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					FLA Audit Profile
Country                                                  China
Name of Factory                                          440015565F
Independent External Monitoring Organization             Level Works Limited
Date(s) in Facility                                      9/25/2007 - 9/26/2007
FLA Affiliated Compan(ies)                               Hennes & Mauritz AB
Number of Workers                                        650
Product(s)                                               Men's Dress, Business Suit
Production Processes                                     Cutting, Sewing, Pressing, Inspection, Packing


FLA Code/Benchmark                                       Compliance Status Describe noncompliance, risk of                List sources/documentation used     Cite and describe local and/or     Descri
                                                                           noncompliance or uncorroborated                for reference and corroborating     country laws used for additional   be
                                                                           evidence of noncompliance                      evidence (e.g. worker interviews,   reference                          notabl
                                                                                                                          factory walkthrough, records                                           e
                                                                                                                          review, etc.)                                                          feature
1. Code Awareness                                                                                                                                                                                s
GEN 2: Ensure that all Company factories as well as Noncompliance            It was noted that the factory did not post   Management Interview, Workers
contractors and suppliers inform their employees                             the company code of conduct onsite.          Interview and Documentation
about the workplace standards orally and through the                                                                      Reviewing
posting of standards in a prominent place (in the local
languages spoken by employees and managers) and
undertake other efforts to educate employees about
the standards on a regular basis.



GEN 3: Develop a secure communications channel, in Noncompliance             It was noted that there is no                Management Interview and
a manner appropriate to the culture and situation, to                        noncompliance reporting mechanism was        workers interview
enable Company employees and employees of                                    established in the factory which allows
contractors and suppliers to report to the Company on                        factory workers to contact the Company
noncompliance with the workplace standards, with                             directly.
security that they shall not be punished or prejudiced
for doing so.


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

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. Non-Discrimination
No person will be subject to any discrimination in
employment, including hiring, salary, benefits,
advancement, discipline, termination or retirement, on
the basis of gender, race, religion, age, disability,
sexual orientation, nationality, political opinion, or
social or ethnic origin.
6. Health and Safety




                                                                                                                                                                                                           1
FLA Code/Benchmark                                         Compliance Status Describe noncompliance, risk of               List sources/documentation used       Cite and describe local and/or       Descri
                                                                             noncompliance or uncorroborated               for reference and corroborating       country laws used for additional     be
                                                                             evidence of noncompliance                     evidence (e.g. worker interviews,     reference                            notabl
                                                                                                                           factory walkthrough, records                                               e
                                                                                                                           review, etc.)                                                              feature
Employers will provide a safe and healthy working                                                                                                                                                     s
environment to prevent accidents and injury to health
arising out of, linked with, or occurring in the course of
work or as a result of the operation of employer
facilities.
H&S.17 Ventilation/Electrical/Facility Installation and    Noncompliance      It was noted that all the switches in the    Factory Tour                          PRC Factory Safety and Sanitary
Maintenance                                                                   dormitory building were not covered                                                Regulations article 41, electrical
                                                                              properly.                                                                          equipment and circuit must be
                                                                                                                                                                 insulated properly. Exposed
                                                                                                                                                                 conductor with electric current
                                                                                                                                                                 shall be installed in an
                                                                                                                                                                 inaccessible area, or it shall be
                                                                                                                                                                 equipped with safety guards and
                                                                                                                                                                 clear warning signs.


7. Freedom of Association and Collective
Bargaining
Employers will recognize and respect the right of employees to freedom of association and collective bargaining. FLA Comment: The Chinese constitution guarantees Freedom of Association
(FOA); however, the Trade Union Act prevents the establishment of trade unions independent of the sole official trade union - the All China Federation of Trade Unions (ACFTU). According to the
ILO, many provisions of the Trade Union Act are contrary to the fundamental principles of FOA, including the non-recognition of the right to strike. As a consequence, all factories in China fall short of
the ILO standards on the right to organize and bargain collectively. However, the government has introduced new regulations that could improve the functioning of the labor relations mechanisms.
The Amended Trade Union Act of Oct. 2001 stipulates that union committees have to be democratically elected at members' assemblies and trade unions must be accountable to their members.
The trade union has the responsibility to consult with management on key issues of importance to their members and to sign collective agreements. Trade unions also have an enhanced role in
dispute resolution. In Dec. 2003, the Collective Contracts Decree introduced the obligation for representative trade unions and employers to negotiate collective agreements, in contrast to the
previous system of non-negotiated
FOA.2 Right to Freely Associate administrative agreements.
                                                         Noncompliance      See FLA comment on China situation

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




                                                                                                                                                                                                                2
FLA Code/Benchmark                       Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or       Descri
                                                           noncompliance or uncorroborated               for reference and corroborating     country laws used for additional     be
                                                           evidence of noncompliance                     evidence (e.g. worker interviews,   reference                            notabl
                                                                                                         factory walkthrough, records                                             e
                                                                                                         review, etc.)                                                            feature
HOW.1 General Compliance Hours of Work   Noncompliance     The compliance status of "Overtime            Records Review, and Workers         PRC Labor Law article 41 The         s
                                                           hours", "Rest Days" could not be verified     Interview                           employing unit may extend
                                                           due to inconsistencies noted during this                                          working hours due to the
                                                           audit.                                                                            requirements of its production or
                                                           1). Through reviewing the finished-                                               business after consultation with
                                                           products inspection records, there were                                           the trade union and laborers, but
                                                           working records on 23rd September 2007                                            the extended working hour for a
                                                           (which was a Sunday), but the provided                                            day shall generally not exceed
                                                           barcode attendance records showed that                                            one hour; if such extension is
                                                           the related worker was off on this day;                                           called for due to special reasons,
                                                           2). Through inspecting finished-products                                          the extended hours shall not
                                                           shipment records in the finished-products                                         exceed three hours a day under
                                                           warehouse, there were finished-products                                           the condition that the health of
                                                           shipment records on 11th, 12th, 16th                                              laborers is guaranteed.
                                                           February 2007, 25th March 2007 (which                                             However, the total extension in a
                                                           were all Sundays or normal working days),                                         month shall not exceed thirty-six
                                                           but the provided barcode attendance                                               hours.
                                                           records showed that the related workers
                                                           were off on these days;
                                                           3). Through the finished-products receiving
                                                           records in the finished-products warehouse
                                                           reviewed, there were working records on
                                                           8th, 15th, 29th July 2007, 5th, 12th August
                                                           2007 (which were all Sundays), but the
                                                           provided barcode attendance records
                                                           showed that the related workers were rest
                                                           on these days.




