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									FLA Audit Profile
Country                       China
Factory name                  01001524D
IEM                           TUV Rheinland Hong Kong Ltd.
Date(s) in facility           September 19-20, 2005
PC(s)                         adidas AG
Number of workers             6538
Product(s)                    Sport shoes
Production                    Stamping, stitching, adhesion and packing

                                                                                                                                                                                                                IEM Findings                                                                                                          Remediation                                           Updates (Cite Date of Follow up)                                 Updates (Cite Date of Follow up)                              Updates (Cite Date of Follow up)                               Updates (Cite Date of Follow up)                          Updates (Cite Date of Follow up)             Updates (Cite Date of Follow up)
FLA Code/ Compliance          Country Law/Legal               FLA Benchmark                                                    Non-compliance                              Risk of Non-compliance         Evidence of Non-   If not        Sources/Documentation used for              Notable Features      PC Remediation plan                                  Target                  Company follow up            Documentation                          Company Follow up            Document                      Company Follow up               Documentation               Company Follow up                  Documentation            Company Follow up      Documentation         Company Follow up     Documentation
issue                         Reference                                                                                                                                                                  compliance          corroborated, corroborating                               implemented by                                                             Completio                 (16-Feb-06)                                                         ( 30-May-2006)               ation                         ( 18-Jan-2007)                                              ( 13-Jul-2007)                                              ( July 2008)                                 ( July 2009)
                                                                                                                                                                                                         (uncorroborated)    explain why                                               Factory                                                                    n Date
                                                                                                                                                                                                                                                                                       Management or

1. Code Awareness
Code posting/information                                      FLA Principle of Monitoring, Obligation of                                                                                                                                                                               SEA (Social and
                                                              Companies: Establish and articulate clear, written                                                                                                                                                                       Environmental
                                                              workplace standards. Formally convey those standards                                                                                                                                                                     Affairs) team was
                                                              to Company factories as well as to licensees,                                                                                                                                                                            set up for
                                                              contractors and suppliers.                                                                                                                                                                                               communication with

Worker/management                                             FLA Principle of Monitoring, Obligation of                       Workers are not familiar with adidas AG'                                                                    Workers' interviews; No training                                  SOE (adidas code of conduct) Poster will be       31-Mar-06 Besides having updated the Worker                   Updated worker           Factory has edited the key points of      Factory       The HSE policies have been integrated in the Factory       Worker Handbook is revised, printed and    Factory management
awareness of Code                                             Companies: Ensure that all Company factories as well             Code of Conduct.                                                                                            evaluation.                                                       added into workers handbook. Factory will                   Handbook which includes labor standards,            handbook; the draft      SOE and added it into worker              Managem       revised Worker Handbook. The new Worker management         distributed already. It includes the basic interview;
                                                              as contractors and suppliers inform their employees                                                                                                                                                                                            provide trainings for workers and supervisors are           factory is editing a booklet which                  HSE booklet              handbook. Since the factory will be re-   ent           Handbook also contains an SEA summary        interview     requirements on HSE and a Chinese version Documentation review
                                                              about the workplace standards orally and through the                                                                                                                                                                                           responsible to do the daily awareness promotion.            summarizes the key points of HSE                                             located and merged with a sister          interview;    section that includes the PC's workplace                   of Workplace Standard.
                                                              posting of standards in a prominent place (in the local                                                                                                                                                                                                                                                    standards and which can be used as                                           factory by October 2006, there are        the draft     standard. The printing of the new Worker
                                                              languages spoken by employees and managers) and                                                                                                                                                                                                                                                            training material. The training for                                          some additional policies that will be     worker        Handbook will be finished before Chinese
                                                              undertake other efforts to educate employees about the                                                                                                                                                                                                                                                     supervisors is planned on Feb 22, 23.                                        will be integrated for the two            handbook      New Year (CNY). Workers will receive the
                                                              standards on a regular basis.                                                                                                                                                                                                                                                                              Factory is looking for supplier to print the                                 factories. Factory Management plans                     new Worker Handbook after the CNY
                                                                                                                                                                                                                                                                                                                                                                         booklet.                                                                     to print out the new workers                            holiday.
                                                                                                                                                                                                                                                                                                                                                                                                                                                      handbook in November 2006.

