FLA Audit Profile Independent External Verification Country El Salvador El Salvador Factory name 46002203D 46002203DV IEM GMIES GMIES Date(s) in facility October 26 - November 7, 2005 August 24 - 26, 2010 PC(s) MJ Soffe MJ Soffe Number of workers 632 650 Product(s) Apparel Apparel Production processes Sewing/Packing Sewing/Packing IEM Findings Remediation [Status] Updates [Status] Third-Party Verification Remediation [Status] FLA Code/Compliance Evidence of If Not Sources/Documentation Used for Target Completed, Completed, External Verification Completed, Issue Country Law/Legal Reference FLA Benchmark Noncompliance Risk of Noncompliance Noncompliance Corroborated, Corroborating PC Remediation Plan Completion Company Follow Up Documentation Pending, Company Follow Up Documentation Pending, (August 24-26, 2010) Documentation Company Remediation Plan Target Completion Date Pending, (Uncorroborated) Explain Why Date Ongoing Ongoing Ongoing 1. Code Awareness Worker/Management Awareness FLA Principle of Monitoring, Obligation of Factory has posted codes of conduct and its internal Interviews with the workers and observation. 7/21/2006 Supervisors were trained. Copy of code of conduct was Management and Completed and Completed and ongoing as Training records, Completed and PENDING: Management said that workers are explained about the Interviews with workers. Factory management will have meetings every 6 months, starting February February 17, 2011 of Code Companies: Ensure that all Company factories as regulations in visible places, such as the plant’s main given to employees. Code of conduct was explained over the worker interview. ongoing as new new hires come in. management and ongoing as new code during the recruitment process, but no documentary evidence of 17, they will explain the code of conduct to workers. Every employee that well as contractors and suppliers inform their entrance. However, during the interviews, none of the microphone. The initial training, completed July 21, is hires come in. worker interview. h ires come in. this was provided. Besides, 85% of interviewed workers assured they attends will sign detail document of what has been spoken of; this document employees about the workplace standards orally workers knew anything about the codes of conduct. continuing with each new hire. Follow up 1/4/06 are not aware of the company code. will be filed under their personne records. [Employee name] is the person and through the posting of standards in a responsible for executing the trainings in the factory. MJ Soffe sponsored a prominent place (in the local languages spoken by two-day training in EL Salvador in December 2010. employees and managers) and undertake other efforts to educate employees about the standards on a regular basis. Confidential Noncompliance FLA Principle of Monitoring, Obligation of Although management said that the factory has a suggestion Interviews with the management, the union In Place The suggestion boxes are checked on a weekly basis, Inspection, checking Completed January 4, 2007: Inspection and Completed PENDING: According to the management workers are orally informed Interviews with workers. Factory management will have meetings every 6 months, starting February February 17, 2011 Reporting Channel Companies: Develop a secure communications box through which workers are able to report their grievances representative and the workers. suggestions with their responses filed. There are 3 with management on Observation, while visiting. workers interview. of the phone number and email account they can use to contact the 17, to explain a) the code of conduct and b) the channels for how to contact channel, in a manner appropriate to the culture and or suggestions to the HR Manager or other management suggestion boxes in different areas: main entrance, women's suggestions brand. However, 90% of interviewed workers do not know these the brand by email or telephone number included in the posters to workers. situation, to enable Company employees and representatives, according to the worker interviews, this restroom, men's restroom. The suggestion boxes will be received and if channels. Will be sending a signed document by the employee. [Employee name] is the employees of contractors and suppliers to report channel has been hardly ever used. Most workers said that opened weekly and management responses will be given answers were given. person responsible for executing the trainings in the factory. to the Company on noncompliance with the they are not aware of the existence of this mechanism; the within a week. workplace standards, with security that they shall few who said they knew of it did not know how to use it. not be punished or prejudiced for doing so. However, according to the interview with the union representative, this suggestion box is reviewed weekly by the Union’s General Secretary and the findings are discussed with the management. 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. Verbal Abuse Employers will prohibit screaming, threatening, or One person who telephoned GMIES said that during the Through a phone call and through interviews with January 4, 2007: By COMPLETED: There was no evidence of verbal abuse or intimidation Interviews with workers. demeaning verbal language. monitoring processes they are pressured by one of the the workers held inside the factory's facilities. observation actions against workers. management representatives to avoid talking about negative aspects of the factory. Moreover, after these monitoring processes, the employees who were interviewed are threatened and humiliated in public. On the other hand, this person also stated that the employees are continuously insulted throughout the speakers. Besides, when the workers express to management their intentions to sue the factory, the response is that they are "asking to be sent to jail," as management can say that they stole something from the plant. Also, two of the workers interviewed stated that, in previous monitoring processes, some employees had been admonished by management because they reported some factory irregularities, one of the reasons why the workers prefer to lie about some of the factory conditions. 