Flowchart Contract Consideration FLA Audit by qru15075


Flowchart Contract Consideration document sample

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									FLA Audit Profile
Country                                     Vietnam
Factory name                                01028472D
IEM                                         Global Standards
Date(s) in facility                         December 5-6, 2005
PC(s)                                       adidas AG & Reebok International, Ltd.
Number of workers                           918
Product(s)                                  Clothes
Production processes                        Cutting, Stitching, Assembly, Inspection, Packing

                                                                                                                                                                                                        IEM Findings                                                                                                                           Remediation                                                                            [Status]                          Update                                 [Status]                  Update                 [Status]
      FLA Code/ Compliance issue               Country Law/Legal Reference                          FLA Benchmark                               Non-compliance                          Risk of                   Evidence of       If not      Sources/         Notable                  PC Remediation plan                     Target Completion Factory                  Company follow up                   Documentation      Completed;             Company follow up               Documentation      Completed;    Company follow up   Documentation Completed;
                                                                                                                                                                                    Non-compliance             Non-compliance corroborated Documentation         Features                                                                Date       Response                   (May 2006)                                           Pending; On-           (September 2006)                                  Pending; On-         date:                       Pending; On-
                                                                                                                                                                                                               (uncorroborated) , explain why   used for      implemented                                                                           (Optional)                                                                         going                                                                    going        (July 16, 2007)                     going
                                                                                                                                                                                                                                              corroborating     by Factory
                                                                                                                                                                                                                                                               or Company
1. Code Awareness
Code posting/information                                                         FLA Principle of Monitoring, Obligation of               The factory has not                                                                               Record review                    Factory has already communicated with                    1-Apr-06                   Factory has already communicated &              Meeting minute Completed
                                                                                 Companies: Establish and articulate clear, written       communicated Company's                                                                            Worker                           subcontractors (Food Caterer, Printing                                              trained the subcontractors (security, food      with signature of
                                                                                 workplace standards. Formally convey those               code requirements to all of its                                                                   interview                        workshop and Security service) to disseminate                                       carter, printing) on Feb 7, 2006 and            participants on
                                                                                 standards to Company factories as well as to             subcontractors (printing,                                                                                                          the Company's Code. Factory to document that                                        subcontractors had signed in the                training sheet &
                                                                                 licensees, contractors and suppliers.                    washing, security, waste                                                                                                           it has communicated the code to                                                     "Company's code".                               pictures
                                                                                                                                          collection)                                                                                                                        subcontractors.                                                                                                                     attached - Feb
                                                                                                                                                                                                                                                                                                                                                                                                                 7, 2006.

Worker/management awareness of Code                                              FLA Principle of Monitoring, Obligation of               The factory posted PC codes                                                                       Record review                    Factory provided periodic training on the PC             1-Apr-06                   Factory provided periodic training on the       Training           Completed
                                                                                 Companies: Ensure that all Company factories as          but no Code training                                                                              Worker                           code via the speaker system to all workers.                                         PC code via the speaker system to all           material, with
                                                                                 well as contractors and suppliers inform their           provided to workers.                                                                              interview                        Worker interviews confirmed that the policy                                         workers. Worker interviews confirmed            the participants
                                                                                 employees about the workplace standards orally           Interviewed workers were not                                                                                                       was announced. Ongoing training should be                                           that the policy was announced. Training         signature on
                                                                                 and through the posting of standards in a prominent      aware of the standards.                                                                                                            conducted for all workers and records of the                                        group by group with test from Feb 20 to         training sheet
                                                                                 place (in the local languages spoken by employees                                                                                                                                           training kept on file.                                                              Feb 21 2006.                                    with pictures
                                                                                 and managers) and undertake other efforts to                                                                                                                                                                                                                                                                                    attached
                                                                                 educate employees about the standards on a
                                                                                 regular basis.
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

Freedom of Movement                                                              If factory entrances are locked or guarded to prevent                                      The factory has not                                             Worker                           Factory has communicated the policy on                   1-Apr-06                   Training on freedom of movement to all   Participants had Completed
                                                                                 non-employee access to the premises for security                                           communicated its policy on                                      interview                        freedom of movement and received                                                    the company supervisors & security guard signed on the
                                                                                 reasons, employees will have free egress at all                                            freedom of movement to security                                                                  commitment from the subcontractors, including                                       on Feb 11, 2006.                         training sheet
                                                                                 times.                                                                                     guards. Interviewed security                                                                     Printing, Canteen, and Security on compliance                                                                                with pictures
                                                                                                                                                                            affirm that workers must have exit                                                               with the policy. Factory to provide training on                                                                              attached .
                                                                                                                                                                            pass to leave during regular                                                                     Freedom of Movement policy and procedures                                                                                    Training
                                                                                                                                                                            hours, a practice that conflicts                                                                 to all subcontractors, including Security guards                                                                             material is the
                                                                                                                                                                            with written factory policy.                                                                     and maintain documentation of training                                                                                       "Pass outward
                                                                                                                                                                                                                                                                             provided on file.                                                                                                            procedure"