2.Forced Labor
There will not be any use of forced labor, whether in the form of prison labor, indentured labor, bonded labor or
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.
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.
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

Fire Safety Health and        Building construction law,      Employer will comply with applicable health and safety           Construction safety proof and fire safety                                                                   Existing construction safety proof and                            Factory should keep construction safety proof        28-Feb-06 Factory got the related construction safety      documents on file.       All but two buildings have fire safety   document Factory has moved to new building in
Safety legal compliance       Fire law                        laws and regulations. In any case where laws and code            proofs of some factory buildings were not                                                                   fire safety proof certificates were                               and fire safety proof of all buildings in place.               proof from the local authority. And factory                               proof. Factory will move out from        s on file. September 2006. As previously reported,
                                                              of conduct are contradictory, the higher standards will          available .                                                                                                 checked and interview with Health and                                                                                            is working to get the fire safety proof now.                              these buildings to [the] new factory in             new buildings have fire proof certificates.
                                                              apply. The factory will possess all legally required                                                                                                                         safety officer.                                                                                                                                                                                            Sep. 2006. All new buildings have
                                                              permits                                                                                                                                                                                                                                                                                                                                                                                 fire proof. For the time being, factory
                                                                                                                                                                                                                                                                                                                                                                                                                                                      continues to work with its internal fire
                                                                                                                                                                                                                                                                                                                                                                                                                                                      safety team that monitors the
                                                                                                                                                                                                                                                                                                                                                                                                                                                      workplace conditions regularly in
                                                                                                                                                                                                                                                                                                                                                                                                                                                      order to ensure safe worker

Document Maintenance/                                         All documents required to be available to workers and            1) Hydrochloric acid and DELVAC SUPER                                                                       MSDS of chemicals in warehouse                                    1) MSDS of Hydrochloric acid and DELVAC               9-Nov-05 1) MSDS of Hydrochloric acid and DELVAC documents on file,
Accessibility                                                 management by applicable laws (such as policies,                 1300-15W-40 were used in the factory,                                                                       were checked and verification of                                  SUPER 1300-15W-40 are available now in the                     SUPER 1300-15W-40 are available and          visual verification
                                                              MSDS, etc.) shall be made available in the prescribed            but their MSDS were not available; 2)                                                                       suitability of MSDS by on-site                                    factory.2) People who are responsible for glue                 keep on file now in the factory. 2) When
                                                              manner and in the local language or language spoken by           MSDS hanged on the glue cart at                                                                             observation.                                                      cart should check whether MSDS match with the                  worker deliveries glues to the glue cart, he
                                                              majority of the workers if different from the local              workshop B did not match with the actual                                                                                                                                      chemicals on the cart.                                         checks whether glues' MSDS match with
                                                              language                                                         content we found on the cart.                                                                                                                                                                                                                the chemicals on the cart.

Evacuation Procedure                                          All applicable legally required or recommended elements Evacuation plans on workshops and                                                                                    By document checking and on-site                                  Factory already updated the evacuation plans          8-Dec-05 Factory updated all evacuation plans and         visual verification,     Factory Management updated all            document
                                                              of safe evacuation (such as posting of evacuation plans, warehouse did not match with the actual                                                                             observation.                                                      accordingly; evacuation plans match layout.                    posted them on each floor of the                 documentation            evacuation plans and posted them on       s on file,
                                                              unblocked aisles/exits, employee education, evacuation       layout.                                                                                                                                                                           Factory should make sure evacuation plans                      workplace.                                       review                   each floor of the workplace. Fire         visual
                                                              procedures, etc.) shall be complied with and workers                                                                                                                                                                                           should match with actual layout. Whenever there                                                                                          safety team is in charge of the           verificatio
                                                              shall be trained in proper safety, first aid, and evacuation                                                                                                                                                                                   is a change of the layout, evacuation plans should                                                                                       updates of the plans. Supervisors are     n
                                                              procedures                                                                                                                                                                                                                                     be changed correspondingly as soon as possible.                                                                                          required to remind all workers
                                                                                                                                                                                                                                                                                                                                                                                                                                                      whenever new changes happen.