5. Nondiscrimination No person will be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin. Pregnancy Discrimination Information arising from pregnancy testing A pregnant women that GMIES interviewed stated that if Interviews with pregnant women. Talked with management again today for Ongoing when January 4, 2007: 84 days of maternity leave and 75% of Discussions with Completed January 4, 2007 Discussions with Completed COMPLETED: No issues relating to pregnant women were found. Interviews with pregnant undertaken voluntarily will not be used as a factor a new worker finds out in the first month of being at the reassurance that pregnant women were needed. their salaries are given by social security during their leave. Management management. women and observation in involuntarily reassigning, firing or making any factory that she is pregnant, there is a risk that helped if during their pregnancy they had Factory abides and follows doctors' notes, along with tour. other employment decision that disadvantages a management would fire her. Another worker said that problems doing their regular job. They again instructions given by doctors. pregnant woman. when she found out about her pregnancy condition and reassured me that they would move them to informed the factory’s management, they told her that another job to help them. because of her past history of illnesses, her condition could be a problem; consequently, for that reason, they would probably have to suspend her. Pregnancy Accommodation Reasonable accommodation will be made in the 3 of the pregnant women that GMIES interviewed stated that Interviews with pregnant women. Factory will train supervisors to work with Now and January 15, 2007: Factory management has assured us that Will set up Completed Next visit down February Will have interviews Completed COMPLETED: No issues relating to pregnant women were found. Interviews with pregnant event of pregnancy, in a manner that will not although they have requested some changes related to their employees if they encounter problems ongoing they do help pregnant women when they encounter problems interviews with 2007 with pregnant women. women and observation unreasonably disadvantage the pregnant woman. actual accommodations, (i.e., chairs that have some back during pregnancy. during pregnancy by changing their jobs if requested. pregnant women to tour. support, change of operations or machinery) factory see how they are management has not attended to their requests. doing. Other The Law of Equal Opportunities for Disabled Company has hired only 6 disabled people and, according to Document review and interview with the Work with factory to help them comply with Present and January 8, 2007: The factory understands and knows the law Review employment Completed January 8, 2007 Employment files Completed COMPLETED: Factory has now the legal required number of workers Records review, worker Persons, on its article 24 the law mentions the law, based on the number of workers (652), factory management. laws concerning the hiring of disabled continuing on the hiring of disabled persons. There is an agreement of files with disability. and management that "Every private employer has the should employ 26 disabled workers. The law that establishes persons. Will continue checking employment readapting and recommendations between government and interviews and observation obligation to hire, as a minimum, for each 25 this situation is "Ley de Equiparación de Oportunidades para files to verify hiring process. companies, for every 100 employees, 4 disabled must be tour. workers under his service, 1 disabled person personas con Discapacidades" (Law of Equal Opportunities hired. with formal education and suitable to develop for Disabled Persons). GMIES spoke to the factory about this the position that is in demand." situation. They stated that the main problems they have in complying with this issue are related to the procedures established by the Ministry of Labor on hiring disabled persons and the capacity of these people to develop the activities carried out by the factory. 6. Health and Safety Employers will provide a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities. Fire Safety: Health and Safety Employer will comply with applicable health and Although, the factory has the environmental permit Interviews with the management and document COMPLETED: Environmental Program is being implemented. Interview with management Legal Compliance safety laws and regulations. In any case where required by the law (MARN -DAL- 297-2002) GMIES review and observation tour. laws and code of conduct are contradictory, the verified that the Environmental Adjustment Program has higher standards will apply. The factory will not been fully applied by the factory. possess all legally required permits. Document Maintenance/ All documents required to be available to workers There is no information posted at visible places regarding the Observation COMPLETED: There is posted information on the safe handling of Observation tour. Accessibility and management by applicable laws (such as risks of mishandling the chemical substances used at the chemicals in the relevant areas. policies, MSDS, etc.) shall be made available in the cleaning department. prescribed manner and in the local language or language spoken by majority of the workers if different from the local language. Evacuation Procedure All applicable legally required or recommended In the production area it is difficult to follow the evacuation Observation and worker interview The workers at the factory had participated in several COMPLETED: Evacuation routes were found unblocked. Observation tour. elements of safe evacuation (such as posting of route because machines and materials, a) in some evacuation procedures and also have received courses on evacuation plans, unblocked aisles/exits, employee occasions, make access to the evacuation route difficult and, first aid procedures and fire control. education, evacuation procedures, etc.) shall be b) in other cases, block the exits. complied with and workers shall be trained in proper safety, first aid, and evacuation procedures. PPE Workers shall wear appropriate protective Although the factory provides the adequate equipment to their Observation On the spot remover tables there's a way out; employees PENDING: By observation tour, it was corroborated that most Observation tour and Factory management will conduct periodic meetings every 6 months to February 17, 2011 equipment (such as gloves, eye protection, hearing employees, some of them do not use it. use this way out to remove stains from garments, that way workers in the sewing department production lines do not use masks. interviews with workers. educate, train and enforce the use of PPE starting February 17, 2011. protection, respiratory protection, etc.) to prevent chemicals are disposed of through a vacuum system venting During the interviews, workers explained that they refuse to use the During these meetings an attendance document will be filed for future unsafe exposure (such as inhalation or contact them to the outside. masks because either they cause difficulties with breathing and/or reference. Factory will post PPE signs in all required areas. [Employee with solvent vapors, noise, dust, etc.) to hazardous allergies or are uncomfortable. Other workers said they do not use name] and Health and Safety Committee are responsible for enforcing this elements including medical waste. them because of the heat. There is no posted information requiring requirement. MJ Soffe recommends the introduction of positive incentives to the use of masks in sewing department, where there is tiny spotted the workers to improve and maintain the use of PPE. fabric in the environment. By records review, there was evidence that management explained to workers the importance of relevant PPE usage during the recruitment process. However, gathered information shows that during regular employment, workers are not continuously talked to about this. 1 / 4 Page 1 of 4 IEM Findings Remediation [Status] Updates [Status] Third-Party Verification Remediation [Status] FLA Code/Compliance Evidence of If Not Sources/Documentation Used for Target Completed, Completed, External Verification Target Completed, Issue Country Law/Legal Reference FLA Benchmark Noncompliance Risk of Noncompliance Noncompliance Corroborated, (Uncorroborated) Explain Why Corroborating PC Remediation Plan Completion Company Follow Up Documentation Pending, Company Follow Up Documentation Pending, Date Ongoing Ongoing (August 24-26, 2010) Documentation Company Remediation Plan Completion Date Pending, Ongoing Chemical Management All chemicals and hazardous substances should be There is no information posted in visible places regarding Observation COMPLETED: Factory has now posted information required and Observation tour and properly labeled and stored in accordance with risks of mishandling chemical substances used in the there was no evidence of problems with handling chemicals. interviews with workers. applicable laws. Workers should receive training, cleaning department. Substances used in cleaning appropriate to their job responsibilities, in the safe department are not adequately disposed of because workers use of chemicals and other hazardous in this area sprinkle these substances on some of the substances. discarded clothes; later, these clothes are placed inside some of the cabinets in the factory. Ventilation/Electrical/facility All ventilation, plumbing, electrical, and lighting Observation NEW FINDING: In production area (sewing), temperature was 30° Observation tour Factory repaired 3 fans that were not working when the inspection was February 10, 2011 maintenance services shall be provided and maintained to Celsius; workers complain because lamps which increase the heat, (temperature taken with the conducted. Factory checked that all fans are in working condition in order to conform to applicable laws and prevent hazardous are so close to them. Fans are insufficient for the sewing department, relevant instrument) and decrease the ambient temperature inside of the factory. Also, factory conditions to employees in the facility. considering that there is not an air flow system. workers interviews. installed automatic oasis system, so that workers can drink cold water at anytime. [Employee name] (maintenance) will be responsible for checking that the fans are working properly. The placement of the lamps was under supervision of the labor department, to comply with the illumination requirements in the factory. A thermometer was installed in order to monitor the temperature during working hours. MJ Soffe recommends to perform regular ambient temperature testing throughout the year. Engage local authorities to lead the testing and make the results available. Sanitation in Facilities All facilities including factory buildings, toilets, The toilets were unclean at the time the monitoring process These findings were verified by observation. PENDING: Toilets conditions in restrooms were not appropriate. Observation tour. Factory has repaired broken levers, toilets and doors that do not close November 5, 2010 canteens, kitchens, and clinics, shall be kept clean was being conducted. Some toilets have broken levers to let water go away and some doors properly. Factory will implement a schedule, and signage sheet for and safe and be in compliance with applicable don't close properly. Despite the fact that there is a cleanliness maintenance in the bathrooms. Factory has improved the cleanliness of the laws. personnel, toilets were dirty with urine and feces. Some toilets have restrooms. [Employee name] is responsible for keeping both the women's also leaks. and men's bathrooms clean at all times according to the cleaning schedule. 