      sheets had entries reflecting “Wages for double duty”.
                                                                                      Management could not provide any explanation for this
                                                                                      “Double Duty”.

WBOT.21 Record Maintenance                                        Noncompliance       1.Record of service was not maintained for employees                    1. Personnel files are maintained that contain all information   Ongoing                              3-12-08. 1.)Personnel files are being maintained which contain                     Ongoing
                                                                                      as required by Law.2. Audit reports for Provident Fund                  regarding service.                                                                                    all the information relating to an individual's service.
                                                                                      accounts for fiscal years 2005 – 06 and 2006-07 were                    2. Audit in process.                                                                                  2.) The audit reports have been received and are available for
                                                                                      not available. As per the Law, these should be                          3. No concept of nomination; inheritance is being followed.                                           verification.
                                                                                      maintained in the facility.3. Member application,                                                                                                                             3.) Factory yet to work on the remediation of same.
                                                                                      declaration of share , nomination for minor / non minor
                                                                                      for Provident benefits were not maintained in the facility


WBOT.26 Pay Statement                                             Noncompliance       Daily wage workers did not receive a wage slip.                         Noted for immediate correction.                                  Done                                 3-12-08. All workers including daily wage workers are now                          Ongoing
                                                                                                                                                                                                                                                                    provided with wage slips, though the format is not very user
                                                                                                                                                                                                                                                                    friendly and management has been advised to revise the
                                                                                                                                                                                                                                                                    format to make it easier for the worker to understand.




Other                                                             Noncompliance        1 Factory was not registered with Government                           1. Will verify with local authority.                             12/31/2007                           3-12-08.                                                                           Ongoing
                                                                                      Apprenticeship Institute as required by Law. 2.Factory                  2. Space Restraint.                                                                                   1..) Factory has checked the same with authorities and has
                                                                                      had not provided a fair price shops required by law.                    3. Fund established by Government of Pakistan. Exempt for                                             been informed that if a factory runs any program under the
                                                                                      3.Worker Welfare fund had not been established as                       2006, first contribution will be make for 2007                                                        apprenticeship Act, that program should be registered not the
                                                                                      required by Law.                                                                                                                                                              factory.
                                                                                                                                                                                                                                                                    2.) Due to space constraint factory has not been able to meet
                                                                                                                                                                                                                                                                    the requirement. Also noted that the government run
                                                                                                                                                                                                                                                                    subsidized utility store is located within 1 kilometer radius of
                                                                                                                                                                                                                                                                    the factory.
                                                                                                                                                                                                                                                                    3.) By law, this fund is established by Government of Pakistan.
                                                                                                                                                                                                                                                                    Factory was exempted from contribution till June 30, 2006.
                                                                                                                                                                                                                                                                    Subsequently paid up to June 2007. Balance till date yet to be
                                                                                                                                                                                                                                                                    paid.




Other                                                             Noncompliance       1.Abstract of the Local Labour Law were not posted                      1. Posted in time office and Garment and Fabric Divisions. 2.    Done                                 3-12-08. Abstract of local labor laws have been posted at                          Completed
                                                                                      .2. Towards the end of day two of the audit a person                    All premises were made available to Russell Pakistan office                                           visible height throughout the different department in the
                                                                                      was seen walking into the factory with a polybag                        personnel. Personally viewed and the yarn store & they made                                           factory.
                                                                                      containing cut pieces. He was carrying a material                       shift arrangement during peak production which has now                                                2.) The adjoining premises is a storage yard for excess fabric
                                                                                      transfer document which stated that the pieces were                     stopped. No cutting work is dong inside yarn store.                                                   and yarns. No process is conducted at this facility.
                                                                                      being transferred from unit - Cutting 3 . On further
                                                                                      investigation , it was found that cutting was being done
                                                                                      in a building opposite the factory across the road. One
                                                                                      of the auditors walked into the building with the worker
                                                                                      and noticed cutting operations in progress and a store.
                                                                                      Usage of this building was neither disclosed by the
                                                                                      Management during the opening meeting nor during the
                                                                                      audit procedure. Although this unit was not covered in
                                                                                      the audit a brief walk through revealed numerous
                                                                                      Health & Safety flaws.