PPE                                                           Workers shall wear appropriate protective equipment        MSDS of glue (#7219) mentioned gloves             Health check of workers                                         By document checking and on-site                                  1) Factory should provide workers PPE              1) 15-Dec-    I) Factory updates PPE list twice a week    Training records on         Factory conducts internal HSE audit       Training
                                                              (such as gloves, eye protection, hearing protection,       should be worn. But workers did not               showed that overall                                             observation.                                                      according to MSDS’s requirement. Provide           2005 2) 28-   according to the chemicals which are being file; noise testing          every month and general manager           records
                                                              respiratory protection, etc.) to prevent unsafe exposure wear gloves during production.                      abnormality of hearing                                                                                                            ongoing training to all workers and supervisors in Feb-2006      used or type of work and factory provides report on file.               reviews audit result. In order to have    on file;
                                                              (such as inhalation or contact with solvent vapors, noise,                                                   and blood test increased                                                                                                          the use of PPE. Supervisors to enforce the use                   PPE according to PPE list to workers.                                   a good control of factory's HSE           noise
                                                              dust, etc.) to hazardous elements including medical                                                          from 2004 2.8% to 2005                                                                                                            of PPE. 2) Workers whose occupational health                     Training on PPE is included in orientation                              condition, the audit result is linked     testing
                                                              waste.                                                                                                       12.7%. On the other                                                                                                               check is abnormal in hearing and blood test                      and is provided to all supervisors twice a                              with the production supervisor            report on
                                                                                                                                                                           hand, noise level                                                                                                                 should be changed to other position without                      year. Supervisors train and monitor their                               monthly bonus; Workers whose              file.
                                                                                                                                                                           monitoring fail area                                                                                                              occupational disease risk. Factory to monitor                    workers daily. Factory compliance team                                  occupational health check is abnormal
                                                                                                                                                                           increase from 22% to                                                                                                              their health condition to avoid getting worse.                   checks and enforces that all workers use                                in hearing and blood test have been
                                                                                                                                                                           50%. Factory take no                                                                                                              Factory to look for alternative products that                    the PPE correctly, when they have factory                               changed to other position that don't
                                                                                                                                                                           action on these two                                                                                                               contain less toxic chemicals to reduce exposure.                 tour. 2) Workers whose occupational health                              present occupational health risks, and
                                                                                                                                                                           scenarios.                                                                                                                        3) Factory should keep the machines which                        check is abnormal in hearing and blood test                             will attend this year's occupational
                                                                                                                                                                                                                                                                                                             produce loud noise in an isolated area to reduce                 have been changed to other position                                     health medical check up. Workers
                                                                                                                                                                                                                                                                                                             workers exposure to the high noise level                         without occupational disease risk. 3)                                   continue to wear PPE if required by
                                                                                                                                                                                                                                                                                                             environment. Factory should maintain machines in                 Factory doesn't use the machines which                                  chemicals' MSDS.
                                                                                                                                                                                                                                                                                                             good condition so that noise can be reduced.                     produce loud noise right now. And they did
                                                                                                                                                                                                                                                                                                             Factory should maintain the effectiveness of                     the noise testing which is under legal
                                                                                                                                                                                                                                                                                                             workplace’s ventilation system, provide workers                  requirement. Factory provides maintenance
                                                                                                                                                                                                                                                                                                             PPE and train workers to wear it correctly.                      to machines every three months.