                                                                                                                                                                                            3
FLA Code/Benchmark                                          Compliance Status Describe noncompliance, risk of              List sources/documentation used     Cite and describe local and/or       Descri
                                                                              noncompliance or uncorroborated              for reference and corroborating     country laws used for additional     be
                                                                              evidence of noncompliance                    evidence (e.g. worker interviews,   reference                            notabl
                                                                                                                           factory walkthrough, records                                             e
                                                                                                                           review, etc.)                                                            feature
HOW.2 Rest Day                                              Noncompliance     The compliance status of "Rest Days"         Records Review, and Workers         PRC Labor Law article 38, the        s
                                                                              could not be verified due to inconsistencies Interview                           employing unit shall guarantee
                                                                              were noted during this audit.                                                    that its staff and workers have at
                                                                              1). Through reviewing the finished-                                              least one day off in a week.
                                                                              products inspection records, there were
                                                                              working records on 23rd September 2007
                                                                              (which was a Sunday), but the provided
                                                                              barcode attendance records showed that
                                                                              the related worker was off on this day;
                                                                              2). Through inspecting finished-products
                                                                              shipment records in the finished-products
                                                                              warehouse, there were finished-products
                                                                              shipment records on 11th, 12th, 16th
                                                                              February 2007, 25th March 2007 (which
                                                                              were all Sundays or normal working days),
                                                                              but the provided barcode attendance
                                                                              records showed that the related workers
                                                                              were off on these days;
                                                                              3). Through the finished-products receiving
                                                                              records in the finished-products warehouse
                                                                              reviewed, there were working records on
                                                                              8th, 15th, 29th July 2007, 5th, 12th August
                                                                              2007 (which were all Sundays), but the
                                                                              provided barcode attendance records
                                                                              showed that the related workers were rest
                                                                              on these days.




9. Wages, Benefits and Overtime Compensation

WAGES AND BENEFITS: Employers recognize that
wages are essential to meeting employees’ basic
needs. Employers will pay employees, as a base, at
least the minimum wage required by local law or the
prevailing industry wage, whichever is higher, and will
provide legally mandated benefits.
OVERTIME COMPENSATION: In addition to their
compensation for regular hours of work, employees
will be compensated for overtime hours at such
premium rate as is legally required in the country of
manufacture or, in those countries where such laws
will not exist, at a rate at least equal to their regular
hourly compensation rate.




                                                                                                                                                                                                              4
FLA Code/Benchmark                              Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                                  noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                                  evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                                factory walkthrough, records                                           e
                                                                                                                review, etc.)                                                          feature
WBOT.1 General Compliance Wages, Benefits and   Noncompliance     The compliance status of "Minimum             Workers Interview and Records                                          s
Overtime Compensation                                             wages" and "Overtime Wages" could not         Review
                                                                  be verified due to inconsistencies noted
                                                                  during this audit.
                                                                  1). Through reviewing the finished-
                                                                  products inspection records, there were
                                                                  working records on 23rd September 2007
                                                                  (which was a Sunday), but the provided
                                                                  barcode attendance records showed that
                                                                  the related worker was off on this day;
                                                                  2). Through inspecting finished-products
                                                                  shipment records in the finished-products
                                                                  warehouse, there were finished-products
                                                                  shipment records on 11th, 12th, 16th
                                                                  February 2007, 25th March 2007 (which
                                                                  were all Sundays or normal working days),
                                                                  but the provided barcode attendance
                                                                  records showed that the related workers
                                                                  were off on these days;
                                                                  3). Through the finished-products receiving
                                                                  records in the finished-products warehouse
                                                                  reviewed, there were working records on
                                                                  8th, 15th, 29th July 2007, 5th, 12th August
                                                                  2007 (which were all Sundays), but the
                                                                  provided barcode attendance records
                                                                  showed that the related workers were rest
                                                                  on these days.




                                                                                                                                                                                                 5
FLA Code/Benchmark    Compliance Status Describe noncompliance, risk of              List sources/documentation used     Cite and describe local and/or     Descri
                                        noncompliance or uncorroborated              for reference and corroborating     country laws used for additional   be
                                        evidence of noncompliance                    evidence (e.g. worker interviews,   reference                          notabl
                                                                                     factory walkthrough, records                                           e
                                                                                     review, etc.)                                                          feature
WBOT.2 Minimum Wage   Noncompliance     The compliance status of Minimum wages Workers Interview and Records             PRC Labor Law article 48 and       s
                                        could not be verified due to inconsistencies Review                              Opinion of the Ministry of Labor
                                        noted during this audit.                                                         on Several Questions concerning
                                        1). Through reviewing the finished-                                              the Implementation of the Labor
                                        products inspection records, there were                                          Law (1995) article 57,
                                        working records on 23rd September 2007                                           employees, including those who
                                        (which was a Sunday), but the provided                                           are in probationary, training or
                                        barcode attendance records showed that                                           internship period, shall not be
                                        the related worker was off on this day;                                          paid lower than the local
                                        2). Through inspecting finished-products                                         minimum standard.
                                        shipment records in the finished-products
                                        warehouse, there were finished-products
                                        shipment records on 11th, 12th, 16th
                                        February 2007, 25th March 2007 (which
                                        were all Sundays or normal working days),
                                        but the provided barcode attendance
                                        records showed that the related workers
                                        were off on these days;
                                        3). Through the finished-products receiving
                                        records in the finished-products warehouse
                                        reviewed, there were working records on
                                        8th, 15th, 29th July 2007, 5th, 12th August
                                        2007 (which were all Sundays), but the
                                        provided barcode attendance records
                                        showed that the related workers were rest
                                        on these days.




                                                                                                                                                                      6
FLA Code/Benchmark                    Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                        noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                        evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                      factory walkthrough, records                                           e
                                                                                                      review, etc.)                                                          feature
WBOT.7 Payment for All Hours Worked   Noncompliance     The compliance status of "Minimum             Workers Interview and Records                                          s
                                                        wages" and "Overtime Wages" could not         Review
                                                        be verified due to inconsistencies noted
                                                        during this audit.
                                                        1). Through reviewing the finished-
                                                        products inspection records, there were
                                                        working records on 23rd September 2007
                                                        (which was a Sunday), but the provided
                                                        barcode attendance records showed that
                                                        the related worker was off on this day;
                                                        2). Through inspecting finished-products
                                                        shipment records in the finished-products
                                                        warehouse, there were finished-products
                                                        shipment records on 11th, 12th, 16th
                                                        February 2007, 25th March 2007 (which
                                                        were all Sundays or normal working days),
                                                        but the provided barcode attendance
                                                        records showed that the related workers
                                                        were off on these days;
                                                        3). Through the finished-products receiving
                                                        records in the finished-products warehouse
                                                        reviewed, there were working records on
                                                        8th, 15th, 29th July 2007, 5th, 12th August
                                                        2007 (which were all Sundays), but the
                                                        provided barcode attendance records
                                                        showed that the related workers were rest
                                                        on these days.




                                                                                                                                                                                       7
FLA Code/Benchmark                               Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                                   noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                                   evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                                 factory walkthrough, records                                           e
                                                                                                                 review, etc.)                                                          feature
WBOT.8 Calculation Basis for Overtime Payments   Noncompliance     The compliance status of "Minimum             Workers Interview and Records       PRC Labor Law article 44, the      s
                                                                   wages" and "Overtime Wages" could not         Review                              overtime payment shall not be
                                                                   be verified due to inconsistencies noted                                          lower than 150%, 200% and
                                                                   during this audit.                                                                300% of employee normal rate
                                                                   1). Through reviewing the finished-                                               for overtime on normal
                                                                   products inspection records, there were                                           workdays, rest days and official
                                                                   working records on 23rd September 2007                                            public holidays respectively.
                                                                   (which was a Sunday), but the provided
                                                                   barcode attendance records showed that
                                                                   the related worker was off on this day;
                                                                   2). Through inspecting finished-products
                                                                   shipment records in the finished-products
                                                                   warehouse, there were finished-products
                                                                   shipment records on 11th, 12th, 16th
                                                                   February 2007, 25th March 2007 (which
                                                                   were all Sundays or normal working days),
                                                                   but the provided barcode attendance
                                                                   records showed that the related workers
                                                                   were off on these days;
                                                                   3). Through the finished-products receiving
                                                                   records in the finished-products warehouse
                                                                   reviewed, there were working records on
                                                                   8th, 15th, 29th July 2007, 5th, 12th August
                                                                   2007 (which were all Sundays), but the
                                                                   provided barcode attendance records
                                                                   showed that the related workers were rest
                                                                   on these days.