                                                                                                                                                                                                                                                                                                                                                           15
FLA Audit Profile
Country                                                                   PAKISTAN
Name of Factory                                                           260257628F
Independent External Monitoring Organization                              T GROUP SOLUTIONS PVT LTD
Date(s) in Facility                                                       August 28-29, 2007
FLA Affiliated Compan(ies)                                                Nike, Inc. & Russell Corp.
Number of Workers                                                         3900
Product(s)                                                                KNITS - TOPS & BOTTOMS
Production Processes                                                      KNITTING - DYEING - CUTTING - PRINTING - EMBROIDERY- SEWING - FINISHING -PACKING .

FLA Code/Benchmark                                                        Compliance Status      [Status]              Description of noncompliance, risk of noncompliance or          Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                                                 Completed, Pending,   uncorroborated evidence of noncompliance                        Company        Documentatio External          Documentatio   Company       Documentatio
                                                                                                 On-going                                                                              Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                                                     (Date)                         (cite date of
GEN 2: Ensure that all Company factories as well as contractors and       Noncompliance          Completed             Most workers interviewed were not aware of the Code                                                                          planned or
suppliers inform their employees about the workplace standards orally                                                  Elements
and through the posting of standards in a prominent place (in the local
languages spoken by employees and managers) and undertake other
efforts to educate employees about the standards on a regular basis.



GEN 3: Develop a secure communications channel, in a manner            Noncompliance             Completed             Nike contact details were not provided in the Code posters
appropriate to the culture and situation, to enable Company employees                                                  seen in the work areas. Workers were not aware of any
and employees of contractors and suppliers to report to the Company                                                    confidential non-compliance reporting mechanism
on noncompliance with the workplace standards, with security that they                                                 implemented by the P.C.
shall not be punished or prejudiced for doing so.



F.9 Employment Records                                                    Noncompliance          Completed             1. Employment documents were not maintained for Daily
                                                                                                                       wage workers except for National identity Cards 2. Daily
                                                                                                                       wage workers were issued a Temporary Entry Pass valid
                                                                                                                       for 1 week. They were issued a time card for that week
                                                                                                                       only. Incase they continue to work fresh time cards and
                                                                                                                       passes were issued with a different registration number for
                                                                                                                       another week. Hence , every week a fresh time card and
                                                                                                                       pass were issued


F.13 Worker Ability to Terminate-Freedom of Movement                      Noncompliance          Completed             1.Factory does not have a policy for Termination. 2.
                                                                                                                       Procedure for disciplinary action/ termination is not defined
                                                                                                                       by the factory.

Other                                                                     Noncompliance          Completed             1.Discrepancies noticed in the total number of employees
                                                                                                                       based on department wise breakdown and shift wise
                                                                                                                       worker breakdown. As per department wise breakdown
                                                                                                                       ,there were 3766 employees. As per shift breakdown , there
                                                                                                                       were 3900 employees. As per section wise shift breakdown
                                                                                                                       with timings, there were 3750 employees.2.During the
                                                                                                                       opening meeting, the management mentioned that they
                                                                                                                       hired daily wage workers and currently there were
                                                                                                                       approximately 150 such workers. However, at 11am the
                                                                                                                       auditors went to the work areas and none of these workers
                                                                                                                       were available . Review of the time cards punched
                                                                                                                       revealed that few of these workers entered the factory
                                                                                                                       between 6 am and 8.30 am . There were few who worked
                                                                                                                       on the night shifts also . It appeared that these workers
                                                                                                                       were asked to leave the facility so that they would not be
                                                                                                                       around during the audit. 3. Some postings were seen in the
                                                                                                                       time office. Workers did not read these as they had been
                                                                                                                       instructed to swipe their cards quickly, to avoid over-
                                                                                                                       crowding, while entering and exiting the factory.

H&A.2 Discipline/Progressive Discipline                                   Noncompliance          Completed             1. Factory does not have a policy for Termination. 2.
                                                                                                                       Procedure for disciplinary action/ termination is not defined
                                                                                                                       by the factory.