3. Child Labor
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.

Age Documentation                                                                Employers will maintain proof of age documentation 1/55 reviewed personnel file                                                                            Record review                    Factory must establish a system for assessing            1-Apr-06                   Recruitment policy mentioned clearly the        Policy           Completed
                                                                                 for all workers, such as a birth certificate, which did not contain age                                                                                                                     the age of employees and new recruits. Factory                                      ID card is obligated in the recruitment file.   #20050124;
                                                                                 verifies date of birth.                             documentation.                                                                                                                          to verify age documentation prior to hiring and                                     Since Jan 2006, all the personnel file is       reviewed all the
                                                                                                                                                                                                                                                                             retain a copy of age documentation in each                                          strictly checked by HR Dept. The copies         employment
                                                                                                                                                                                                                                                                             employee's file. Factory to list the documents                                      of worker's ID are kept in each personal        files since Jan
                                                                                                                                                                                                                                                                             required when applying for employment                                               file.                                           2006.
                                                                                                                                                                                                                                                                             (identification documentation required should
                                                                                                                                                                                                                                                                             comply with PC codes and local law) and
                                                                                                                                                                                                                                                                             inform candidates of documentation required.
                                                                                                                                                                                                                                                                             Obtain a copy of age documentation of existing
                                                                                                                                                                                                                                                                             employees and maintain in personnel files.

Legal compliance for juvenile workers       Article 6, 119~112 of Labor Code     Employers will comply with applicable laws that          2 juvenile workers found                                                                          Record review                    The factory has developed a recruitment policy           1-Apr-06                   Juvenile Policy is issued on Feb 7 2006.        Announcement Pending              Factory Management modified the         Recruitment        Completed
                                            Joint Circular No. 09/TT-LB          apply to young workers, i.e., those between the          employed in violation of                                                                                                           and training on the policy and procedures                                           According to the recruitment policy there       07/HR_[Factory]                   Recruitment Policy on June.15,          policy: [Factory]-
                                                                                 minimum working age and the age of 18, including         factory policy on hiring age.                                                                                                      provided to Human Resources Personnel.                                              is no more juvenile labor in the factory.       _20060207                         2006. The minimum age for               HR-01- dated
                                                                                 regulations relating to hiring, working conditions,      No policy or procedure to                                                                                                          Factory to develop policy and procedures for                                        However, Juvenile Policy must be                                                  recruitment is 15. The juvenile         June 15.
                                                                                 types of work, hours of work, proof of age               insure special treatment of                                                                                                        juvenile workers according to local law and PC                                      amended. Factory must not discriminate                                            workers are assigned to do light        - Training Doc.
                                                                                 documentation, and overtime                              such workers as required by                                                                                                        codes. Train all employees, including Human                                         against juvenile workers. Management                                              work, and may not work OT, can          in place
                                                                                                                                          law.                                                                                                                               Resources and Supervisors, on the policy for                                        must ensure that new juvenile policy is in                                        only work only 7hrs/day but still
                                                                                                                                                                                                                                                                             juvenile workers.                                                                   accordance with the legal provisions for                                          receive full payment of 8hrs.
                                                                                                                                                                                                                                                                                                                                                                 juvenile workers' hours of work, working                                          When workers reach 18 years of
                                                                                                                                                                                                                                                                                                                                                                 conditions, benefit, training program, etc.                                       age, company will orient them
                                                                                                                                                                                                                                                                                                                                                                 It must also be based on local Labor                                              and place them in a job that
                                                                                                                                                                                                                                                                                                                                                                 Code, Chapter 11, Article 119. Policy                                             meets their skill level and interest.
                                                                                                                                                                                                                                                                                                                                                                 must be drafted by June 15.                                                       -Training had been conducted for
                                                                                                                                                                                                                                                                                                                                                                                                                                                   HR and Administration staffs on
                                                                                                                                                                                                                                                                                                                                                                                                                                                   September 4, -2006 with 17

Juvenile worker Identification System                                            Employers will have a system for identifying work        The factory has no system for                                                                     Management                       Factory to develop a system for identifying and          1-Apr-06                   Training for HR staff to follow the             Recruitment        Pending        Training had been conducted for         Training Doc. in Completed
                                                                                 stations and operations that are inappropriate for       tracking, identifying or                                                                          interview                        tracking juvenile workers. Train all supervisors                                    recruitment policy (over 18 years old           policy                            HR and Administration staffs on         place
                                                                                 young workers according to applicable laws               monitoring juvenile workers.                                                                      Record review                    and employees on the policy for juvenile                                            employee only) was completed in                                                   September 4, 2006 with 17
                                                                                                                                                                                                                                                                             workers.                                                                            December 2005.                                                                    participants
                                                                                                                                                                                                                                                                                                                                                                 HR to receive additional training once
                                                                                                                                                                                                                                                                                                                                                                 new recruitment policy is drafted in June

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.