Chemical Management                                           All chemicals and hazardous substances should be                                                             1) Thermometer should                                           1) By on-site observation. 2) By on-                              1) Thermometer should be placed in the chemical 1) 9-Nov-        1) Thermometer was in place on Nov 2005. training record on             The first round training were        Training           2) No satisfactory outside consultant for    Factory       Factory has been trying to find outside         Factory management     1)Chemicals have         Factory management   The factory has         Training records,
                                                              properly labeled and stored in accordance with                                                               be placed in the                                                site observation and checking the                                 warehouse.                                      2005; 2)         2) Factory provided specific trainings to   file; visual verification   completed in Feb. 2006. In addition, records            HSE training has been found. Factory will    management    consultant for training on chemical handling,   interview;             been clearly             interview;           invited the experts     worker interview and
                                                              applicable laws. Workers should receive training,                                                            dangerous goods                                                 training records of relevant workers.                             2) Factory should provide specific trainings to 28-Feb-          chemical handling workers on Dec. 2005                                  factory management is currently      on file.           continue to look for outside consultant. In  interview     but has not yet found a very satisfactory       Documentation review   identified;              documentation        from the local CDC      management
                                                              appropriate to their job responsibilities, in the safe use of                                                warehouse to monitor the                                                                                                          chemical handling workers.                      2006             and will keep on providing training to them                             looking for outside professional                        addition, factory management has                           one. However, factory internal SEA team                                2)Flammable and          review; Visual       to train the workers interview.
                                                              chemicals and other hazardous substances                                                                     temperature; 2) Training                                                                                                                                                                           twice a year.                                                           trainers to provide training in the                     conducted a training course for 14 workers                 has carried out 20 training sessions in                                explosive chemicals      verification         handling chemicals in
                                                                                                                                                                           for special tasks like                                                                                                                                                                                                                                                     future.                                                 in Stock-fitting and assembly departments on               January and February on chemical handling                              are stored separately                         Aug and Nov 2008.
                                                                                                                                                                           adhesive, polishing                                                                                                                                                                                                                                                                                                                the chemical components and the possible                   for those workers who handle chemicals on                              in accordance with                            And 4 management
                                                                                                                                                                           should be arranged as                                                                                                                                                                                                                                                                                                              diseases that chemicals cause. Factory is                  their job.                                                             the relevant safety                           staff members
                                                                                                                                                                           these processes have                                                                                                                                                                                                                                                                                                               planning to give the training to all workers                                                                                      requirements;                                 participated in the
                                                                                                                                                                           potential health and                                                                                                                                                                                                                                                                                                               who handle chemicals including workers on                                                                                         3)Factory                                     adidas health and
                                                                                                                                                                           safety risk.                                                                                                                                                                                                                                                                                                                       production lines and in warehouse in                                                                                              management                                    safety officer training
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              February 2007.                                                                                                                    continues offering the                        in 2008, where some
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                safety training to the                        consultants were
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                operator of chemicals                         invited for some
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                on the hazardous                              special training
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                knowledge and                                 courses.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                prevention methods.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                4)Consultant for the
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Chemical training
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                must be arranged at
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                the end of 2008.
Sanitation in Facilities                                      All facilities including factory buildings, toilets, canteens,                                               Qualification of one of the                                     By checking the qualification certificate                         The Chinese herbalist has the doctor qualification                                                              documentation
                                                              kitchens, and clinics, shall be kept clean and safe and be                                                   doctor is Chinese                                               of doctors.                                                       certificate from China medical authority. He only                                                               review
                                                              in compliance with applicable laws                                                                           herbalist.                                                                                                                        provides workers counter medicine.

Chemical Management           Dangerous Chemical              All chemicals and hazardous substances should be              Dangerous chemicals waste were not                                                                             By checking the waste collection            Factory has           Factory should use a qualified collector which is        38776 Factory signed the contract with a qualified     documentation on file Factory signed the contract with a           document
                              Handling regulation             properly labeled and stored in accordance with                collected by a qualified collector.                                                                            record and the qualification list of        established their     approved by the government to take their                       collector provided by the government on                                qualified collector provided by the          ation on
                                                              applicable laws. Workers should receive training,                                                                                                                            collector.                                  own fire team (full   chemical waste.                                                Dec. 2005 and the collector started taking                             government on Dec. 2005. The                 file
                                                              appropriate to their job responsibilities, in the safe use of                                                                                                                                                            time) to handle the                                                                  out factory's chemical waste starting Jan.                             collector started collecting factory's
                                                              chemicals and other hazardous substances                                                                                                                                                                                 fire safety issue.                                                                   2006.                                                                  chemical waste on Jan. 2006.
                                                                                                                                                                                                                                                                                       Basically workers
                                                                                                                                                                                                                                                                                       are satisfied with

                                                                                                                                                                                                           IEM Findings                                                                                                   Remediation                                           Updates (Cite Date of Follow up)                            Updates (Cite Date of Follow up)                           Updates (Cite Date of Follow up)                               Updates (Cite Date of Follow up)                         Updates (Cite Date of Follow up)               Updates (Cite Date of Follow up)
FLA Code/ Compliance          Country Law/Legal               FLA Benchmark                                                Non-compliance                               Risk of Non-compliance       Evidence of Non-   If not        Sources/Documentation used for          Notable Features   PC Remediation plan                                   Target                 Company follow up            Documentation                     Company Follow up            Document                   Company Follow up               Documentation               Company Follow up                  Documentation           Company Follow up      Documentation           Company Follow up     Documentation
issue                         Reference                                                                                                                                                             compliance          corroborated, corroborating                           implemented by                                                           Completio                (16-Feb-06)                                                    ( 30-May-2006)               ation                      ( 18-Jan-2007)                                              ( 13-Jul-2007)                                             ( July 2008)                                   ( July 2009)
                                                                                                                                                                                                    (uncorroborated)    explain why                                           Factory                                                                  n Date
                                                                                                                                                                                                                                                                              Management or
7. Freedom of Association and Collective Bargaining
Employers will recognize and respect the right of employees to freedom of association and collective bargaining