H&S.1 General Compliance Health and Safety                                Noncompliance          Completed             1. Medical check up of all employees for detecting
                                                                                                                       contagious disease was not conducted in Jan and July
                                                                                                                       2007 as required by Law. 2. Vaccination for Small pox,
                                                                                                                       Typhoid and Cholera, as required by Law was not done.
                                                                                                                       The last vaccination done was in Feb 2004 for Hepatitis (B).



                                                                                                                                                                                                                                                                 16
FLA Code/Benchmark                            Compliance Status   [Status]              Description of noncompliance, risk of noncompliance or            Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                  Completed, Pending,   uncorroborated evidence of noncompliance                          Company        Documentatio External          Documentatio   Company       Documentatio
                                                                  On-going                                                                                Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                        (Date)                         (cite date of
H&S.8 Permits and Certificates                Noncompliance       Ongoing               1. Lift inspection Certificate , Lift operator training record,                                                                planned or
                                                                                        Lift maintenance record were not produced for review in
                                                                                        spite of repeated requests. 2. Building stability certificate
                                                                                        was available only for new Building ( B2) . This document
                                                                                        was not available for other buildings. 3. Lime wash and
                                                                                        painting records not maintained as required by Law. 4.
                                                                                        Factory did not have a pressure plant inspection certificate
                                                                                        as required by Law. 5. Only Chemical test report of Drinking
                                                                                        water was available. Biological test report was not
                                                                                        available as required by Law.

H&S.9 Evacuation Requirements and Procedure   Noncompliance       Ongoing               1. Fire Evacuation Logs did not provide details of number of
                                                                                        workers present during the evacuation. There were no
                                                                                        remarks on the responses from emergency teams. 2. Few
                                                                                        exits had illuminated exit signage which may not be visible
                                                                                        in thick smoke owing to poor illumination. High beam
                                                                                        emergency lights were not installed above exits and on
                                                                                        staircase landings. 3. Aisle and Evacuation route markings
                                                                                        were either missing or faded in most work areas. 4.
                                                                                        Approach to 2nd Exit from Finishing section in Sampling
                                                                                        section located in building no.3 was blocked with garments.
                                                                                        5. Most aisles in all work areas were either partially blocked
                                                                                        or completely blocked with garment bins, pedestal fans,
                                                                                        tables or other work stations. 6.Side aisles in the printing
                                                                                        section were very narrow. There was hardly any space
                                                                                        between the tables and side walls. A person could not even
                                                                                        walk freely on the aisle.7. Approach to Fire exit from Print
                                                                                        Curing section was blocked with Bed Press machine.8. Few
                                                                                        Exit doors in the facility open inwards. 9 Evacuation plans
                                                                                        were missing from most work areas.

H&S.9 Evacuation Requirements and Procedure   Noncompliance                             10.Most of the aisles in the cutting section were very
                                                                                        narrow. 11. Auto spreader blocks aisles in the cutting
                                                                                        section. 12.Numerous instances noticed where access to
                                                                                        passages for workers were completely blocked with
                                                                                        garments, tables and bins. These workers were completely
                                                                                        caged in their work stations. The auditor was unable to
                                                                                        reach these work stations located on the sides of the floor.
                                                                                        Approach to these work stations was blocked from both
                                                                                        ends. 13. 2nd Exit from sample Section 1 was through a
                                                                                        window opening into the cutting section. Wooden steps
                                                                                        were provided on both sides of the window. However, when
                                                                                        the auditor attempted to cross over, the steps on the cutting
                                                                                        side gave away . The steps provided on both the sides
                                                                                        were weak and unstable. 14. 2nd Exit from the Sampling
                                                                                        section was blocked with tables and a cupboard on the
                                                                                        Cutting Side. There was no way that anyone could use this
                                                                                        Exit. 15. There was no 2nd exit from thread cutting area in
                                                                                        the finishing section located on the 3rd floor. The passage
                                                                                        was completely blocked with tables.