7. Freedom of Association and Collective Bargaining Employers will recognize and respect the right of employees to freedom of association and collective bargaining. Employer Interference in The employer will not interfere, to the detriment of Union affiliation is mandatory, because if employees do not Interviews with the workers and the union PENDING: Gathered information showed that the management Interviews with workers Factory management to enhance its FOA policy by including the following August 30, 2011 Registration worker’s organizations, with government sign the affiliation book at the moment that they sign their representative. continues promoting employee affiliation to one of the unions: and union leaders of both elements: 1) ensure employees will not be subject to intimidation or registration requirements regarding the formation labor contracts, they are not hired by the company. STITAS, which is the one with more affiliations in place. Management trade unions. Observation harassment in exercising their right to join or to refrain from joining any of workers’ organizations. support STITAS and provide this union more opportunities than SITS. tour. organization; 2) no interference and/or favoritism to any active union at the During the 3 day audit, GMIES could verify that the leader of STITAS workplace; 3) define the disciplinary process should any violation to this has time to work on union activities in working hours at the factory, policy occur; and 4) define the communication protocols of enhanced FOA while no member of SITS has such advantage. Besides, some policy to parties involved. [Employee name], HR Manager, responsible for workers interviewed confirmed that management allows STITAS policy implementation and/or enforcement. Factory management to create board members to approach new employees in order to affiliate them FOA procedures that provide guidance on the following : a) relationship to the trade union, while management tries to keep new employees management; b) consultation/negotiation with active unions; c) dispute away from SITS members. This is a clearly interference in the union settlement; and d) communication of procedures to parties involved. registration. [Employee name], HR Manager, responsible to ensure their implementation. MJ Soffe recommends that factory management consider a neutral 3rd party for ongoing policy and/or procedures training. Unfair Dismissal The employer will not dismiss, discipline, or Although there are already 2 unions at the factory, some of Interviews with the workers. UNCORROBORATED NONCOMPLIANCE: Gathered information Interviews with workers MJ Soffe recommends the factory to maintain a better record of employees. June 30, 2011 otherwise coerce or threaten workers seeking to the workers interviewed stated that they think that the factory shows that factory has fired unionized workers in past, arguing and union leaders of both (Some workers were fired and they claimed being officials from the union form, join or participate in workers’ organizations. would not allow a different union at the plant. Some time ago retrenchment. Members of the SITS board that were interviewed trade unions. Pre-audit committee, HR requested their IDs, but were not available. Weeks later they workers tried to form another union; management did not confirmed this. In writing, factory does not have any record information gathered. returned with their IDs and they were rehired). allow them and even fired some people. demonstrating that these workers were fired, their names are not included in the records of fired workers for the past 12 months. Employer Interference/Formation In cases where a single union represents workers, Although there are already 2 unions at the factory, some of Interviews with the workers. UNCORROBORATED NONCOMPLIANCE: Gathered information Interviews with workers Factory management to enhance its FOA policy by including the following August 30, 2011 of Alternative Organizations the employer will not interfere in any way in the workers interviewed stated that they think that the factory shows that management support STITAS and provide this union more and union leaders and elements: 1) ensure employees will not be subject to intimidation or workers’ ability to form other organizations that would not allow a different union at the plant. Some time ago opportunities than SITS. For example, from the observation tour, it members and observation harassment in exercising their right to join or to refrain from joining any represent workers workers tried to form another union; management did not was corroborated that the leader of STITAS has time to perform union tour. organization; 2) no interference and/or favoritism to any active union at the allow them and even fired some people. activities in working time at the factory, while no member of SITS has workplace; 3) define the disciplinary process should any violation to this such advantage. Besides, according to SITS leaders, management policy occur; and 4) define the communication protocols of enhanced FOA allows STITAS Board members to approach new workers in order to policy to parties involved. [Employee name], HR Manager, responsible for affiliate them to the trade union, while management tries to keep new policy implementation and/or enforcement. Factory management to create employees away from SITS Board members. For that reasons, FOA procedures that provide guidance on the following : a) relationship management is hindering the affiliation activities of SITS. management; b) consultation/negotiation with active unions; c) dispute settlement; and d) communication