Disciplinary Practices                      Chapter VIII of labor code           Employers will utilize consistent written disciplinary   Factory's discipline practices                                                                    Record review                    1) Disciplinary Process developed and in                 1-Apr-06                   Disciplinary policy (dated August 13,           Participants'      Pending        Factory already re-modified       Revised                Completed
                                            Decree 41/CP-1995                    practices that are applied fairly among all workers      do not comply with its policy                                                                                                      compliance with Labor Regulation; all                                               2005) is posted on the notice board. The        signatures on                     Discipline System and point 2 had Disciplinary
                                            Decree 33/2003/ND-CP                                                                          or with local law. No Union                                                                                                        disciplinary actions must be reviewed by the                                        training on this policy was conducted for       training sheet.                   been added on Sept. 1, 2006.      Policy No: 22,
                                            Circular 19/2003/TT-BLDTBXH                                                                   participation per local law.                                                                                                       disciplinary committee (Trade Union, HR,                                            all the employees & supervisors on Feb          Training                                                            dated Sept.1,
                                                                                                                                                                                                                                                                             Witness Social Responsibility, Management                                           28, 2006, the latest training was               pictures                                                            2006
                                                                                                                                                                                                                                                                             representative); any dismissal case must be                                         conducted on May 16, 2006 based on the
                                                                                                                                                                                                                                                                             acknowledged by Trade Union, worker, and                                            revised policy dated April 7, 2006.
                                                                                                                                                                                                                                                                             approved and signed by General Manager.                                             However, item mentioned in point 2 is not
                                                                                                                                                                                                                                                                             Disciplinary Form is signed by worker, Trade                                        yet included in this policy. Factory is
                                                                                                                                                                                                                                                                             Union, Witnesses, Line Manager and General                                          revising the contents of this policy with
                                                                                                                                                                                                                                                                             Manager. 2) Factory to update the policy and                                        Trade Union, Management & HR to
                                                                                                                                                                                                                                                                             procedure to include: * the objection right of the                                  amend this. Deadline for this amendment
                                                                                                                                                                                                                                                                             concerned worker. * re-structuring of the                                           will be June 15th.
                                                                                                                                                                                                                                                                             Committee members * The right to ask the help                                       The training will be conducted on June 19,
                                                                                                                                                                                                                                                                             from one defender (if any) * If dismissal is                                        2006 for Supervisors and for all workers
                                                                                                                                                                                                                                                                             taken, within 10 days of signing the decision,                                      in July at the latest.
                                                                                                                                                                                                                                                                             the Factory management must send the                                                This amended policy must also include
                                                                                                                                                                                                                                                                             disciplinary decision and minutes to the Labor                                      the disciplinary process with the
                                                                                                                                                                                                                                                                             department. 3) Post disciplinary policy and                                         participation of the Trade Union, the
                                                                                                                                                                                                                                                                             procedures on the notice board: Mar 31, 2006                                        management, the HR and the worker.
                                                                                                                                                                                                                                                                             4) Disciplinary committee meeting for how to
                                                                                                                                                                                                                                                                             implement properly Apr 3, 2006.

                                                                                                                                                                                                                                                                             5) Provide training to all the supervisors and
                                                                                                                                                                                                                                                                             employees by end of April. Factory
                                                                                                                                                                                                                                                                             management and internal Social Responsibility
                                                                                                                                                                                                                                                                             team to review that disciplinary procedures are
                                                                                                                                                                                                                                                                             being implemented as per policy. Ongoing
                                                                                                                                                                                                                                                                             monitoring by PC.