                                                                                                                                                                                                  8
FLA Code/Benchmark                      Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                          noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                          evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                        factory walkthrough, records                                           e
                                                                                                        review, etc.)                                                          feature
WBOT.10 Premium/Overtime Compensation   Noncompliance     The compliance status of "Minimum             Workers Interview and Records       PRC Labor Law article 44, the      s
                                                          wages" and "Overtime Wages" could not         Review                              overtime payment shall not be
                                                          be verified due to inconsistencies noted                                          lower than 150%, 200% and
                                                          during this audit.                                                                300% of employee normal rate
                                                          1). Through reviewing the finished-                                               for overtime on normal
                                                          products inspection records, there were                                           workdays, rest days and official
                                                          working records on 23rd September 2007                                            public holidays respectively.
                                                          (which was a Sunday), but the provided
                                                          barcode attendance records showed that
                                                          the related worker was off on this day;
                                                          2). Through inspecting finished-products
                                                          shipment records in the finished-products
                                                          warehouse, there were finished-products
                                                          shipment records on 11th, 12th, 16th
                                                          February 2007, 25th March 2007 (which
                                                          were all Sundays or normal working days),
                                                          but the provided barcode attendance
                                                          records showed that the related workers
                                                          were off on these days;
                                                          3). Through the finished-products receiving
                                                          records in the finished-products warehouse
                                                          reviewed, there were working records on
                                                          8th, 15th, 29th July 2007, 5th, 12th August
                                                          2007 (which were all Sundays), but the
                                                          provided barcode attendance records
                                                          showed that the related workers were rest
                                                          on these days.




                                                                                                                                                                                         9
FLA Code/Benchmark                              Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                                  noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                                  evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                                factory walkthrough, records                                           e
                                                                                                                review, etc.)                                                          feature
WBOT.17 Accurate Calculation and Recording of   Noncompliance     The compliance status of "Minimum             Records Review, and Workers                                            s
Wage Compensation                                                 wages" and "Overtime Wages" could not         Interview
                                                                  be verified due to inconsistencies noted
                                                                  during this audit.
                                                                  1). Through reviewing the finished-
                                                                  products inspection records, there were
                                                                  working records on 23rd September 2007
                                                                  (which was a Sunday), but the provided
                                                                  barcode attendance records showed that
                                                                  the related worker was off on this day;
                                                                  2). Through inspecting finished-products
                                                                  shipment records in the finished-products
                                                                  warehouse, there were finished-products
                                                                  shipment records on 11th, 12th, 16th
                                                                  February 2007, 25th March 2007 (which
                                                                  were all Sundays or normal working days),
                                                                  but the provided barcode attendance
                                                                  records showed that the related workers
                                                                  were off on these days;
                                                                  3). Through the finished-products receiving
                                                                  records in the finished-products warehouse
                                                                  reviewed, there were working records on
                                                                  8th, 15th, 29th July 2007, 5th, 12th August
                                                                  2007 (which were all Sundays), but the
                                                                  provided barcode attendance records
                                                                  showed that the related workers were rest
                                                                  on these days.




                                                                                                                                                                                                 10
FLA Code/Benchmark                              Compliance Status Describe noncompliance, risk of               List sources/documentation used     Cite and describe local and/or     Descri
                                                                  noncompliance or uncorroborated               for reference and corroborating     country laws used for additional   be
                                                                  evidence of noncompliance                     evidence (e.g. worker interviews,   reference                          notabl
                                                                                                                factory walkthrough, records                                           e
                                                                                                                review, etc.)                                                          feature
WBOT.19 False Payroll Records                   Noncompliance     The compliance status of "Minimum             Records Review, and Workers                                            s
                                                                  wages" and "Overtime Wages" could not         Interview
                                                                  be verified due to inconsistencies noted
                                                                  during this audit.
                                                                  1). Through reviewing the finished-
                                                                  products inspection records, there were
                                                                  working records on 23rd September 2007
                                                                  (which was a Sunday), but the provided
                                                                  barcode attendance records showed that
                                                                  the related worker was off on this day;
                                                                  2). Through inspecting finished-products
                                                                  shipment records in the finished-products
                                                                  warehouse, there were finished-products
                                                                  shipment records on 11th, 12th, 16th
                                                                  February 2007, 25th March 2007 (which
                                                                  were all Sundays or normal working days),
                                                                  but the provided barcode attendance
                                                                  records showed that the related workers
                                                                  were off on these days;
                                                                  3). Through the finished-products receiving
                                                                  records in the finished-products warehouse
                                                                  reviewed, there were working records on
                                                                  8th, 15th, 29th July 2007, 5th, 12th August
                                                                  2007 (which were all Sundays), but the
                                                                  provided barcode attendance records
                                                                  showed that the related workers were rest
                                                                  on these days.




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




                                                                                                                                                                                                 11
FLA Audit Profile
Country                                                   China
Name of Factory                                           440015565F
Independent External Monitoring Organization              Level Works Limited

Date(s) in Facility                                       9/25/2007 - 9/26/2007
FLA Affiliated Compan(ies)                                Hennes & Mauritz AB
Number of Workers                                         650
Product(s)                                                Men's Dress, Business Suit
Production Processes                                      Cutting, Sewing, Pressing, Inspection, Packing

FLA Code/Benchmark                                        Compliance Status                                                                       Remediation
                                                                                Description of noncompliance, risk of            Company          Company Remediation Plan                           Target       Factory Response
                                                                                noncompliance or uncorroborated evidence         Internal Audit                                                      Completion   (optional)
                                                                                of noncompliance                                 Findings                                                            Date
                                                                                                                                 (optional)
GEN 2: Ensure that all Company factories as well as Noncompliance               It was noted that the factory did not post the                    Generally we do not require our Code of         In Progress     Have the factory
contractors and suppliers inform their employees                                company code of conduct onsite.                                   Conduct to be posted in the factory. In the                     post a code of
about the workplace standards orally and through the                                                                                              case a factory produces for different buyers it                 conduct.
posting of standards in a prominent place (in the local                                                                                           might be confusing for the workers. Instead,
languages spoken by employees and managers) and                                                                                                   we encourage the factories to develop internal
undertake other efforts to educate employees about                                                                                                regulations in line with our Code of Conduct
the standards on a regular basis.                                                                                                                 and local legislation and to clearly
                                                                                                                                                  communicate these to all workers, for
                                                                                                                                                  example through a handbook for the workers
                                                                                                                                                  or on the notice board.