of procedures to parties involved. [Employee name], HR Manager, responsible to ensure their implementation. MJ Soffe recommends that factory management consider a neutral 3rd party for ongoing policy and/or procedures training. Compliance to Local Collective Employers will comply with all national and local According to the percentage established in labor code for Interviews with the union's representative. ONGOING: The biggest union at place has begun talks with Interviews with Bargaining Laws laws and regulations concerning collective collective bargaining, both unions have the right to negotiate a management in order to negotiate a Collective Bargaining Agreement. management and union bargaining and free association. Where conflicts collective bargaining agreement (CBA) with management. The problem is that this union is so close to the management and it leader. are known to exist, employers will use the standard However, the union representative interviewed stated that does not have independence. that provides the greatest protection for workers. they would rather negotiate individual cases with Ministry of Labor. On this issue, it is necessary to point out that the reasons argued by both unions to abstain themselves in initiating the negotiation of a collective bargaining agreement with management were contradictory. At the beginning they said that management was not willing to initiate the negotiation, but later on they said that union had decided that it was not necessary. Other/No Interference Policy It is important to mention that union affiliation is mandatory. Interviews with the workers. PENDING: As it was mentioned above, management promotes the Interviews with workers Factory management to enhance its FOA policy by including the following August 30, 2011 Some of the workers interviewed stated that they think that affiliation of workers to the biggest union at place (STITAS), which and union leaders and elements: 1) ensure employees will not be subject to intimidation or the factory would not allow a different union at the plant, constitutes an interference. members. harassment in exercising their right to join or to refrain from joining any because some time ago the workers tried to form another organization; 2) no interference and/or favoritism to any active union at the union; the management did not allow them and even fired workplace; 3) define the disciplinary process should any violation to this some people. Also, factory does not hire workers who are policy occur; and 4) define the communication protocols of enhanced FOA affiliated to other unions. Besides, none of the workers policy to parties involved. [Employee name], HR Manager, responsible for interviewed knew any of the unions' names, the activities they policy implementation and/or enforcement. Factory management to create carry out, the procedure by which the union representatives FOA procedures that provide guidance on the following : a) relationship are elected or if they held meetings with the workers. One management; b) consultation/negotiation with active unions; c) dispute worker said that both unions continuously pressure the settlement; and d) communication of procedures to parties involved. employees to reach their goals. [Employee name], HR Manager, responsible to ensure their implementation. MJ Soffe recommends that factory management consider a neutral 3rd party for ongoing policy and/or procedures training. 8. Wages and Benefits Employers recognize that wages are essential to meeting employees’ basic needs. Employers will pay employees, as a base, at least the minimum wage required by local law or the prevailing industry wage, whichever is higher, and will provide legally mandated benefits. Timely Payment of Benefits All legally mandated deductions for taxes, social The factory has a different payroll which includes the persons Payroll review Employees have to sign a new agreement Now and The training wage is paid for 30 days now with neither social Document review Completed February 2007 Employee file, and Completed COMPLETED: Factory does not have double payroll any more. Records review. insurance, or other purposes will be deposited that are hired as apprentices and deducts neither their social when they have completed their continuing security quota nor pension plan quota taken out during that document review. each pay period in the legally defined account or security quota nor their pension plan quota. apprenticeship (after 30 days), then they 30 days. Beyond the 30 days, normal deductions are taken transmitted to the legally defined agency. This become a permanent employee; then, social out. includes any lawful garnishments for back taxes, security and pension plan quota are taken etc. Employer will not hold any of these funds over out of their pay. Will check files to make from one pay period to the other, unless the law sure the policy is being followed. February specifies that deposits are to be made less 2007 frequently than pay periods (e.g., monthly deposits, weekly pay). If the law does not specify, then deposits will be made before the next pay period in all cases. Deduction for Services According to the Salvadorian Labor Law Deductions for services to employees will not Several workers presented a higher withholding than what is Payroll review Via discussions with management, they only July 2006 Article 132 of the law allows the company to deduct 20% of Employee pay files Completed February 2007 Employee pay files Completed COMPLETED: Factory does not apply withholding in excess of the Records review. deductions made to employees' gross salary exceed the cost of the service to employer. If permitted by the law. take out the standard deductions unless their salaries. Article 136 (Flexible) from Labor Code allows legal limits. will not exceed 20% of it. questioned, employers will demonstrate the there is an allowance for bank payment. Will the company