                                                                                                                                                                                                           IEM Findings                                                                                                                             Remediation                                                                          [Status]                          Update                                   [Status]                    Update                 [Status]
        FLA Code/ Compliance issue                Country Law/Legal Reference                            FLA Benchmark                               Non-compliance                         Risk of                  Evidence of       If not      Sources/         Notable                     PC Remediation plan                    Target Completion Factory                 Company follow up                  Documentation      Completed;             Company follow up                 Documentation      Completed;      Company follow up   Documentation Completed;
                                                                                                                                                                                        Non-compliance            Non-compliance corroborated Documentation         Features                                                                  Date       Response                  (May 2006)                                          Pending; On-           (September 2006)                                    Pending; On-           date:                       Pending; On-
                                                                                                                                                                                                                  (uncorroborated) , explain why   used for      implemented                                                                             (Optional)                                                                       going                                                                      going          (July 16, 2007)                     going
                                                                                                                                                                                                                                                 corroborating     by Factory
                                                                                                                                                                                                                                                                  or Company
Training of Management in Disciplinary                                                Employers will provide training to managers and          The factory did not provide                                                                     Record review     Now is in         Factory should provide training on the                  1-Apr-06                   Factory already developed the disciplinary    Participants'      Pending        The training course for all factory       Training          Ongoing        Last training for the     Training       Completed
Practices                                                                             supervisors in appropriate disciplinary practices        training to managers and                                                                                          process of        Disciplinary policy and procedures and                                             process. There is a disciplinary committee    signatures on                     staff was conducted on :                  materials                        rest of all workers was   Documents in   and Ongoing
                                                                                                                                               supervisors in legal and                                                                                          completing        appropriate and legal disciplinary practices for                                   formed by Trade union, HR, SR,                training sheets,                  - Aug 16, 2006 : 20 participants-         including                        conducted in              place for
                                                                                                                                               appropriate disciplinary                                                                                          the discipline    workers, Management and Supervisors.                                               Management.                                   pictures of                       supervisors                               signing sheet,                   December 25, 2006         checking
                                                                                                                                               practices                                                                                                         policy. Plan to   Training record should be documented.                                              Training on Disciplinary procedure for        training                          - Aug 28, 2006: 174 workers (             pictures, testing                and continue training
                                                                                                                                                                                                                                                                 train all the                                                                                        supervisors and workers completed on                                            Line 2, 13, 11, 15, 18)                   exercise in place                will be conducted
                                                                                                                                                                                                                                                                 supervisors                                                                                          Feb. 28, 2006.                                                                  - Sept- 23,2006 : 43 office staffs                                         throughout the year for
                                                                                                                                                                                                                                                                 on March 31,                                                                                         Training for the revised policy will be                                         - Sept, 26, 2006: 26 workers                                               new workers.
                                                                                                                                                                                                                                                                 2006.                                                                                                conducted on June 19 for all supervisors                                        (Sample Room)                                                              As of July 2007,
                                                                                                                                                                                                                                                                                                                                                                      and in July for all workers.                                                    - October & November 2006                                                  another 627 new
                                                                                                                                                                                                                                                                                                                                                                      The Disciplinary policy is part of the                                          (expect for 700 workers).                                                  workers had been
                                                                                                                                                                                                                                                                                                                                                                      orientation program that all employees                                          - The last training for the rest of all                                    trained.
                                                                                                                                                                                                                                                                                                                                                                      receive before signing their contract. A                                        workers will be conducted at the
                                                                                                                                                                                                                                                                                                                                                                      list of the orientation training program is                                     end of November 2006.
                                                                                                                                                                                                                                                                                                                                                                      available for verification.
Record Maintenance                             Chapter VIII of labor code             Employers will maintain written records of               Written disciplinary records                                                                    Record review                       Factory should develop a procedure for                  1-Apr-06                   Factory already developed the disciplinary    Participants'      Completed
                                               Decree 41/CP-1995                      disciplinary actions taken.                              are incomplete. Written                                                                                                             maintaining disciplinary records. All                                              process. There is a disciplinary committee    signatures on
                                               Decree 33/2003/ND-CP                                                                            disciplinary decisions must                                                                                                         disciplinary records should be complete. The                                       formed by Trade union, HR, SR,                training sheets,
                                               Circular 19/2003/TT-BLDTBXH                                                                     be issued and signed in                                                                                                             disciplinary decision is issues and signed by                                      Management).                                  pictures of
                                                                                                                                               accordance with local laws                                                                                                          the General Manager and is based on the                                            Training for all the supervisors &            training
                                                                                                                                               with Union participation.                                                                                                           disciplinary report. However, workers should                                       employees about the disciplinary policy
                                                                                                                                                                                                                                                                                   also be informed and acknowledge his/her                                           was conducted on Feb 28, 2006.
                                                                                                                                                                                                                                                                                   agreement on the content of this Disciplinary
                                                                                                                                                                                                                                                                                   Decision. Union representatives should also
                                                                                                                                                                                                                                                                                   participate in the disciplinary practice. Factory
                                                                                                                                                                                                                                                                                   to include in the disciplinary policy and
                                                                                                                                                                                                                                                                                   procedures that the worker and a union
                                                                                                                                                                                                                                                                                   representative should be offered to sign the
                                                                                                                                                                                                                                                                                   disciplinary report.