H&S.9 Evacuation Requirements and Procedure   Noncompliance                             16. Air coolers were installed on the Fire Exit from
                                                                                        Sampling section in building no.3. 17. Workers were seen
                                                                                        standing on aisles and working in most of the work areas.
                                                                                        18. Sample section I had only 1 exit.19. Area in front of
                                                                                        Exits from room housing printing tables 1 & 2 was very
                                                                                        narrow. 20.There was a drop of approximately 3 feet in the
                                                                                        floor level of the area in front of Exit from knitting section.
                                                                                        No fencing or guard was installed to prevent accidents
                                                                                        during an emergency evacuation. Also no signage was
                                                                                        posted near this area to warn workers of the drop in floor
                                                                                        level. 21 Electric cable connecting heaters with the mains,
                                                                                        in the printing section were loose, close to workers feet and
                                                                                        crossing walk ways. 22. Due to constraint of space, factory
                                                                                        conducted fire evacuation drills section wise, once every 3
                                                                                        months. The complete factory was evacuated once a year.
                                                                                        23. “Do not use lift incase of fire” signage was not posted
                                                                                        near the lifts 24 2 to 3 workers seen working in the same
                                                                                        work station .

                                                                                                                                                                                                                                    17
FLA Code/Benchmark                                                    Compliance Status   [Status]              Description of noncompliance, risk of noncompliance or           Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                                          Completed, Pending,   uncorroborated evidence of noncompliance                         Company        Documentatio External          Documentatio   Company       Documentatio
                                                                                          On-going                                                                               Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                                               (Date)                         (cite date of
H&S.9 Evacuation Requirements and Procedure                           Noncompliance                             25.Few work stations on the sewing floor were overcrowded                                                                     planned or
                                                                                                                with workers caged in with garments and tables from all
                                                                                                                sides. They had no access to the passages. The auditors
                                                                                                                could not reach few of these work stations

H&S.10 Safety Equipment and First Aid Training                        Noncompliance       Completed             1.Instructions for First Aid is not posted near the kits as
                                                                                                                required by Law. 2. List of supplies in the First Aid kit do
                                                                                                                not meet legal requirements. 3. Approach to few fire
                                                                                                                extinguishers were seen blocked with garments and fabric
                                                                                                                bundles.
H&S.11 Personal Protective Equipment                                  Noncompliance       Completed             1. Excessive floating fiber noticed in the sewing floors.
                                                                                                                Workers complained of lint on their hair and face which was
                                                                                                                aggravating the sinus and asthma allergy in many
                                                                                                                instances.2. None of the operators were using the eye
                                                                                                                shields installed on over lock machines.3.Tag guns were
                                                                                                                not marked. 4.Snap button machine did not have a finger
                                                                                                                guard. 5. Band knife operator uses mesh gloves only on 1
                                                                                                                hand. 6. Few workers in the dyeing section were not using
                                                                                                                ear plugs, gloves and appropriate shoes. 7. Over lock
                                                                                                                operators were not using respiratory masks. Excessive
                                                                                                                floating fiber were seen in the area which was also noticed
                                                                                                                on workers’ hair.
H&S.13 Chemical Management and Training                               Noncompliance       Completed             1. Chemical storage area in the dyeing section was open
                                                                                                                and easily accessible to employees. 2.Containers with
                                                                                                                chemicals used for Printing were lying open near the
                                                                                                                printing tables.
H&S.17 Ventilation/Electrical/Facility Installation and Maintenance   Noncompliance       Ongoing               1. Few open electric junction boxes noticed. 2.Few Pedestal
                                                                                                                fans were connected to the mains without a plug.
                                                                                                                3.Temperatures recorded in the facility were ranging from
                                                                                                                95 to 110 degrees F. 4. Ventilation was very poor in the
                                                                                                                work areas. 5.Lighting levels recorded was ranging between
                                                                                                                52 lux to 230 lux on few sewing machines and 285 lux in
                                                                                                                the print curing section . Lighting Level recorded on few
                                                                                                                checking stations in the finishing sections was 410 to 480
                                                                                                                lux. 6. Excessive lint seen on all electrical installations.7.
                                                                                                                Review of Accident register revealed instances of many
                                                                                                                workers being sent to Hospital for falling unconscious.