GEN 3: Develop a secure communications channel, Noncompliance                   It was noted that there is no noncompliance                       During our audits and discussions with the       In Progress    Non-compliance
in a manner appropriate to the culture and situation,                           reporting mechanism was established in the                        factory, H&M primarily encourage them to                        reporting
to enable Company employees and employees of                                    factory which allows factory workers to                           develop and deepen its own confidential non-                    mechanism will be
contractors and suppliers to report to the Company                              contact the Company directly.                                     compliance system. We support the factory in                    established in
on noncompliance with the workplace standards, with                                                                                               building a dialogue system within the factory in                future.
security that they shall not be punished or prejudiced                                                                                            order to have a forum for the workers to
for doing so.                                                                                                                                     communicate grievances to the management.
                                                                                                                                                  During our audits, we regularly check the
                                                                                                                                                  function of these systems. At all H&M audits
                                                                                                                                                  we conduct worker interviews. During these
                                                                                                                                                  confidential, one-to-one interviews, business
                                                                                                                                                  cards with a mobile number is provided to the
                                                                                                                                                  workers in order for them to be able to contact
                                                                                                                                                  and put forward their grievances directly to us.
                                                                                                                                                  We encourage the business cards to be
                                                                                                                                                  spread among all the workers in the factory.




H&S.17 Ventilation/Electrical/Facility Installation and   Noncompliance         It was noted that all the switches in the                         H&M requires that safety in the factory as well
Maintenance                                                                     dormitory building were not covered properly.                     as the dormitory is maintained according to
                                                                                                                                                  local law and our Code of Conduct. We will
                                                                                                                                                  encourage the factory to participate in external
                                                                                                                                                  training on health and Safety in order to
                                                                                                                                                  improve the health and safety awareness in
                                                                                                                                                  the factory.




                                                                                                                                                                                                                                      12
FLA Code/Benchmark                       Compliance Status                                                                   Remediation
                                                             Description of noncompliance, risk of          Company          Company Remediation Plan                        Target       Factory Response
                                                             noncompliance or uncorroborated evidence       Internal Audit                                                   Completion   (optional)
                                                             of noncompliance                               Findings                                                         Date
                                                                                                            (optional)
FOA.2 Right to Freely Associate          Noncompliance       See FLA comment on China situation                              The workers should be free to form
                                                                                                                             associations of their own choosing, and to
                                                                                                                             bargain collectively. We don't accept any
                                                                                                                             disciplinary actions from the factory against
                                                                                                                             workers who choose to peacefully and lawfully
                                                                                                                             organize or join an association. In addition,
                                                                                                                             during our audits we put effort on building
                                                                                                                             effective communication channels between
                                                                                                                             workers and management.


HOW.1 General Compliance Hours of Work   Noncompliance       The compliance status of "Overtime hours",                      H&M is first and foremost interested in being Immediately
                                                             "Rest Days" could not be verified due to                        shown the true situation in the factory and
                                                             inconsistencies noted during this audit.                        require the factories to always provide the
                                                             1). Through reviewing the finished-products                     correct attendance records and salary lists.
                                                             inspection records, there were working                          Providing incomplete or fake documents is a
                                                             records on 23rd September 2007 (which was                       violation of our basic requirements of
                                                             a Sunday), but the provided barcode                             transparency. Only after knowing the real
                                                             attendance records showed that the related                      overtime are we able to engage in dialogue
                                                             worker was off on this day;                                     with the factory to establish a system to
                                                             2). Through inspecting finished-products                        reduce the overtime in a sustainable manner.
                                                             shipment records in the finished-products                       The long-term aim is to through improved
                                                             warehouse, there were finished-products                         production planning and efficiency steadily
                                                             shipment records on 11th, 12th, 16th                            reduce the overtime hours in order to meet
                                                             February 2007, 25th March 2007 (which                           the legal limit of overtime hours per month. In
                                                             were all Sundays or normal working days),                       the short term, we require the factory to
                                                             but the provided barcode attendance records                     ensure that workers may have one day off per
                                                             showed that the related workers were off on                     week and reduce the number of overtime
                                                             these days;                                                     hours in the weekdays. We have requested
                                                             3). Through the finished-products receiving                     the factory to provide us with a remediation
                                                             records in the finished-products warehouse                      plan on how to reduce the overtime.
                                                             reviewed, there were working records on 8th,
                                                             15th, 29th July 2007, 5th, 12th August 2007
                                                             (which were all Sundays), but the provided
                                                             barcode attendance records showed that the
                                                             related workers were rest on these days.




                                                                                                                                                                                                             13
FLA Code/Benchmark                              Compliance Status                                                                   Remediation
                                                                    Description of noncompliance, risk of          Company          Company Remediation Plan                      Target         Factory Response
                                                                    noncompliance or uncorroborated evidence       Internal Audit                                                 Completion     (optional)
                                                                    of noncompliance                               Findings                                                       Date
                                                                                                                   (optional)
HOW.2 Rest Day                                  Noncompliance       The compliance status of "Rest Days" could                      H&M requires the factory to provide true       Immediately
                                                                    not be verified due to inconsistencies were                     documents of working hours and payrolls.
                                                                    noted during this audit.                                        Only after knowing the real overtime are we
                                                                    1). Through reviewing the finished-products                     able engage in dialogue with the factory to
                                                                    inspection records, there were working                          establish a system to reduce the overtime in a
                                                                    records on 23rd September 2007 (which was                       sustainable manner. The long-term aim is to,
                                                                    a Sunday), but the provided barcode                             through improved production planning and
                                                                    attendance records showed that the related                      efficiency, steadily reduce the overtime hours
                                                                    worker was off on this day;                                     in order to meet the legal limit of overtime
                                                                    2). Through inspecting finished-products                        hours per month. In the short term, we require
                                                                    shipment records in the finished-products                       the factory to ensure that workers have one
                                                                    warehouse, there were finished-products                         day off per week and reduce the number of
                                                                    shipment records on 11th, 12th, 16th                            overtime hours on weekdays. We have
                                                                    February 2007, 25th March 2007 (which                           requested the factory to provide us with a
                                                                    were all Sundays or normal working days),                       remediation plan on how to reduce the
                                                                    but the provided barcode attendance records                     overtime.
                                                                    showed that the related workers were off on
                                                                    these days;
                                                                    3). Through the finished-products receiving
                                                                    records in the finished-products warehouse
                                                                    reviewed, there were working records on 8th,
                                                                    15th, 29th July 2007, 5th, 12th August 2007
                                                                    (which were all Sundays), but the provided
                                                                    barcode attendance records showed that the
                                                                    related workers were rest on these days.




WBOT.1 General Compliance Wages, Benefits and   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
Overtime Compensation                                               and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                                    due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                                    audit.                                                          able engage in dialogue with the factory to
                                                                    1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                                    inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                                    records on 23rd September 2007 (which was                       through improved production planning and
                                                                    a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                                    attendance records showed that the related                      in order to meet the legal limit of overtime
                                                                    worker was off on this day;                                     hours per month. In the short term, we require
                                                                    2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                                    shipment records in the finished-products                       day off per week and reduce the number of
                                                                    warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                                    shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                                    February 2007, 25th March 2007 (which                           remediation plan on how to reduce the
                                                                    were all Sundays or normal working days),                       overtime.
                                                                    but the provided barcode attendance records
                                                                    showed that the related workers were off on
                                                                    these days;
                                                                    3). Through the finished-products receiving
                                                                    records in the finished-products warehouse
                                                                    reviewed, there were working records on 8th,
                                                                    15th, 29th July 2007, 5th, 12th August 2007
                                                                    (which were all Sundays), but the provided
                                                                    barcode attendance records showed that the
                                                                    related workers were rest on these days.