5. Nondiscrimination
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

Chemical Management                            Decree No. 168/2005/ND-CP              All chemicals and hazardous substances should be         Chemicals (Acetone) used                                                                        Visual                              All chemical containers have been labeled and           1-Apr-06                   Training for all the workers handling         Participants'      Completed
                                               dated May 20, 2005                     properly labeled and stored in accordance with           for spot cleaning were found                                                                    inspection                          MSDS posted in the working area. Factory                                           chemical was conducted on Feb 28,             signatures on
                                                                                      applicable laws. Workers should receive training,        in containers without proper                                                                                                        should conduct training for all workers handling                                   2006. This training is conducted multiple     training sheet.
                                                                                      appropriate to their job responsibilities, in the safe   labels.                                                                                                                             chemicals. Training record should be accurate                                      times a year. Last training was conducted     Pictures of
                                                                                      use of chemicals and other hazardous substances                                                                                                                                              and kept on file (number of workers in                                             in March 2006, the next training will be      training.
                                                                                                                                                                                                                                                                                   attendance should be recorded).                                                    conducted in Sept 2006. Chemical
                                                                                                                                                                                                                                                                                                                                                                      trainings focus on chemical handling,
                                                                                                                                                                                                                                                                                                                                                                      MSDS, PPE. Trainings also cover
                                                                                                                                                                                                                                                                                                                                                                      accident/Incident reporting, first aid,
                                                                                                                                                                                                                                                                                                                                                                      chemical transferring methods, proper
                                                                                                                                                                                                                                                                                                                                                                      chemical storage, chemical labeling and
                                                                                                                                                                                                                                                                                                                                                                      warning signs.

Record Maintenance                             Joint Circular No 14/2005/TTLT/ All safety and accident reports shall be maintained                                                                                  More accidents             Record review                       Standard Operating Procedures for                       1-Apr-06                   Standard Operating Procedures for             Accident           Completed
                                               BLDTBXH-BYT-TLDLDVN dated for at least one year, or longer if required by law                                                                                        are recorded in                                                accident/incident investigation have been set                                      accident/incident investigation have been     investigation
                                               08/3/2005                                                                                                                                                            clinic logs than                                               up and recorded and reported to Management                                         set up and recorded and reported to           report, monthly
                                                                                                                                                                                                                    are investigated,                                              monthly (documentation available in place for                                      Management monthly (documentation             accident report
                                                                                                                                                                                                                    reported and                                                   checking). All accidents should be                                                 available in place for checking). All
                                                                                                                                                                                                                    analyzed in                                                    investigated, reported and analyzed on a                                           accidents are investigated, reported and
                                                                                                                                                                                                                    statistical reports                                            monthly basis.                                                                     analyzed on a monthly basis.

Sanitation in Dining Area                      Decision No. 4128/BYT                  All food preparation shall be prepared, stored, and                                       Factory maintains food samples                                 Visual                              Standard Operating Procedures for taking and            1-Apr-06                   SOP was developed on Dec 10, 2005 for Food sample                Completed
                                                                                      served in a sanitary manner in accordance with                                            from every meal but does not                                   inspection                          recording food sample (dated in December 10,                                       food sample. Food caterer also signed the SOP
                                                                                      applicable laws. Safe drinking water should be                                            have a clear system to document                                                                    2005) has been developed and is available for                                      agreement to follow the Factory's code.
                                                                                      available in each building.                                                               this (date, time, name and                                                                         checking.                                                                          Factory conducts monthly spot checks to
                                                                                                                                                                                signature of person in charge)                                                                     Factory should also conduct a spot check on                                        the caterer using adidas' Labor & HSE
                                                                                                                                                                                                                                                                                   the sources of food provider and working                                           Guidelines. Spot check is conducted with
                                                                                                                                                                                                                                                                                   conditions of food catering workers to make                                        the participation of the Factory
                                                                                                                                                                                                                                                                                   sure that they are in line with subcontractor                                      management Compliance team, Nurse,
                                                                                                                                                                                                                                                                                   standards of Company's Code.                                                       HR.
                                                                                                                                                                                                                                                                                                                                                                      The latest audit was conducted on April
                                                                                                                                                                                                                                                                                                                                                                      22, 2006. Picture and Action plan of all
                                                                                                                                                                                                                                                                                                                                                                      non compliance issues have been sent to
                                                                                                                                                                                                                                                                                                                                                                      food caterer service for remediation
                                                                                                                                                                                                                                                                                                                                                                      (Action Plan on file). In addition, the local
                                                                                                                                                                                                                                                                                                                                                                      Reserved First Aid Center audited the
                                                                                                                                                                                                                                                                                                                                                                      food caterer service on May 11, 2006.
                                                                                                                                                                                                                                                                                                                                                                      Factory management plans to do the next
                                                                                                                                                                                                                                                                                                                                                                      follow up audit on June 10, 2006.
                                                                                                                                                                                                                                                                                                                                                                      In addition to the Food Sample SOP
                                                                                                                                                                                                                                                                                                                                                                      created in Dec. 05, factory management
                                                                                                                                                                                                                                                                                                                                                                      has also created a food poisoning
                                                                                                                                                                                                                                                                                                                                                                      procedure (No: 01/ NDTP/[Factory]-
                                                                                                                                                                                                                                                                                                                                                                      SR/20060108), in which each process
                                                                                                                                                                                                                                                                                                                                                                      clearly states the responsibility of each
                                                                                                                                                                                                                                                                                                                                                                      party involved in the investigation, as well
                                                                                                                                                                                                                                                                                                                                                                      as the requirements for worker's
                                                                                                                                                                                                                                                                                                                                                                      compensation, etc.