                                                              FLA Comment: The Chinese constitution guarantees
                                                              Freedom of Association; however, the Trade Union Act
                                                              prevents the establishment of trade unions independent
                                                              of the sole official trade union – the All China
                                                              Federation of Trade Unions (ACFTU). According to the
                                                              ILO, many provisions of the Trade Union Act are
                                                              contrary to the fundamental principles of freedom of
                                                              association, including the non-recognition of the right to
                                                              strike. As a consequence, all factories in China fall
                                                              short of the ILO standards on the right to organize and
                                                              bargain collectively. Recently, however, the
                                                              government has introduced new regulations that could
                                                              improve the functioning of the labor relations
                                                              The Amended Trade Union Act of October 2001 does
                                                              stipulate that union committees have to be
                                                              democratically elected at members’ assemblies and
                                                              trade unions must be accountable to their members.
                                                              The trade union has the responsibility to consult with
                                                              management on key issues of importance to their
                                                              members and to sign collective agreements. It also
                                                              grants the trade union an enhanced role in dispute
                                                              resolution. In December 2003,the Collective Contracts
                                                              Decree introduced the obligation for representative
                                                              trade unions and employers to negotiate collective
                                                              agreements, in contrast to the previous system of non-
Right to Freely Associate                                     Workers will have the right to establish and, subject only                                                                            Workers not aware of              Workers interview                                          Factory will provide trainings for workers on        31-Mar-06 Factory provides training for new workers     New worker             Since the factory will be re-located    Factory    Due to the relocation of the old factory, the Factory        New union was set up in April. Factory        Factory management
                                                              to the rules of the organization concerned, to join                                                                                   arrangement of union                                                                         function of union and supervisors will provide daily           during orientation. For existing workers,     orientation record;    and merged with a sister factory by     managem old union no longer exists. New union will be management        announced the set-up of the union in the      interview;
                                                              organizations of their own choosing without previous                                                                                                                                                                               awareness promotion to workers in the function                 supervisors give talk to workers during their worker interviews      October 2006, factory had stopped       ent        established in the new building by March      interview      factory's monthly magazine and posted the Documentation review
                                                              authorization. The right to freedom of association begins                                                                                                                                                                          of the union.                                                  weekly meeting.                                                      recruiting new workers. All current     interview; 2007.                                                        information about the union on notice board.
                                                              at the time that a worker seeks employment, and                                                                                                                                                                                                                                                                                                                        workers are aware of the Union.         worker                                                                  A designated office is set up and 2 full-time
                                                              continues through the course of employment                                                                                                                                                                                                                                                                                                                                                                     interview                                                               union committee members have been on
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     board and started to work.
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
Wage Benefits Awareness                                       Employers will communicate orally and in writing to all                                                   Workers not familiar with                                     Worker interview                                           Factory management to post information in a           28-Feb-06 The training is provided for new workers      New worker            Since the factory will be re-located    Factory      Factory has conducted an exam to all          Factory      Supervisors are still responsible to inform    Factory management     Bonus policy is          Factory management
                                                              employees in the language of the worker the wages,                                                        bonus calculation.                                                                                                       public place on how to calculate bonus. Provide                 during orientation. For existing workers,     orientation record;   and merged with a sister factory by     managem      production line supervisors on the production management   workers of bonus calculation. In April 2007, interview;               posted on bulletin       interview and worker
                                                              incentive systems, benefits and bonuses to which all                                                                                                                                                                               training on bonus calculation to workers in                     when they receive their pay slips every       documentation         October 2006, factory had stopped       ent          bonus calculation. Besides posting the rules interview     factory carried out random worker              Documentation review   boards and in the        interview
                                                              workers are entitled in that company and under the                                                                                                                                                                                 orientation. Supervisors are responsible to                     month, their supervisors explain how the      review                recruiting new workers. All current     interview;   on production bonus calculation on the notice              interviews to investigate if workers are clear                        employee handbook;
                                                              applicable law                                                                                                                                                                                                                     update workers on bonus calculation monthly.                    bonus is calculated.                                                workers in the factory know about the   worker       board, supervisors are responsible for                     about bonus calculation or not. However, the                          the orientation training
                                                                                                                                                                                                                                                                                                                                                                                                                                     bonus calculation.                      interview    clearly training workers on the bonus                      result is not satisfactory as the majority                            and annual training is
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          calculation system. Factory is planning to                 don't know about the bonus calculation                                being provided, so
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          carry out random worker interviews in                      clearly. The reason is that the formula of                            that employees can
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          February 2007 to verify whether the workers                bonus calculation is too complicated for                              understand it easily.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          understand the bonus calculation system.                   workers to understand. Factory needs to re-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     evaluate the bonus calculation.