to deduct 20% of their salaries if they have, for reasonableness of these charges. check employee pay files on next visit example, a bank allowance. February 2007 2 / 4 Page 2 of 4 IEM Findings Remediation [Status] Updates [Status] Third-Party Verification Remediation [Status] FLA Code/Compliance Evidence of If Not Sources/Documentation Used for Target Completed, Completed, Completed, Issue Country Law/Legal Reference FLA Benchmark Noncompliance Risk of Noncompliance Noncompliance Corroborated, Corroborating PC Remediation Plan Completion Company Follow Up Documentation Pending, Company Follow Up Documentation Pending, External Verification Target (Uncorroborated) Explain Why Date Ongoing Ongoing (August 24-26, 2010) Documentation Company Remediation Plan Completion Date Pending, Ongoing Payroll Reporting Accurate and reliable payroll reporting, including The factory maintains double payrolls. Situation was verified through payroll review and COMPLETED: Factory does not have double payroll any more. Records review. pay stubs, will be provided. worker interviews; when GMIES verified workers´ payroll, we noticed that there were some employees who were not listed on the official payment record. When we asked for an explanation from HR management, she showed another payroll, which did not show any social security or pension plan deductions. Coincidentally, it was with the list of persons hired as apprentices. When GMIES verified workers' payroll, we noticed that employees do not receive any bonuses or incentives when they reach their daily goals. However, during interviews workers stated that the factory gives them bonuses every time they reach their daily goals. Legal Benefits Employers will provide all legally mandated benefits NEW FINDING: Factory does not effectively guarantee the right of 1 Observation tour, workers Factory will ask the nursing mother what would be the best time for her to June 30, 2011 to all eligible workers. nursing mother to breastfeed her baby (Article 312 of the Code of and management nurse her child, either in the morning, at noon or towards the end of her Labor). Considering she lives so far away from the factory, the best interviews working day. After which, factory will create policy and procedures for way to ensure she could exercise this right is to provide her the nursing mothers to respect their chosen hour. [Employee name}, HR nursing hour at the beginning or the end of the working day, instead of manager, responsible. at the lunch break. Payment of Legal Benefits Legally mandated benefits will be provided or paid GMIES corroborated this situation throughout the NEW FINDING: There is a noncompliance regarding this benchmark, Payroll and records review. 1) Company recommends that factory considers paying severance to the 4 July 30, 2011 in full within legally defined time periods. payrolls. due to the following situations: 1) 4 cases of employees fired in May workers as required by local labor law. 2) Factory to include the seniority in 2010 without receiving the relevant severance were found, as Article Christmas bonus calculations. Payroll system was fixed in November 2010 59 of Code of Labor claims. Management did not provide explanation (based on Article 198 of Code of Labor). In regards to 3 cases of fired about the lack of severance payment. 2) Factory does not respect workers, factory tried to locate them without any success. 3) Company seniority while calculating Christmas bonuses of fired workers, there recommends that factory management ensures payment for the mentioned were 3 cases of fired workers who did not receive their complete benefits based on salary averages. For a more sustainable approach, the Christmas bonus (as Article 198 of Code of Labor requires) when factory management to enhance or create Wages, Benefits and Overtime factory dismissed them. These cases correspond to a sample Compensation policy and procedures that; a) describe commitment to pay reviewed in the period of May 2009. workers at least the minimum total compensation required by local law, 3) Factory does not take into account the average of salaries, which including mandated wages, benefits, overtime compensation and additional must include overtime and bonuses, in order to calculate legal benefits payments in accordance with terms of employment; b) establish that such as Christmas bonus, vacations and severance. Factory only overtime hours worked will be compensated at legal rate as set by legal applies the basic salary, excluding overtime and bonuses; this is an requirements; c) commitment that all worked hours, including overtime and infraction of Articles 119, 183 and 199 of the Code of Labor. benefits, must be recorded in payroll and paid in accordance with local labor laws. Management to create procedures that: a) information regarding payroll calculation will be well defined, recorded and communicated to managers in charge, supervisors and workers; b) establish system to ensure workers will be compensated at least legally mandated wage, overtime, and benefits in accordance with local labor law; c) [Empoyee name], HR Manager, is responsible for assuring all hours worked, including overtime, and calculation of benefits are being tracked and paid in accordance to local labor law. Accurate Recording of Wage All hourly wages, piecework, bonuses, and other Factory does not pay time established for lunch break This situation was corroborated by GMIES Provide clear guidelines on pay for lunch to July 21, 2006 According to Labor Code Art. 166, when day work is not Document review, Completed Copy of guidelines. Document review Completed COMPLETED: Factory is paying employees for all the time Records review. Compensation incentives will be calculated and recorded because they work 9 hours a day, instead of 8, which is the through interviews with workers and management, all employees and inform employees of divided, employer must give