Other                                          Circular No. 13/BYT-TT dated                                                                    The factory has not                                                                             Record review                       Internal testing on noise, air has been                Completed                   Noise levels have been tested monthly.        Monthly            Completed
                                               October 24th, 1996:"2.1.3.                                                                      conducted internal                                                                                                                  conducted on January 16, 2006 (record in                                           All the results meet the TCVN standard,       environment
                                               Undertakings shall ensure that                                                                  air/environment testing                                                                                                             place for checking)                                                                Results for the last three months can be      testing reports
                                               harmful elements of working                                                                     annually as required by law.                                                                                                                                                                                           found below:
                                               environment be checked and                                                                      SR staff reportedly conduct                                                                                                                                                                                            -Sewing line: 74 db; 71db; 74 db
                                               measured at least once a year".                                                                 temperature and noise tests                                                                                                                                                                                            -Cutting: 69 db; 72 db; 74 db
                                                                                                                                               monthly but no records kept.                                                                                                                                                                                           -Store: 58 db; 57 db; 57 db
                                                                                                                                                                                                                                                                                                                                                                      -Emb: 82 db; 81.5 db; 80.5 db
                                                                                                                                                                                                                                                                                                                                                                      -Office: 57 db; 62 db; 64 db
                                                                                                                                                                                                                                                                                                                                                                       Test records for Noise and lighting
                                                                                                                                                                                                                                                                                                                                                                      (lighting meet Adidas AG' standard) are
                                                                                                                                                                                                                                                                                                                                                                      kept in place for checking.

Other                                                                                                                                          Government fire inspection in                                                                   Record review                       There are 5 issues found by the fire station: 3    Ongoing and                     1/ Fire pump was installed in Feb 2006        Visual             Completed
                                                                                                                                               July found 5 violation issues.                                                                                                      issues are fixed immediately upon receipt of       Completed in                    based on the instruction of the local Fire    inspection 2/
                                                                                                                                               Factory lacks a documented                                                                                                          the report.                                      February 10, 2006                 Brigade Department. The installation has      Document No:
                                                                                                                                               action plan to address these                                                                                                        1/ Form the Fire fighting team (60 members,                                        been checked and approved by Fire             241-11/7/2005)
                                                                                                                                               issues. Monitors found 3                                                                                                            certified by Local Brigade Dept. August 2005)                                      Brigade Department (February 13, 2006).
                                                                                                                                               issues corrected, 1 under                                                                                                           2/ Lightning Arrester was checked by Safety                                        2/ The brick wall was completed in March      3/ Document
                                                                                                                                               consideration and another 1                                                                                                         Validation Center No.2.                                                            2006. The Fire Brigade Department will        No: 3-PCCC/NT-
                                                                                                                                               disputed by factory                                                                                                                 3/ Dormitory fire safety validation by fire                                        check on it June 1, 2006.                     13/7/2005
                                                                                                                                               management (emergency fire                                                                                                          brigade department is approved.
                                                                                                                                               pump runs on gas, not                                                                                                               4/ Brick wall to replace the plywood partition
                                                                                                                                               electric).                                                                                                                          between the Material Warehouse and the
                                                                                                                                                                                                                                                                                   Cutting area will be finished by March 2006.
                                                                                                                                                                                                                                                                                   5/ Install Electric fire pump (Completed Feb 10,

7. Freedom of Association and Collective Bargaining
Employers will recognize and respect the right of employees to freedom of association and collective bargaining

Compliance to local collective bargaining      Chapter V of labor code;               Employers will comply with all national and local                                         Temporary trade union has been                                 Management                          Based on the schedule, election of the official         1-Apr-06                   New Official Trade union committee was        CBA                Completed
laws                                           Decree No. 196/CP;                     laws and regulations concerning collective                                                formed according to local law and                              interview                           Trade Union Committee will be conducted in                                         established on Mar 22, 2006. The CBA
                                               Decree No. 93/2002/ND-CP               bargaining and free association. Where conflicts                                          practice. No elections or CBA                                                                      March 2006 and CBA will be established                                             was signed and approved on Apr 12,
                                                                                      are known to exist, employers will use the standard                                       yet, but planned for 2006.                                                                         afterward.                                                                         2006.
                                                                                      that provides the greatest protection for workers.