                                                                                                                                                                                                                    14
FLA Code/Benchmark                    Compliance Status                                                                   Remediation
                                                          Description of noncompliance, risk of          Company          Company Remediation Plan                      Target         Factory Response
                                                          noncompliance or uncorroborated evidence       Internal Audit                                                 Completion     (optional)
                                                          of noncompliance                               Findings                                                       Date
                                                                                                         (optional)
WBOT.2 Minimum Wage                   Noncompliance       The compliance status of Minimum wages                          H&M requires the factory to provide true       Immediately
                                                          could not be verified due to inconsistencies                    documents of working hours and payrolls.
                                                          noted during this audit.                                        Only after knowing the real overtime are we
                                                          1). Through reviewing the finished-products                     able engage in dialogue with the factory to
                                                          inspection records, there were working                          establish a system to reduce the overtime in a
                                                          records on 23rd September 2007 (which was                       sustainable manner. The long-term aim is to,
                                                          a Sunday), but the provided barcode                             through improved production planning and
                                                          attendance records showed that the related                      efficiency, steadily reduce the overtime hours
                                                          worker was off on this day;                                     in order to meet the legal limit of overtime
                                                          2). Through inspecting finished-products                        hours per month. In the short term, we require
                                                          shipment records in the finished-products                       the factory to ensure that workers have one
                                                          warehouse, there were finished-products                         day off per week and reduce the number of
                                                          shipment records on 11th, 12th, 16th                            overtime hours on weekdays. We have
                                                          February 2007, 25th March 2007 (which                           requested the factory to provide us with a
                                                          were all Sundays or normal working days),                       remediation plan on how to reduce the
                                                          but the provided barcode attendance records                     overtime.
                                                          showed that the related workers were off on
                                                          these days;
                                                          3). Through the finished-products receiving
                                                          records in the finished-products warehouse
                                                          reviewed, there were working records on 8th,
                                                          15th, 29th July 2007, 5th, 12th August 2007
                                                          (which were all Sundays), but the provided
                                                          barcode attendance records showed that the
                                                          related workers were rest on these days.




WBOT.7 Payment for All Hours Worked   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
                                                          and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                          due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                          audit.                                                          able engage in dialogue with the factory to
                                                          1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                          inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                          records on 23rd September 2007 (which was                       through improved production planning and
                                                          a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                          attendance records showed that the related                      in order to meet the legal limit of overtime
                                                          worker was off on this day;                                     hours per month. In the short term, we require
                                                          2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                          shipment records in the finished-products                       day off per week and reduce the number of
                                                          warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                          shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                          February 2007, 25th March 2007 (which                           remediation plan on how to reduce the
                                                          were all Sundays or normal working days),                       overtime.
                                                          but the provided barcode attendance records
                                                          showed that the related workers were off on
                                                          these days;
                                                          3). Through the finished-products receiving
                                                          records in the finished-products warehouse
                                                          reviewed, there were working records on 8th,
                                                          15th, 29th July 2007, 5th, 12th August 2007
                                                          (which were all Sundays), but the provided
                                                          barcode attendance records showed that the
                                                          related workers were rest on these days.




                                                                                                                                                                                                          15
FLA Code/Benchmark                               Compliance Status                                                                   Remediation
                                                                     Description of noncompliance, risk of          Company          Company Remediation Plan                      Target         Factory Response
                                                                     noncompliance or uncorroborated evidence       Internal Audit                                                 Completion     (optional)
                                                                     of noncompliance                               Findings                                                       Date
                                                                                                                    (optional)
WBOT.8 Calculation Basis for Overtime Payments   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
                                                                     and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                                     due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                                     audit.                                                          able engage in dialogue with the factory to
                                                                     1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                                     inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                                     records on 23rd September 2007 (which was                       through improved production planning and
                                                                     a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                                     attendance records showed that the related                      in order to meet the legal limit of overtime
                                                                     worker was off on this day;                                     hours per month. In the short term, we require
                                                                     2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                                     shipment records in the finished-products                       day off per week and reduce the number of
                                                                     warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                                     shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                                     February 2007, 25th March 2007 (which                           remediation plan on how to reduce the
                                                                     were all Sundays or normal working days),                       overtime.
                                                                     but the provided barcode attendance records
                                                                     showed that the related workers were off on
                                                                     these days;
                                                                     3). Through the finished-products receiving
                                                                     records in the finished-products warehouse
                                                                     reviewed, there were working records on 8th,
                                                                     15th, 29th July 2007, 5th, 12th August 2007
                                                                     (which were all Sundays), but the provided
                                                                     barcode attendance records showed that the
                                                                     related workers were rest on these days.




                                                                                                                                                                                                                     16
FLA Code/Benchmark                      Compliance Status                                                                   Remediation
                                                            Description of noncompliance, risk of          Company          Company Remediation Plan                      Target         Factory Response
                                                            noncompliance or uncorroborated evidence       Internal Audit                                                 Completion     (optional)
                                                            of noncompliance                               Findings                                                       Date
                                                                                                           (optional)
WBOT.10 Premium/Overtime Compensation   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
                                                            and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                            due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                            audit.                                                          able engage in dialogue with the factory to
                                                            1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                            inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                            records on 23rd September 2007 (which was                       through improved production planning and
                                                            a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                            attendance records showed that the related                      in order to meet the legal limit of overtime
                                                            worker was off on this day;                                     hours per month. In the short term, we require
                                                            2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                            shipment records in the finished-products                       day off per week and reduce the number of
                                                            warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                            shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                            February 2007, 25th March 2007 (which                           remediation plan on how to, in a sustainable
                                                            were all Sundays or normal working days),                       manner, reduce the overtime.
                                                            but the provided barcode attendance records
                                                            showed that the related workers were off on
                                                            these days;
                                                            3). Through the finished-products receiving
                                                            records in the finished-products warehouse
                                                            reviewed, there were working records on 8th,
                                                            15th, 29th July 2007, 5th, 12th August 2007
                                                            (which were all Sundays), but the provided
                                                            barcode attendance records showed that the
                                                            related workers were rest on these days.




                                                                                                                                                                                                            17
FLA Code/Benchmark                              Compliance Status                                                                   Remediation
                                                                    Description of noncompliance, risk of          Company          Company Remediation Plan                      Target         Factory Response
                                                                    noncompliance or uncorroborated evidence       Internal Audit                                                 Completion     (optional)
                                                                    of noncompliance                               Findings                                                       Date
                                                                                                                   (optional)
WBOT.17 Accurate Calculation and Recording of   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
Wage Compensation                                                   and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                                    due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                                    audit.                                                          able engage in dialogue with the factory to
                                                                    1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                                    inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                                    records on 23rd September 2007 (which was                       through improved production planning and
                                                                    a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                                    attendance records showed that the related                      in order to meet the legal limit of overtime
                                                                    worker was off on this day;                                     hours per month. In the short term, we require
                                                                    2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                                    shipment records in the finished-products                       day off per week and reduce the number of
                                                                    warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                                    shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                                    February 2007, 25th March 2007 (which                           remediation plan on how to reduce the
                                                                    were all Sundays or normal working days),                       overtime.
                                                                    but the provided barcode attendance records
                                                                    showed that the related workers were off on
                                                                    these days;
                                                                    3). Through the finished-products receiving
                                                                    records in the finished-products warehouse
                                                                    reviewed, there were working records on 8th,
                                                                    15th, 29th July 2007, 5th, 12th August 2007
                                                                    (which were all Sundays), but the provided
                                                                    barcode attendance records showed that the
                                                                    related workers were rest on these days.