H&S.18 Machinery Maintenance and Worker Training                      Noncompliance       Completed             1.Needle guards were missing from few sewing machines.
                                                                                                                Few had been tampered rendering them ineffective. 2. Belt
                                                                                                                guards were missing from most sewing machines 3. Pedal
                                                                                                                Mats were missing from most sewing machines. Many
                                                                                                                workers were noticed operating these machines bare feet.

H&S.20 Bodily Strain                                                  Noncompliance       Ongoing               1 .Few workers with standing jobs were seen wearing high
                                                                                                                heeled footwear. 2. Workers were provided with hard stools
                                                                                                                to sit on .


H&S.22 Sanitation in Factory Facilities                               Noncompliance       Ongoing               1. Water Seepage was noticed on the walls in the finishing
                                                                                                                area in Sampling section located in building no. 3. 2. Fabric
                                                                                                                was seen kept on the floor in the cutting section .3. Fabric
                                                                                                                was seen kept on the floor in the cutting section.
                                                                                                                4.Excessive amount of waste material comprising of cut
                                                                                                                ends and cartons were seen piled up near building three.
                                                                                                                5.Housekeeping standards were poor. All work areas were
                                                                                                                littered with cut ends of fabric.

H&S.23 Toilets                                                        Noncompliance       Completed             Number of toilets for Males were inadequate.


H&S.25 Food Preparation                                               Noncompliance       Ongoing               Factory did not have a Canteen as required by Law.


H&S.26 Drinking Water                                                 Noncompliance       Completed             Cool drinking water was not available as required by Law.




                                                                                                                                                                                                                                                           18
FLA Code/Benchmark                                                     Compliance Status       [Status]              Description of noncompliance, risk of noncompliance or         Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                                               Completed, Pending,   uncorroborated evidence of noncompliance                       Company        Documentatio External          Documentatio   Company       Documentatio
                                                                                               On-going                                                                             Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                                                  (Date)                         (cite date of
Other                                                                  Noncompliance           Ongoing               1.Factory did not have Welfare and Safety officers as                                                                       planned or
                                                                                                                     required by Law. 2. Review of record of grievances
                                                                                                                     received in the Suggestion / Grievance boxes for Aug 07
                                                                                                                     revealed that workers felt uncomfortable to use the PPE
                                                                                                                     due to excessive heat on the production floors. Drinking
                                                                                                                     water points provided for ladies was also being used by
                                                                                                                     male workers.3.Particulars of Room ( Working space in
                                                                                                                     work areas ) - FORM I (Rule 38 ) was not being
                                                                                                                     maintained as required by Law 4.Factory did not have a
                                                                                                                     group insurance for Death , Partial , Full , Temporary and
                                                                                                                     Permanent disability and fortnight income benefit for
                                                                                                                     employees, as required by Law
FOA.5 Employer Interference/Constitution, Elections, Administration,   Noncompliance           Ongoing                As per the Management the representatives in the Joint
Activities and Programs                                                                                              Worker management committees had been nominated by
                                                                                                                     the Management. .

FOA.14 Severance Pay                                                   Noncompliance           Ongoing               Terminal dues were not being paid within the time stipulated
                                                                                                                     by the local law


FOA.26 Grievance Procedure                                             Risk of noncompliance   Ongoing               Workers interviewed were not aware of any worker
                                                                                                                     committees or Joint Worker – Management committees. 


HOW.1 General Compliance Hours of Work                                 Noncompliance           Completed             Review of Time Records of Security Guards revealed that
                                                                                                                     on few occasions they had worked for 16 to 24 hours per
                                                                                                                     day continuously

HOW.2 Rest Day                                                         Noncompliance           Ongoing               1.Review of documents collected from the Production floor
                                                                                                                     revealed that factory had been working on all weekly rest
                                                                                                                     days over the past 3 months. 2. Factory did not provide a
                                                                                                                     Compensatory off, for work done on rest days. 3. Instances
                                                                                                                     noticed where few workers had worked 12 to 13 days
                                                                                                                     continuously without a day of rest. 4. Most workers
                                                                                                                     interviewed stated that they do not get a weekly off