employees breaks within day worker interview. performed. accurately. standard established by Salvadoran Labor Code. and was also verified through payroll review. these guidelines. work so employees can have their food time. These breaks shall be at least 30 minutes. Factory has provided clear guidelines on pay for lunch and has informed employees. Timely Payment All compensation shall be paid in a timely manner. Workers´ salary is paid 5 days after payroll expiration date. GMIES corroborated this situation throughout the Employees are paid every other Friday, Factory has set pay schedules to be paid every 2 weeks. Pay files review Completed January 4, 2007 Check Pay files review Completed COMPLETED: Payments have been made in timely manner. Records review. GMIES considers this a very long period for workers, due to payrolls. which allows time for payroll to be figured for pay files. their low incomes. the previous 2 weeks. False Payroll Records Employers will not use hidden or multiple payroll The factory maintains double payrolls. Situation verified through payroll review and COMPLETED: At the present time, there is no evidence of double records in order to hide overtime, falsely worker interviews. When GMIES verified workers´ payroll. demonstrate hourly wages, or for any other payrolls, we noticed there were some employees fraudulent reason. not listed on official payment record. When we asked for an explanation from HR management, she showed another payroll, which did not show any social security or pension plan deduction. Coincidentally. it was the list of persons hired as apprentices. When GMIES verified worker payroll, we noticed that employees do not receive any bonuses or incentives when they reach their daily goals. However, during interviews workers stated that factory gives them bonuses every time they reach their daily goals. Record Maintenance All legally required payroll documents, journals and On worker files there is not an accurate date describing the GMIES corroborated this situation through COMPLETED: Personnel files and contracts are in proper order. Records review. reports will be available complete, accurate and up- day employees initiated their labor at factory, because both reviewing the workers' files. to date. (In United States terms, this would include apprentice and definitive labor contracts were initiated in W-4s, I-9s, green cards, 941s and supporting January 2005, along with the job applications the factory has. material.) Also, workers' files only contain a photocopy of local ID and the employees´ picture. Accurate Benefit Compensation Labor Code Article 25 "establishes that All employees will be credited with all time worked Factory has a policy establishing that their employees will GMIES corroborated this situation through Discussed vacation and bonus pay with Factory has Checked payroll file for employee vacation and bonus pay. Employee pay files. Completed January 4, 2007 Checked employees Completed PENDING: Factory continues paying 70% of severance. Period Payroll and records review. For severance payment, factory management will pay in accordance with Under investigation, contracts regarding labor that, due to its for an employer for purposes of calculating length sign a new labor contract each year; consequently, their reviewing the workers' files. factory management. been going by Vacation pay after 1 year: bonus and vacation reviewed goes from November 2009 to June 2010. local labor law. Factory will commit to pay employees 100% when they have estimated completion nature, is permanent in factory should be of service to determine the benefits to which severance payment will be paid annually, although workers schedule and *Total Vacation Pay: 15 days x rate of pay per day x 13% pay files. been fired. [Employee name], HR Manager, responsible. MJ Soffe's August 30, 2011 considered for an indefinite period, although workers are entitled. continue working at factory. This severance payment is not paying vacation *Bonus: 1-3 years of service = 10 days pay, 3-10 years of recommendation is that if any workers fired from November 2009 to June in them is established a termination date. It accurate, because factory is only paying them 70% of total and bonus each service = 15 days pay; 10+ years of service = 18 days pay 2010, factory will try to locate those workers to pay the remaining 30%. also affects Labor Code Article 198, which amount that corresponds to workers. December says that the minimum quantity that should be paid to workers as an allowance for year-end bonus will be: 1) workers with a year or more or less than 3 years of service, the equivalent to 10 days salary, 2) workers with 3 years or more or less than 10 years of service, equivalent to 15 days salary, and 3) workers with 10 years or more of service, equivalent to 18 days salary. Other Code of Labor Article 29, 6° letter b): claims NEW FINDING: Factory does not provide the 2 paid working days per Interview with management Management will review the factory's policy. Procedures will be February 17, 2011 that employers must provide workers with 2 month that labor law requires for workers to attend to familiar issues and workers. communicated to workers on fulfilling family obligations mentioned in ARticle paid working days per month, at a maximum, (Code of Labor, Article 29, 6° literal b)). Factory only lets workers out 29 6 a) and b), to avoid any confusion to workers. [Employee name], HR for them to attend to familiar issues related to of facilities for a maximum of 2 hours; if employees exceed this limit, Manager, responsible. emergencies (such as death or illness of factory deducts working day from the salary following. Despite this, it relatives). was not possible to identify any specific case of salary deduction. For this reason, management recognized that it is a factory practice and all workers were also aware of such practice. 