WBOT.19 False Payroll Records                   Noncompliance       The compliance status of "Minimum wages"                        H&M requires the factory to provide true       Immediately
                                                                    and "Overtime Wages" could not be verified                      documents of working hours and payrolls.
                                                                    due to inconsistencies noted during this                        Only after knowing the real overtime are we
                                                                    audit.                                                          able engage in dialogue with the factory to
                                                                    1). Through reviewing the finished-products                     establish a system to reduce the overtime in a
                                                                    inspection records, there were working                          sustainable manner. The long-term aim is to,
                                                                    records on 23rd September 2007 (which was                       through improved production planning and
                                                                    a Sunday), but the provided barcode                             efficiency, steadily reduce the overtime hours
                                                                    attendance records showed that the related                      in order to meet the legal limit of overtime
                                                                    worker was off on this day;                                     hours per month. In the short term, we require
                                                                    2). Through inspecting finished-products                        the factory to ensure that workers have one
                                                                    shipment records in the finished-products                       day off per week and reduce the number of
                                                                    warehouse, there were finished-products                         overtime hours on weekdays. We have
                                                                    shipment records on 11th, 12th, 16th                            requested the factory to provide us with a
                                                                    February 2007, 25th March 2007 (which                           remediation plan on how to reduce the
                                                                    were all Sundays or normal working days),                       overtime.
                                                                    but the provided barcode attendance records
                                                                    showed that the related workers were off on
                                                                    these days;
                                                                    3). Through the finished-products receiving
                                                                    records in the finished-products warehouse
                                                                    reviewed, there were working records on 8th,
                                                                    15th, 29th July 2007, 5th, 12th August 2007
                                                                    (which were all Sundays), but the provided
                                                                    barcode attendance records showed that the
                                                                    related workers were rest on these days.




                                                                                                                                                                                                                    18
                                                                    Status
Company Follow-Up (December 27, 2007, unannounced Documentation     Completed, Pending,
visit)                                                              On-going


                                                                    Ongoing




During the interviews conducted during this audit, we Worker        Ongoing
handed out our card with our non-compliance number to interviews.
the workers interviewed.




Still not covered properly.                           Factory       Ongoing
                                                      inspection.




                                                                                          19
                                                                               Status
Company Follow-Up (December 27, 2007, unannounced Documentation                Completed, Pending,
visit)                                                                         On-going




Factory production in the recent months has decreased        Management         Pending
due to the slow season and there hasn't been any work        interviews, review
on Sundays. However, the factory admitted that some of       of attendance
their departments would have overtime work on                records and
Sundays during the peak season (generally from May           payrolls.
onwards). The factory management was not able to
confirm the number of Sundays that will be worked in the
future during the peak season as this would depend on
the production related issues that occur at that time.
The factory will put in place a new regulation after
Chinese new year; we are interested and focused to
know the true situation in the factory, so if workers have
worked on Sunday, attendance records should be
provided for review.




                                                                                                     20
                                                                               Status
Company Follow-Up (December 27, 2007, unannounced Documentation                Completed, Pending,
visit)                                                                         On-going


Factory production in the recent months has decreased        Management         Pending
due to the slow season and there hasn't been any work        interviews, review
on Sundays. However, the factory admitted that some of       of attendance
their departments would have overtime work on                records and
Sundays during the peak season (generally from May           payrolls.
onwards). The factory management was not able to
confirm the number of Sundays that will be worked in the
future during the peak season as this would depend on
the production related issues that occur at that time.
The factory will put in place a new regulation after
Chinese new year; we are interested and focused to
know the true situation in the factory, so if workers have
worked on Sunday, attendance records should be
provided for review.




See Above                                                    Management         Pending
                                                             interviews, review
                                                             of attendance
                                                             records and
                                                             payrolls.




                                                                                                     21
                                                                   Status
Company Follow-Up (December 27, 2007, unannounced Documentation    Completed, Pending,
visit)                                                             On-going


See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




                                                                                         22
                                                                   Status
Company Follow-Up (December 27, 2007, unannounced Documentation    Completed, Pending,
visit)                                                             On-going


See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




                                                                                         23
                                                                   Status
Company Follow-Up (December 27, 2007, unannounced Documentation    Completed, Pending,
visit)                                                             On-going


See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




                                                                                         24
                                                                   Status
Company Follow-Up (December 27, 2007, unannounced Documentation    Completed, Pending,
visit)                                                             On-going


See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




See Above                                        Management         Pending
                                                 interviews, review
                                                 of attendance
                                                 records and
                                                 payrolls.




                                                                                         25
FLA Audit Profile
Country                                China
Name of Factory                        440015565F
Independent External Monitoring        Level Works Limited
Organization
Date(s) in Facility                    9/25/2007 - 9/26/2007
FLA Affiliated Compan(ies)             H&M
Number of Workers                      650
Product(s)                             Men's Dress, Business Suit
Production Processes                   Cutting, Sewing, Pressing, Inspection, Packing

FLA Code/Benchmark                     Compliance Status [Status]        Description of noncompliance, risk of       Updates (May 15, 2008)                                       Third-Party Verification     Company Verification Follow-Up
                                                         Completed,      noncompliance or uncorroborated             Company Follow-Up                              Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                         Pending, On-    evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                         going                                                                                                                    (Date)                       visit, if appropriate)
GEN 2: Ensure that all Company         Noncompliance     Ongoing         It was noted that the factory did not
factories as well as contractors and                                     post the company code of conduct
suppliers inform their employees about                                   onsite.
the workplace standards orally and
through the posting of standards in a
prominent place (in the local languages
spoken by employees and managers)
and undertake other efforts to educate
employees about the standards on a
regular basis.
GEN 3: Develop a secure                   Noncompliance      Ongoing     It was noted that there is no               During the interviews conducted with factory   Worker
communications channel, in a manner                                      noncompliance reporting mechanism           workers during this follow-up we handed out    interviews.
appropriate to the culture and situation,                                was established in the factory which        our non-compliance card with our number,
to enable Company employees and                                          allows factory workers to contact the       through which the workers can contact H&M.
employees of contractors and                                             Company directly.
suppliers to report to the Company on
noncompliance with the workplace
standards, with security that they shall
not be punished or prejudiced for doing
so.
H&S.17 Ventilation/Electrical/Facility    Noncompliance      Ongoing     It was noted that all the switches in the   The switches had been equipped with the        Factory
Installation and Maintenance                                             dormitory building were not covered         protective cover.                              inspection.
                                                                         properly.