HOW.6 Time Recording System                                            Noncompliance           Completed             1.Daily wage workers were issued a Temporary Entry Pass
                                                                                                                     valid for 1 week. They were issued a time card for that week
                                                                                                                     only. Incase they continued to work, fresh time card and
                                                                                                                     pass were issued with a different registration number for
                                                                                                                     another week. Hence, every week a fresh time card and
                                                                                                                     pass was issued.2.The auditors had access to the main
                                                                                                                     server after repeated requests. Review of options in the
                                                                                                                     software revealed a software menu link which said “Reports
                                                                                                                     – Actual OT”. When opened, this file had data pertaining to
                                                                                                                     actual hours of work. . On investigating further, the
                                                                                                                     Management stated that they officially reflected only 2
                                                                                                                     hours of OT per day . This is to comply with requirements of
                                                                                                                     few brands that the factory produces for. OT hours worked
                                                                                                                     beyond 2 hours a day were recorded separately and
                                                                                                                     compensated through a voucher. This practice was not
                                                                                                                     disclosed during interview with the Management.


HOW.8 Overtime/Reduced Mandated Overtime                               Noncompliance           Completed             Review of actual time records collected from the main
                                                                                                                     server, revealed that Housekeeping workers & Security
                                                                                                                     Guards worked more than 60 hours a week. Few piece
                                                                                                                     rated workers had worked up to 148 hours of overtime in
                                                                                                                     July 07 and had worked up to 82.5 hours per week.

HOW.12 Extraordinary Business Circumstance/Overtime Explanation        Noncompliance           Completed             Though workers signed on the consent form for working
                                                                                                                     overtime, hours of overtime work to be done were not
                                                                                                                     mentioned on these sheets

HOW.13 Public Holidays                                                 Noncompliance           Ongoing               Factory had worked on a national holiday ( Aug 14, 07 –
                                                                                                                     Independence Day ).


HOW.18 Annual Leave/Wage Payments                                      Noncompliance           Completed             Yearly and half yearly returns for Holiday with pay was not
                                                                                                                     maintained as required by Law.


                                                                                                                                                                                                                                                              19
FLA Code/Benchmark                                               Compliance Status   [Status]              Description of noncompliance, risk of noncompliance or          Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                                     Completed, Pending,   uncorroborated evidence of noncompliance                        Company        Documentatio External          Documentatio   Company       Documentatio
                                                                                     On-going                                                                              Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                                         (Date)                         (cite date of
HOW.20 Sick Leave/Restrictions                                   Noncompliance       Completed             Factory provided sick Leave for 8 days instead of 16 days                                                                    planned or
                                                                                                           a year as required by Law

Other                                                            Noncompliance       Ongoing               1.Information on Actual shift timings of workers could not be
                                                                                                           produced till the end of the audit on day two. 2.Though the
                                                                                                           Management stated that few sections work on 3 shifts i.e.
                                                                                                           from 6 am to 2pm, 2pm to 10 pm and from 10 pm to 6am,
                                                                                                           few workers were seen entering the factory at 3 pm. The
                                                                                                           management later stated that the cutting section worked on
                                                                                                           3 shifts from 7 am to 3 pm, 3pm to 11pm and from 11pm to
                                                                                                           7 am.
WBOT.2 Minimum Wage                                              Noncompliance       Completed             1.Calculation of wages for days worked did not comply with
                                                                                                           legal requirement. Factory calculated wages based on
                                                                                                           number of days in the month instead of 26 as specified by
                                                                                                           the local law. 2. Minimum Wages were not being paid as
                                                                                                           per skill levels, notified by the local minimum wage board.
                                                                                                           E.g. Few Packers were being designated as loaders and
                                                                                                           were being paid Rs 4600 ( unskilled wages ) instead of
                                                                                                           being paid Rs 4753 (Semi skilled ).Similarly the Quality
                                                                                                           checker was being paid Rs 4600 (Unskilled wage) instead
                                                                                                           Rs 5137.3. Review of wage records for stitchers (Piece
                                                                                                           rated) revealed that they were being paid an unskilled wage
                                                                                                           of Rs 4600 as total wage.