8. 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
                                                                                                                                                                                                      IEM Findings                                                                                                                         Remediation                                                                         [Status]                         Update                            [Status]                    Update                 [Status]
      FLA Code/ Compliance issue               Country Law/Legal Reference                             FLA Benchmark                               Non-compliance                       Risk of                 Evidence of       If not      Sources/         Notable                  PC Remediation plan                   Target Completion Factory                  Company follow up                   Documentation   Completed;            Company follow up            Documentation    Completed;      Company follow up   Documentation Completed;
                                                                                                                                                                                    Non-compliance           Non-compliance corroborated Documentation         Features                                                              Date       Response                   (May 2006)                                        Pending; On-          (September 2006)                             Pending; On-           date:                       Pending; On-
                                                                                                                                                                                                             (uncorroborated) , explain why   used for      implemented                                                                         (Optional)                                                                      going                                                              going          (July 16, 2007)                     going
                                                                                                                                                                                                                                            corroborating     by Factory
                                                                                                                                                                                                                                                             or Company
Wage Benefits Awareness                      Article 57 of the Labor Code,           Employers will communicate orally and in writing to     The factory has not set up                                                                   Record review                    Policy had been drafted and sent to HQ in              1-Apr-06                   Salary scale was approved by HQ in April Salary scale           Completed
                                             Decree 114/2003/ND-CP and               all employees in the language of the worker the         wage scale system or                                                                                                          Taiwan for the approval. However, new salary                                      2006 & by local labor Dept. in May 2006. approvals
                                             Circular No 14/2003/TT-                 wages, incentive systems, benefits and bonuses to       submitted one for                                                                                                             scale will be applied on Feb 1, 2006.
                                             BLDTBXH :                               which all workers are entitled in that company and      government approval as per                                                                                                    After being approved by HQ, this new salary
                                             Enterprises shall have to               under the applicable law                                local law. No clear written                                                                                                   scale will be submitted to the local labor
                                             formulate their own wage scales                                                                 raise policy exists.                                                                                                          department for validation and approval.
                                             and payrolls, technical criteria and                                                                                                                                                                                          Approval duration may last until April 2006.
                                             grades of workers, titles and                                                                                                                                                                                                 Factory should brief workers and provide
                                             professional qualifications of                                                                                                                                                                                                training on the new salary policy and establish
                                             employees, for use as a basis for                                                                                                                                                                                             an efficient communication channel to timely
                                             signing labor contracts and                                                                                                                                                                                                   respond to any questions from workers
                                             collective labor agreements,                                                                                                                                                                                                  regarding the new salary scheme.
                                             determining the wage funds,
                                             paying wages and setting other
                                             regimes for laborers.
Time-recording system                                                                Time worked by all employees, regardless of                                            Time records from the computer                                                                 Factory has directly linked the time records to       Completed                   The time record is now automatically      Computer              Completed
                                                                                     compensation system, will be documented by time                                        swipe card system took an                                                                      the computer system which eliminated errors in                                    linked to the HR computerized system.     system
                                                                                     cards or other accurate and reliable recording                                         unreasonably long time to print                                                                manual data entry (which produced                                                 The manual time record keeping is no
                                                                                     systems such as electronic swipe cards                                                 (more than 1 day) & contained a                                                                inconsistencies in the past). Time records can                                    longer being used. This new
                                                                                                                                                                            number of inconsistencies w/                                                                   be tracked via excel file which records payroll,                                  computerized system can assist Factory
                                                                                                                                                                            information used to calculate                                                                  overtime, Social Insurance, and other                                             HR & Compliance team, as well as the
                                                                                                                                                                            payroll.                                                                                       deductions. Time for printing is reduced                                          SEA Team, to better track on the spot the
                                                                                                                                                                                                                                                                           considerably (20minutes/worker data/month-                                        monthly OT and leave records.
                                                                                                                                                                                                                                                                           before 5hrs/per worker data/month).