FOA.2 Right to Freely Associate        Noncompliance                     See FLA comment on China situation




                                                                                                                                                                                                                                                        26
FLA Code/Benchmark                  Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                      Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                      Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                      going                                                                                                                   (Date)                       visit, if appropriate)
HOW.1 General Compliance Hours of   Noncompliance     Pending        The compliance status of "Overtime        1. On May 11, 2008, the H&M auditors made        Sunday visit,
Work                                                                 hours", "Rest Days" could not be          a Sunday visit to the factory and found that     management
                                                                     verified due to inconsistencies noted     the workers of No. 3/5 workshop were             interviews,
                                                                     during this audit.                        working at that time.                            review of
                                                                     1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                     products inspection records, there were   unannounced follow up audit to the factory,      records.
                                                                     working records on 23rd September         but found that all the workers of No. 3/5
                                                                     2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                     provided barcode attendance records       that day. The Office Director claimed that the
                                                                     showed that the related worker was off    worker will take the sightseeing the whole day
                                                                     on this day;                              and no workers worked in the factory that day,
                                                                     2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                     products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                     finished-products warehouse, there        for an unannounced audit of the factory.
                                                                     were finished-products shipment           When reviewing the attendance records for
                                                                     records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                     2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                     Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                     the provided barcode attendance           contrary to our findings from visiting the
                                                                     records showed that the related           factory on those days.
                                                                     workers were off on these days;           4. Because of the incomplete time record
                                                                     3). Through the finished-products         system, the worker's OT hours can not be
                                                                     receiving records in the finished-        verified.
                                                                     products warehouse reviewed, there
                                                                     were working records on 8th, 15th, 29th
                                                                     July 2007, 5th, 12th August 2007 (which
                                                                     were all Sundays), but the provided
                                                                     barcode attendance records showed
                                                                     that the related workers were rest on
                                                                     these days.




                                                                                                                                                                                                                                                    27
FLA Code/Benchmark   Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                       Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                       Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                       going                                                                                                                   (Date)                       visit, if appropriate)
HOW.2 Rest Day       Noncompliance     Pending        The compliance status of "Rest Days"      1. On May 11, 2008, the H&M auditors made        Sunday visit,
                                                      could not be verified due to              a Sunday visit to the factory and found that     management
                                                      inconsistencies were noted during this    the workers of No. 3/5 workshop were             interviews,
                                                      audit.                                    working at that time.                            review of
                                                      1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                      products inspection records, there were   unannounced follow up audit to the factory,      records.
                                                      working records on 23rd September         but found that all the workers of No. 3/5
                                                      2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                      provided barcode attendance records       that day. The Office Director claimed that the
                                                      showed that the related worker was off    worker will take the sightseeing the whole day
                                                      on this day;                              and no workers worked in the factory that day,
                                                      2). Through inspecting finished-          so the auditor cancelled the audit.
                                                      products shipment records in the          3. On May 15, 2008, the auditor again went
                                                      finished-products warehouse, there        for an unannounced audit of the factory.
                                                      were finished-products shipment           When reviewing the attendance records for
                                                      records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                      2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                      Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                      the provided barcode attendance           contrary to our findings from visiting the
                                                      records showed that the related           factory on those days.
                                                      workers were off on these days;           4. Because of the incomplete time record
                                                      3). Through the finished-products         system, the worker's OT hours can not be
                                                      receiving records in the finished-        verified.
                                                      products warehouse reviewed, there
                                                      were working records on 8th, 15th, 29th
                                                      July 2007, 5th, 12th August 2007 (which
                                                      were all Sundays), but the provided
                                                      barcode attendance records showed
                                                      that the related workers were rest on
                                                      these days.




                                                                                                                                                                                                                                     28
FLA Code/Benchmark                 Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                     Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                     Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                     going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.1 General Compliance Wages, Noncompliance       Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
Benefits and Overtime Compensation                                  wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                                    not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                                    noted during this audit.                  working at that time.                            review of
                                                                    1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                    products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                                    working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                                    2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                    provided barcode attendance records       that day. The Office Director claimed that the
                                                                    showed that the related worker was off    worker will take the sightseeing the whole day
                                                                    on this day;                              and no workers worked in the factory that day,
                                                                    2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                    products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                    finished-products warehouse, there        for an unannounced audit of the factory.
                                                                    were finished-products shipment           When reviewing the attendance records for
                                                                    records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                    2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                    Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                    the provided barcode attendance           contrary to our findings from visiting the
                                                                    records showed that the related           factory on those days.
                                                                    workers were off on these days;           4. Because of the incomplete time record
                                                                    3). Through the finished-products         system, the worker's OT hours can not be
                                                                    receiving records in the finished-        verified.
                                                                    products warehouse reviewed, there
                                                                    were working records on 8th, 15th, 29th
                                                                    July 2007, 5th, 12th August 2007 (which
                                                                    were all Sundays), but the provided
                                                                    barcode attendance records showed
                                                                    that the related workers were rest on
                                                                    these days.




                                                                                                                                                                                                                                                   29
FLA Code/Benchmark    Compliance Status [Status]       Description of noncompliance, risk of      Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                        Completed,     noncompliance or uncorroborated            Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                        Pending, On-   evidence of noncompliance                                                                                 Verification                 date of planned or follow-up
                                        going                                                                                                                    (Date)                       visit, if appropriate)
WBOT.2 Minimum Wage   Noncompliance     Pending        The compliance status of Minimum           1. On May 11, 2008, the H&M auditors made        Sunday visit,
                                                       wages could not be verified due to         a Sunday visit to the factory and found that     management
                                                       inconsistencies noted during this audit.   the workers of No. 3/5 workshop were             interviews,
                                                       1). Through reviewing the finished-        working at that time.                            review of
                                                       products inspection records, there were    2. On May 12, 2008, the auditor made an          attendance
                                                       working records on 23rd September          unannounced follow up audit to the factory,      records and
                                                       2007 (which was a Sunday), but the         but found that all the workers of No. 3/5        payrolls.
                                                       provided barcode attendance records        workshop had gone out for sightseeing on
                                                       showed that the related worker was off     that day. The Office Director claimed that the
                                                       on this day;                               worker will take the sightseeing the whole day
                                                       2). Through inspecting finished-           and no workers worked in the factory that day,
                                                       products shipment records in the           so the auditor cancelled the audit.
                                                       finished-products warehouse, there         3. On May 15, 2008, the auditor again went
                                                       were finished-products shipment            for an unannounced audit of the factory.
                                                       records on 11th, 12th, 16th February       When reviewing the attendance records for
                                                       2007, 25th March 2007 (which were all      May 2008, it was found that the attendance
                                                       Sundays or normal working days), but       records showed working hours for No. 3/5
                                                       the provided barcode attendance            workshop on May 12, but not May 11, which is
                                                       records showed that the related            contrary to our findings from visiting the
                                                       workers were off on these days;            factory on those days.
                                                       3). Through the finished-products          4. Because of the incomplete time record
                                                       receiving records in the finished-         system, the worker's OT hours can not be
                                                       products warehouse reviewed, there         verified.
                                                       were working records on 8th, 15th, 29th
                                                       July 2007, 5th, 12th August 2007 (which
                                                       were all Sundays), but the provided
                                                       barcode attendance records showed
                                                       that the related workers were rest on
                                                       these days.