WBOT.4 Timely Payment of Wages                                   Noncompliance       Completed             Night allowance being paid to night shift workers and
                                                                                                           production incentives being paid to all workers did not
                                                                                                           reflect on wage records. These were being paid through a
                                                                                                           separate pay sheet. There was no fixed date for payment of
                                                                                                           these incentives.

WBOT.5 Holidays, Leave, Legal Benefits and Bonuses               Noncompliance       Completed             1.Factory provided Sick Leave for 8 days instead of 16 days
                                                                                                           as required by Law. 2. Daily wage workers ( approximately
                                                                                                           150 workers ) were being frequently rotated and their time
                                                                                                           cards and gate-pass were changed every week. This was
                                                                                                           being done with the intent of ensuring that mandatory
                                                                                                           benefits were not provided to these workers.

WBOT.8 Calculation Basis for Overtime Payments                   Noncompliance       completed             1.Calculation for Overtime compensation did not comply
                                                                                                           with legal requirements. Factory calculated OT
                                                                                                           compensation by multiplying 80 % of gross salary by 12
                                                                                                           months and then divided the result by 313 working days X 8
                                                                                                           hours X 2. By law, full gross salary should be divided by
                                                                                                           208 hours X 2 (i.e. at twice the ordinary rate of pay). Based
                                                                                                           on the calculation adopted by the factory the worker was
                                                                                                           being compensated at a lower rate than applicable. E.g. If a
                                                                                                           worker was earning Rs 4600, he was being paid overtime at
                                                                                                           the rate of Rs 35.27 per hour instead of Rs 44.23. 2. Pay
                                                                                                           records for July 2007 of piece rated workers being shown
                                                                                                           on Salary basis revealed inaccurate calculation for OT
                                                                                                           compensation. This calculation was based on an unskilled
                                                                                                           wage and not on wage applicable as per skill category.

WBOT.12 Overtime Compensation for Piece Rates and Other Incentive Noncompliance      Completed             1.Till June 07, wages for tailors were being paid on piece
Schemes                                                                                                    rate basis. Effective July07, these workers were being paid
                                                                                                           on a monthly salary basis. As per the management, these
                                                                                                           workers were shown on a monthly salary though they
                                                                                                           continued to work on piece rate basis. Their OT
                                                                                                           compensation was being calculated based on a monthly
                                                                                                           salary.The difference between the earnings and actual
                                                                                                           piece rate earnings was paid as incentive. So far there was
                                                                                                           no appropriately defined basis for calculating the incentive
                                                                                                           being paid.This system was being introduced to comply with
                                                                                                           legal requirements for OT compensation. However, since
                                                                                                           actual work was based on a piece-rate system calculation
                                                                                                           of compensation for overtime was not legally compliant. 2.
                                                                                                           Pay records for July 2007 of piece rated workers being
                                                                                                           shown on Salary basis revealed inaccurate calculation for
                                                                                                           OT compensation. This calculation was based on an
                                                                                                           unskilled wage and not on wage applicable as per skill
                                                                                                           category

                                                                                                                                                                                                                                                     20
FLA Code/Benchmark                                                Compliance Status   [Status]              Description of noncompliance, risk of noncompliance or          Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                                                                      Completed, Pending,   uncorroborated evidence of noncompliance                        Company        Documentatio External          Documentatio   Company       Documentatio
                                                                                      On-going                                                                              Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                                                                          (Date)                         (cite date of
WBOT.13 Deposit of Legally Mandated Deductions                    Noncompliance       Completed             1. Legally mandated benefits of Employee Old Age Benefit                                                                     planned or
                                                                                                            and Social Security were not being extended to Daily Wage
                                                                                                            Workers. The Factory was not contributing towards these
                                                                                                            benefits as required by Law. 2. Member application,
                                                                                                            declaration of share, nomination for minor / non minor for
                                                                                                            Provident benefits was not maintained in the facility.