Voluntary Use of Benefits                                     All workers have a right to use or not to use employer       4RMB per day will be deducted even                                                                         Payment slip and attendance record.                        Factory is to revise the policy - breakfast will be   30-Apr-06 Factory is looking for the best solution   documentation            Factory IT dept. has chosen the         Factory      Factory has completed the trial test for the  Factory      Since March 1st 2007, factory has          Factory management
                                                              provided services, such as housing or meals                  workers not having meal in the factory but                                                                 In addition, management agreed that                        provided for free; lunch/dinner is RMB 2 per                    including testing some new IT systems. The review                   software which can automatically        managem      new recording software and machines.          management   implemented the IT system to record the    interview;
                                                                                                                           reported duty on that day.                                                                                 currently they don't have a system to                      meal; and workers can choose whether they                       draft of the revised policy is in place.                            record the number of meals that         ent          Factory will install the machines in the      interview    number of meals that workers have, and     Documentation review
                                                                                                                                                                                                                                      verify this situation.                                     want to have meals in factory or not, monthly.                                                                                      workers have taken, and then link it    interview    canteen at the end of January. Due to                      factory deducts the meal charges according
                                                                                                                                                                                                                                                                                                                                                                                                                                     with the wage system. This IT system                 combination of the meal recording system                   to the numbers of meals.
                                                                                                                                                                                                                                                                                                                                                                                                                                     will be on trial in July.                            with the salary calculation system, IT and HR
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          departments need 2 more weeks to test the
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          integrated system. As a result, the
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          recording system will begin to be
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          implemented by March 2007.
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
Forced overtime                                                 Under extraordinary business circumstances, employers                                                                               Some workers                      workers' interviews                                        Voluntary overtime policy is written in workers       28-Feb-06 Voluntary overtime policy has been always     Worker handbook       Workers understand the voluntary        Worker
                                                                will make extensive efforts to secure voluntary overtime                                                                            feedback that they                                                                           handbook. Factory will provide trainings for                    in the worker handbook. Verbal training                             overtime policy well and they can       interview
                                                                work prior to mandating involuntary overtime                                                                                        might have difficulty to                                                                     workers and supervisors regularly on such policy.               (reminding) is given during weekly meeting.                         refuse to work overtime freely.
                                                                                                                                                                                                    apply OT exemption.

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.
OT Compensation                                               The factory shall comply with applicable law for premium Fixed overtime wage, 3 days (24hours),                                                                         Wage calculation guideline, payment                        Factory will revise the workers handbook and the      31-Mar-06 Factory revised the policy and states that  documentation           All overtime work is paid according to Document
                                                              rates for overtime compensation                          were paid to officers in warehouse and                                                                         slip & attendance record.                                  policy and inform all workers of the correct                    all overtime work will be paid according to review; interviews      the actual hours and at correct rate. ation
                                                                                                                       PMC even though their actual overtime                                                                                                                                     calculation for overtime payment. All workers will              worker's actual working hours and law                                                                      review
                                                                                                                       working hours exceed 16 hours (16 hours                                                                                                                                   be paid according to their actual working hours                 requirements. Factory informed all
                                                                                                                       x 1.5 = 24 hours)                                                                                                                                                         and to law requirements.                                        employees of such policy on 23-Dec-05 and
                                                                                                                                                                                                                                                                                                                                                                 the policy came into effect since 1-Jan-06.



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