9. Hours of Work Except in extraordinary business circumstances, employees will (i) not be required to work more than the lesser of (a) 48 hours per week and 12 hours overtime or (b) the limits on regular and overtime hours allowed by the law of the country of manufacture or, where the laws of such country will not limit the hours of work, the regular work week in such country plus 12 hours overtime; and (ii) be entitled to at least one day off in every seven day period. Forced Overtime Under extraordinary business circumstances, 2 workers interviewed said that they feel pressured to GMIES corroborated this situation throughout COMPLETED: No employee complaints of forced overtime. Interviews with workers. employers will make extensive efforts to secure work overtime. interviews with the workers. voluntary overtime work prior to mandating involuntary overtime. Positive Incentives Positive incentives will be utilized and known by the Some workers interviewed said that whenever they GMIES corroborated this situation throughout $5.04 per day; $0.63 per hour; $1.26 Overtime. Deductions: Checked payroll Payroll files Completed January 4, 2007 Completed COMPLETED: Workers receive the relevant payments of overtime Payroll and records review. workers. reach their goals, they receive bonuses that are better interviews with the workers. Social Security = 3%, Provisions. Present and ongoing. files for hours checked files. and bonuses. paid than the extra hours. However, in these cases, the worked and pay, extra hours are not paid. This means that workers files were in order. receive either bonuses or overtime payment, but not both. 3 / 4 Page 3 of 4 IEM Findings Remediation [Status] Updates [Status] Third-Party Verification Remediation [Status] FLA Code/Compliance Evidence of If Not Sources/Documentation Used for Target Completed, Completed, External Verification Target Completed, Issue Country Law/Legal Reference FLA Benchmark Noncompliance Risk of Noncompliance Noncompliance Corroborated, Corroborating PC Remediation Plan Completion Company Follow Up Documentation Pending, Company Follow Up Documentation Pending, (Uncorroborated) Explain Why Date Ongoing Ongoing (August 24-26, 2010) Documentation Company Remediation Plan Completion Date Pending, Ongoing Overtime Limitations Except in extraordinary business circumstances, In the period October 3 - 16, there were 3 people who worked GMIES corroborated this situation throughout the PENDING: Found that 6 packaging department workers performed Payroll and records review. Factory management to define/enhance or create Hours of Work policy and July 30, 2011 employees will (i) not be required to work more more than 60 hours. payrolls. around 60 and 63 hours per week, in the period between May 17 - 30, procedures that: a) outline regular hours of work expected (employees shall than the lesser of (a) 48 hours per week and 12 2010. not be required to work more than the lesser of 48 hours per week and 12 hours overtime or (b) the limits on regular and hours overtime, or the limits on regular and overtime hours allowed by the overtime hours allowed by the law of the country of law of the country of manufacture); b) outlines when overtime will come into manufacture or, where the laws of such country will effect; c) outlines what constitutes extraordinary business circumstances not limit the hours of work, the regular work week in and ensures that all overtime is performed voluntarily. Management shall such country plus 12 hours overtime; and (ii) be create procedures that: a) describe how workers will be communicated to on entitled to at least one day off in every seven day their hours of work; b) how factory will ensure management on hours of period. An extraordinary business circumstance is work; c) [Employee name], HR Manager, is responsible or accountable for a temporary period of extra work that could not assuring that no worker exceeds the limits on regular and overtime hours as have been anticipated or alleviated by other allowed by law. reasonable efforts. Reduced Mandated OT The employer will demonstrate a commitment to GMIES found out that, Saturday’s shift usually is extended GMIES corroborated this situation throughout COMPLETED: There is no evidence of forced working time on Payroll and records review. reduce mandated overtime and to enact a until 4:00pm. Also, 2 workers interviewed stated that they are interviews with the workers. Saturdays. voluntary overtime system to meet unforeseen not allowed to leave factory until they reach their daily goal, situations. which usually is around 6:30 to 7:00pm. One worker interviewed said that some employees start their shifts at 6:00am in order to finish their daily goal. 10. Overtime Compensation In addition to their compensation for regular hours of work, employees will be compensated for overtime hours at such premium rate as is legally required in the country of manufacture or, in those countries where such laws will not exist, at a rate at least equal to their regular hourly compensation rate. OT Compensation The factory shall comply with applicable law for Some workers interviewed said that whenever they reach GMIES corroborated this situation throughout Discussed with management about the pay Now January 4, 2007 Note: According to Labor Code Art. 126 Review pay files for Completed Employee pay files. Completed COMPLETED: Workers receive the relevant payments of overtime Payroll and records review. premium rates for overtime compensation. their goals and receive bonuses, the extra hours are not paid. interviews with the workers. policy. Literal A: The employee can be hired by Time Unit and Literal employees and bonuses. This means that workers receive either bonuses or overtime C: Mixed System. By Time Units: Wage is adjusted to time payment, but not both. units, without any special consideration to job result. Daily Wage: $5.04, normal hour wage: $0.60. Miscellaneous 4 / 4 Page 4 of 4