WBOT.17 Accurate Calculation and Recording of Wage Compensation   Noncompliance       Ongoing               Till June 07 wages for tailors were being paid on piece rate
                                                                                                            basis. Effective July 07, these workers were being paid on
                                                                                                            a monthly salary basis. As per the management, these
                                                                                                            workers were being shown on a monthly salary though they
                                                                                                            continue to work on piece rate basis. Their OT
                                                                                                            compensation was being calculated based on a monthly
                                                                                                            salary. The difference between the earnings and actual
                                                                                                            piece rate earnings was paid as incentive. However, there
                                                                                                            was no formula for calculating the incentive being paid. This
                                                                                                            system was being introduced to comply with legal
                                                                                                            requirements for OT compensation as stated by the
                                                                                                            management. However, this methodology does not meet
                                                                                                            legal standards for piece-rate earnings.

WBOT.18 Accurate Length of Service Calculation                    Noncompliance       Completed             Daily wage workers were issued a Temporary Entry Pass
                                                                                                            valid for 1 week. They were issued a time card for that
                                                                                                            week only. Incase they continued to work fresh time card
                                                                                                            and pass were issued with a different registration number
                                                                                                            for another week. Hence , every week a fresh time card and
                                                                                                            pass were issued. Hence actual length of service could not
                                                                                                            be verified.
WBOT.20 Payroll Record Maintenance/Worker Acknowledgement         Noncompliance       Completed             Interviews with Daily wage loaders and loading supervisor
                                                                                                            revealed that the loading supervisor would collect the
                                                                                                            wages of these loaders from the accounts department by
                                                                                                            signing on the Daily wages attendance / Payment sheet. He
                                                                                                            would then disburse the wages. These sheets did not
                                                                                                            reflect details of wages paid to individual loaders. However,
                                                                                                            workers had acknowledged receipt of wages. Amount
                                                                                                            received was not mentioned anywhere . Same system for
                                                                                                            daily wage workers was being followed for workers working
                                                                                                            in the Waste store, Inverter Section, General store, Fabric
                                                                                                            Store and Housekeeping workers. Many payment sheets
                                                                                                            had entries reflecting “Wages for double duty”.
                                                                                                            Management could not provide any explanation for this
                                                                                                            “Double Duty”.
WBOT.21 Record Maintenance                                        Noncompliance       Ongoing               1.Record of service was not maintained for employees as
                                                                                                            required by Law.2. Audit reports for Provident Fund
                                                                                                            accounts for fiscal years 2005 – 06 and 2006-07 were not
                                                                                                            available. As per the Law, these should be maintained in
                                                                                                            the facility.3. Member application, declaration of share ,
                                                                                                            nomination for minor / non minor for Provident benefits
                                                                                                            were not maintained in the facility


WBOT.26 Pay Statement                                             Noncompliance       Ongoing               Daily wage workers did not receive a wage slip.


Other                                                             Noncompliance       Ongoing                1 Factory was not registered with Government
                                                                                                            Apprenticeship Institute as required by Law. 2.Factory had
                                                                                                            not provided a fair price shops required by law. 3.Worker
                                                                                                            Welfare fund had not been established as required by Law.




                                                                                                                                                                                                                                                      21
FLA Code/Benchmark   Compliance Status   [Status]              Description of noncompliance, risk of noncompliance or            Updates (Cite Date of Follow- Third-Party Verification       Company Verification Follow-
                                         Completed, Pending,   uncorroborated evidence of noncompliance                          Company        Documentatio External          Documentatio   Company       Documentatio
                                         On-going                                                                                Follow-Up      n              Verification    n              Follow-Up     n
                                                                                                                                                               (Date)                         (cite date of
Other                Noncompliance       Completed             1.Abstract of the Local Labour Law were not posted .2.                                                                         planned or
                                                               Towards the end of day two of the audit a person was seen
                                                               walking into the factory with a polybag containing cut
                                                               pieces. He was carrying a material transfer document which
                                                               stated that the pieces were being transferred from unit -
                                                               Cutting 3. On further investigation , it was found that cutting
                                                               was being done in a building opposite the factory across the
                                                               road. One of the auditors walked into the building with the
                                                               worker and noticed cutting operations in progress and a
                                                               store. Usage of this building was neither disclosed by the
                                                               Management during the opening meeting nor during the
                                                               audit procedure. Although this unit was not covered in the
                                                               audit a brief walk through revealed numerous Health &
                                                               Safety flaws.




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Description: Formula for Calculating Employee Turnover document sample