9. 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

Overtime Limitations                         Article 68, 69 of the Labor Code        Except in extraordinary business circumstances,         Overtime worked in excess of                                                                 Record review                    Overtime policy and procedure (No: 017                 Ongoing                    1/ According to Adidas AG SEA                                   Completed                                                                         Overtime report has       OT tracking     Completed
                                             Circular No. 15/2003/TT-                employees will (i) not be required to work more than    code limits (60 hrs/week) by                                                                                                  signed in March 12-2005, is based the local                                       requirement, all Adidas AG suppliers                            and                                                                               been sent to SEA          chart & working
                                             BLDTBXH dated Jun 3rd 2003:             the lesser of (a) 48 hours per week and 12 hours        many workers during                                                                                                           labor regulation which is limited in 300hrs/year                                  must send the monthly OT report to the                          Ongoing                                                                           Manager on a monthly      hours sheet in
                                             The overtime must not exceed 4          overtime or (b) the limits on regular and overtime      October & November.                                                                                                           or 12hrs/week) has been established/signed by                                     SEA Team for monitoring and updating                                                                                                              basis.                    place
                                             hours a day, 16 hours a week, 14        hours allowed by the law of the country of                                                                                                                                            Management board in which overtime schedule                                       Adidas AG' sourcing department. In this
                                             hours in 4 consecutive days and         manufacture or, where the laws of such country will                                                                                                                                   is planned on a weekly basis to have a better                                     form, all OT hours worked throughout the
                                             300 hours a year.                       not limit the hours of work, the regular work week in                                                                                                                                 tracking system for overtime done by HR                                           year is reported. This OT report can help
                                                                                     such country plus 12 hours overtime; and (ii) be                                                                                                                                      department. Voluntary overtime policy has                                         factory management and the SEA Team
                                                                                     entitled to at least one day off in every seven day                                                                                                                                   been also posted and training provided                                            follow up and maintain the annual OT
                                                                                     period. An extraordinary business circumstance is a                                                                                                                                   continuously for existing employees and                                           within the 300 hour limit stipulated by local
                                                                                     temporary period of extra work that could not have                                                                                                                                    orientation program for new worker (record in                                     labor regulation.
                                                                                     been anticipated or alleviated by other reasonable                                                                                                                                    place for checking)                                                               2/ Factory Management also completes a
                                                                                     efforts                                                                                                                                                                                                                                                                 Weekly Working/OT Hours Report which
                                                                                                                                                                                                                                                                                                                                                             is also reviewed.
                                                                                                                                                                                                                                                                                                                                                             3/ Factory Production Team also submits
                                                                                                                                                                                                                                                                                                                                                             to Factory Management a weekly OT
                                                                                                                                                                                                                                                                                                                                                             schedule prior to each week. Weekly OT
                                                                                                                                                                                                                                                                                                                                                             schedule must be signed and approved
                                                                                                                                                                                                                                                                                                                                                             by Factory Management and Compliance
                                                                                                                                                                                                                                                                                                                                                             Team and later forwards to HR for follow
                                                                                                                                                                                                                                                                                                                                                             up. SEA has recommended Factory
                                                                                                                                                                                                                                                                                                                                                             Management to send this weekly OT to
                                                                                                                                                                                                                                                                                                                                                             SEA (weekly) for checking as well.

Legal compliance with protected workers      Art.115 of labor code and Art.122       The factory will comply with all applicable laws        The factory lacks adequate                                                                   Record review                    1) The policy related to pregnant workers is                                      Factory has assigned one staff to work          "Pregnant &     Completed      Pregnant workers SOP has stated     * Woman        Completed and   Factory has the record    List of pregnant Completed
                                             of labor code:                          governing work hours, including those regulating or     system to track pregnant                                                                                                      mentioned in Factory Human Right policy                                           closely with the production team to             nursing baby    and            clearly that worker should inform   Worker Policy  ongoing         system to track down      workers and
                                             - Workers with 7th month of             limiting the nature and volume of work performed by     workers and nursing mothers                                                                                                   No:025 signed in May 20-2005 in which clearly                                     monitor this item. Training has been            "tracking       Ongoing        their pregnancy status to HR        No: 20/SR-                     all pregnant workers in   pregnant
                                             pregnancy or nursing a child            women or workers under the age of 18                    to provide legally required                                                                                                   states the benefit for pregnant workers as well                                   provided to new workers and policy              flowchart in                   through the Pregnant                [Factory]-                     the production lines.     notification
                                             under 12 months of age will be                                                                  benefits. Some nursing                                                                                                        as nursing mothers based on local law,                                            announcement has been conducted and             place                          Confirmation Sheet. HR staff will   20050906                       For example, in July      sheets, list of
                                             entitled: 7 hrs/day with full pay, no                                                           mothers found working OT                                                                                                      including that working mothers will not work                                      posted in the prominent area. Workers'                                         then create a list of pregnant      * Pregnant                     2006 there are 26         female workers
                                             OT work, no night work.                                                                         contrary to local law.                                                                                                        overtime as per law. Training for supervisors                                     interviews also indicated that workers                                         workers in order to inform          Confirmation                   pregnant workers (        with baby under
                                             - Juvenile workers will be entitled                                                                                                                                                                                           had been conducted Dec 7, 2005 as well as                                         were aware of this policy.                                                     Production so workers are then      Sheet                          pregnant from 4 to 6      12 months in
                                             7 hrs/day with full paid, work                                                                                                                                                                                                orientation training for new workers (record in                                                                                                                  transferred to an appropriate job   ( HR_Form_ 22)                 months).                  place for
                                             suitable to the health, separated                                                                                                                                                                                             place and worker interview). 2) Factory should                                                                                                                   and their hours of work do not      * Pregnant                     Record for female         checking
                                             personal file to follow up.                                                                                                                                                                                                   develop a system for tracking pregnant                                                                                                                           violate local law.                  Worker                         workers having baby
                                                                                                                                                                                                                                                                           workers and ensuring that they are not working                                                                                                                                                       Registration                   under 12 month also
                                                                                                                                                                                                                                                                           overtime; maintain records of pregnant                                                                                                                                                               SOP: [Factory]                 available for
                                                                                                                                                                                                                                                                           workers, overtime shall not be assigned to                                                                                                                                                           _HR_FC_02                      verification
                                                                                                                                                                                                                                                                           those employees as per law.
10. 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.


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