                                                                                                                                                                                                                                       30
FLA Code/Benchmark             Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                 Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                 Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                 going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.7 Payment for All Hours   Noncompliance     Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
Worked                                                          wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                                not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                                noted during this audit.                  working at that time.                            review of
                                                                1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                                working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                                2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                provided barcode attendance records       that day. The Office Director claimed that the
                                                                showed that the related worker was off    worker will take the sightseeing the whole day
                                                                on this day;                              and no workers worked in the factory that day,
                                                                2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                finished-products warehouse, there        for an unannounced audit of the factory.
                                                                were finished-products shipment           When reviewing the attendance records for
                                                                records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                the provided barcode attendance           contrary to our findings from visiting the
                                                                records showed that the related           factory on those days.
                                                                workers were off on these days;           4. Because of the incomplete time record
                                                                3). Through the finished-products         system, the worker's OT hours can not be
                                                                receiving records in the finished-        verified.
                                                                products warehouse reviewed, there
                                                                were working records on 8th, 15th, 29th
                                                                July 2007, 5th, 12th August 2007 (which
                                                                were all Sundays), but the provided
                                                                barcode attendance records showed
                                                                that the related workers were rest on
                                                                these days.




                                                                                                                                                                                                                                               31
FLA Code/Benchmark             Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                 Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                 Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                 going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.8 Calculation Basis for   Noncompliance     Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
Overtime Payments                                               wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                                not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                                noted during this audit.                  working at that time.                            review of
                                                                1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                                working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                                2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                provided barcode attendance records       that day. The Office Director claimed that the
                                                                showed that the related worker was off    worker will take the sightseeing the whole day
                                                                on this day;                              and no workers worked in the factory that day,
                                                                2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                finished-products warehouse, there        for an unannounced audit of the factory.
                                                                were finished-products shipment           When reviewing the attendance records for
                                                                records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                the provided barcode attendance           contrary to our findings from visiting the
                                                                records showed that the related           factory on those days.
                                                                workers were off on these days;           4. Because of the incomplete time record
                                                                3). Through the finished-products         system, the worker's OT hours can not be
                                                                receiving records in the finished-        verified.
                                                                products warehouse reviewed, there
                                                                were working records on 8th, 15th, 29th
                                                                July 2007, 5th, 12th August 2007 (which
                                                                were all Sundays), but the provided
                                                                barcode attendance records showed
                                                                that the related workers were rest on
                                                                these days.




                                                                                                                                                                                                                                               32
FLA Code/Benchmark         Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                             Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                             Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                             going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.10 Premium/Overtime   Noncompliance     Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
Compensation                                                wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                            not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                            noted during this audit.                  working at that time.                            review of
                                                            1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                            products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                            working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                            2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                            provided barcode attendance records       that day. The Office Director claimed that the
                                                            showed that the related worker was off    worker will take the sightseeing the whole day
                                                            on this day;                              and no workers worked in the factory that day,
                                                            2). Through inspecting finished-          so the auditor cancelled the audit.
                                                            products shipment records in the          3. On May 15, 2008, the auditor again went
                                                            finished-products warehouse, there        for an unannounced audit of the factory.
                                                            were finished-products shipment           When reviewing the attendance records for
                                                            records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                            2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                            Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                            the provided barcode attendance           contrary to our findings from visiting the
                                                            records showed that the related           factory on those days.
                                                            workers were off on these days;           4. Because of the incomplete time record
                                                            3). Through the finished-products         system, the worker's OT hours can not be
                                                            receiving records in the finished-        verified.
                                                            products warehouse reviewed, there
                                                            were working records on 8th, 15th, 29th
                                                            July 2007, 5th, 12th August 2007 (which
                                                            were all Sundays), but the provided
                                                            barcode attendance records showed
                                                            that the related workers were rest on
                                                            these days.




                                                                                                                                                                                                                                           33
FLA Code/Benchmark                 Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                     Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                     Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                     going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.17 Accurate Calculation and   Noncompliance     Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
Recording of Wage Compensation                                      wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                                    not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                                    noted during this audit.                  working at that time.                            review of
                                                                    1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                    products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                                    working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                                    2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                    provided barcode attendance records       that day. The Office Director claimed that the
                                                                    showed that the related worker was off    worker will take the sightseeing the whole day
                                                                    on this day;                              and no workers worked in the factory that day,
                                                                    2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                    products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                    finished-products warehouse, there        for an unannounced audit of the factory.
                                                                    were finished-products shipment           When reviewing the attendance records for
                                                                    records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                    2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                    Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                    the provided barcode attendance           contrary to our findings from visiting the
                                                                    records showed that the related           factory on those days.
                                                                    workers were off on these days;           4. Because of the incomplete time record
                                                                    3). Through the finished-products         system, the worker's OT hours can not be
                                                                    receiving records in the finished-        verified.
                                                                    products warehouse reviewed, there
                                                                    were working records on 8th, 15th, 29th
                                                                    July 2007, 5th, 12th August 2007 (which
                                                                    were all Sundays), but the provided
                                                                    barcode attendance records showed
                                                                    that the related workers were rest on
                                                                    these days.




                                                                                                                                                                                                                                                   34
FLA Code/Benchmark              Compliance Status [Status]       Description of noncompliance, risk of     Updates (May 15, 2008)                                         Third-Party Verification     Company Verification Follow-Up
                                                  Completed,     noncompliance or uncorroborated           Company Follow-Up                                Documentation External     Documentation   Company Follow-Up (cite      Documentation
                                                  Pending, On-   evidence of noncompliance                                                                                Verification                 date of planned or follow-up
                                                  going                                                                                                                   (Date)                       visit, if appropriate)
WBOT.19 False Payroll Records   Noncompliance     Pending        The compliance status of "Minimum         1. On May 11, 2008, the H&M auditors made        Sunday visit,
                                                                 wages" and "Overtime Wages" could         a Sunday visit to the factory and found that     management
                                                                 not be verified due to inconsistencies    the workers of No. 3/5 workshop were             interviews,
                                                                 noted during this audit.                  working at that time.                            review of
                                                                 1). Through reviewing the finished-       2. On May 12, 2008, the auditor made an          attendance
                                                                 products inspection records, there were   unannounced follow up audit to the factory,      records and
                                                                 working records on 23rd September         but found that all the workers of No. 3/5        payrolls.
                                                                 2007 (which was a Sunday), but the        workshop had gone out for sightseeing on
                                                                 provided barcode attendance records       that day. The Office Director claimed that the
                                                                 showed that the related worker was off    worker will take the sightseeing the whole day
                                                                 on this day;                              and no workers worked in the factory that day,
                                                                 2). Through inspecting finished-          so the auditor cancelled the audit.
                                                                 products shipment records in the          3. On May 15, 2008, the auditor again went
                                                                 finished-products warehouse, there        for an unannounced audit of the factory.
                                                                 were finished-products shipment           When reviewing the attendance records for
                                                                 records on 11th, 12th, 16th February      May 2008, it was found that the attendance
                                                                 2007, 25th March 2007 (which were all     records showed working hours for No. 3/5
                                                                 Sundays or normal working days), but      workshop on May 12, but not May 11, which is
                                                                 the provided barcode attendance           contrary to our findings from visiting the
                                                                 records showed that the related           factory on those days.
                                                                 workers were off on these days;           4. Because of the incomplete time record
                                                                 3). Through the finished-products         system, the worker's OT hours can not be
                                                                 receiving records in the finished-        verified.
                                                                 products warehouse reviewed, there
                                                                 were working records on 8th, 15th, 29th
                                                                 July 2007, 5th, 12th August 2007 (which
                                                                 were all Sundays), but the provided
                                                                 barcode attendance records showed
                                                                 that the related workers were rest on
                                                                 these days.




                                                                                                                                                                                                                                                35

				
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