Proposal B3: Eliminate short-term contracting.

Ensure that workers engaged in the company’s core business are employed under open-ended or undetermined duration contracts, and that:

• Any use of fixed duration contracts is in response to a clearly defined plan justifying their use;

• Any workers on fixed duration contracts are provided the same salary and benefits accorded to permanent workers performing the same work;

• Once a short-term employee has been hired on a fixed duration contract twice by the same employer, or for two years, the employee is automatically hired on an undetermined duration contract with the third contract.

• Where requirements are stronger under local law, the higher standard should prevail.

Why?

In recent years, unions and labour rights organizations have reported an increasing use of successive short-term employment contracts – or in many cases, no written contracts whatsoever. The use of successive short-term contracts has been used to deny workers statutory benefits and bonuses, and to undermine worker organization. Not only are contract workers always in danger of losing their jobs, while they are employed contract workers don’t have the same rights as permanent workers, such as maternity leave, annual leave, or wage increases that would accrue with seniority at the factory.

Responses

adidas

According to adidas “contract workers must receive at least the minimum wage or the prevailing industry wage, whichever is higher, and all legally mandated benefits.” The use of contract workers must also be clearly defined and cannot be a means for suppliers to continuously engage workers in multiple short-term contracts. The company does not commit to requiring automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment.

Full response

"Based on the findings from our own monitoring, and in response to feedback from the NGO community, union organizations, and workers themselves, in 2006 a supplementary guidance note was developed dealing with contract, temporary and/or casual labour. The standards and practices set out in the guidance note, make it clear that we expect suppliers to comply with local laws and our Employment Guidelines when recruiting workers and signing employment contracts, and that the use of short-term labour should be limited and only used under certain conditions. (Note: this guidance note will also be incorporated into the second edition of the adidas Group Employment Guidelines.)
The two underlying principles governing this standard are:

"(1) suppliers must not hire workers on a contract basis as a means for depriving such workers of the correct wage and benefits, or other rights and privileges provided to permanent workers; and

"(2) suppliers must not hire contract workers on a continuous basis, multiple short-term contracts, or as regular practice, to support normal business needs.

"The guidance note referred to directly above states that suppliers may hire contract workers where contract (ie short-term) employment is allowed by law; in cases of unusual or extraordinary circumstances which may result in great financial loss to the supplier if delivery of goods cannot be met on time; or in the event of an unexpected or unusually large volume of orders placed at the factory and the permanent workforce is not sufficient.

"If factories use contract workers during peak periods, then the peak season must be clearly defined and this information provided to adidas, ie suppliers should consult with SEA before hiring any contract workers. Additionally, the factory should define the job functions or tasks that contract workers are hired to perform, and maintain information on the use of contract workers in relation to production needs.

"The same guidance notes specifically states: 'Contract workers must receive at least the minimum wage or the prevailing industry wage, whichever is higher, and all legally mandated benefits such as social security, other forms of insurance, annual leave and holiday pay.' It also states: 'Factory rules and regulations apply to contract workers the same as to permanent workers.'

"The guidance that we have developed on this point does not specify at which point a supplier would be required to automatically hire a worker who has been engaged on a short-term or contract basis. This is mainly because different countries and jurisdictions have adopted their own requirements to protect contact workers.

"Nonetheless, the standards set out in the guidance note referred to above, are aimed specifically and preventing suppliers from continuously engaging workers on multiple short-term contracts.

"Additional requirements set out in the guidance note are:

"• Any local laws governing contract workers must be observed. Where local law is silent on specific aspects of contract employment, at a minimum, contract workers must be provided an employment agreement, setting out the employment terms and conditions.

"• Personnel files and all relevant information in relation to contract workers must be maintained and accessible at the factory at all times. If a contract worker is hired on more than one occasion, ie under separate contracts, the worker should retain the same ID number where possible and all information on that worker must be kept in one file.

"• Contract workers must be given priority when the factory is seeking ‘new’ permanent employees

"• For any contract worker who becomes a permanent employee, seniority and other benefits such as social security entitlements, must be dated from the first date of entry to the factory as a contract worker, and not from the first day of permanent employment, ie all work-related benefits accumulate. "

Lotto

Lotto does not commit to the elimination of short-term contracts, their clearly defined use, providing same salary and benefits to short-term contracts, or automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment.

Full response

"Lotto Sport Italia researches and plans the workload of the factories on the basis of the amount of productivity needed, and therefore, identifies a workload plan for the labourers. We also acknowledge that our business is seasonal, however, it is in the factories’ interest to retain workers on a flat rate, although there are some cases where workers leave for more prosperous offers and the consequence is a general lack of labourers. Furthermore, Lotto’s production requires a high level of “know how” for the creation of the products, and therefore has minimal interest in promoting precarious employment as this would only mean the continuous transfer of our “know how” resources from worker to worker. Notwithstanding what above mentioned, precarious employment is a phenomenon that occurs globally, and to all businesses, including first tyre world countries."

Mizuno

Mizuno says it “will take steps to state our policies on the response to the problems related our suppliers gradually,” but the company does not commit to the elimination of short-term contracts, their clearly defined use, providing same salary and benefits to short-term contracts, or automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment.

Full response

"In Japan also there has been short-term contract and third-party employment problems in recent years. We understand these problems and will take steps to state our policies on the response to the problems related our suppliers gradually."

New Balance

New Balance allows temporary contracts to deal with seasonal fluctuations but limits the use of temporary contracts to six months. They do require a clear plan justifying their use. They have not clarified whether contract workers receive the same benefits and salaries as regular workers.

Full response

New Balance strongly discourages the use of temporary and contract labor in our supply chain, and over the last five years has withdrawn from a number of factories where we were unable to change such employment arrangements. Our philosophy is that if a job is permanent, then the worker who does the job should have a permanent contract. We allow temporary employment contracts in specific circumstances where seasonal fluctuations merit seeking temporary help with production. Before allowing supplier factories to hire temporary workers, however, we require that they clearly quantify how many temporary positions they need to create, elaborate the reasons behind the need and why it is unavoidable, and fix the length of the contract to no longer than necessary. We allow temporary contracts for no more than 6 months.

Nike

Nike supports “the overall concept of eliminating inappropriate use of short-term contracts for workers engaged in core business operation,” and expresses a willingness to engage with stakeholders on the use of short-term contracts, but the company does not commit to clearly defining use of short-term contracts, providing same salary and benefits to short term contract workers, or automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment.

Full response

"We support the overall concept of eliminating inappropriate use of short-term contracts for workers engaged in core business operations. We also strive to move toward longer-term strategic partnerships with suppliers, which we believe should encourage longer-term contracts for workers. In some cases, however, there are business reasons why a factory may need to employ workers for a short period of time (e.g. peak production periods). We would be willing to engage with stakeholders to determine fair practices around the appropriate use of short-term labor in these specific circumstances."

Pentland

Pentland says that “These already form part of our work with suppliers. Although there are some problems in some countries, in general all our core business suppliers have permanent, direct and open-ended contracts with workers.” While this is positive, the company needs to clarify whether they apply this standard at all supplier factories or just “in general” at “core” suppliers.

Full response

Puma

Although PUMA claims that “the vast majority of our indirect employees are hired on unlimited-period working contracts,” the company will not commit to the elimination of short-term contracts, their clearly defined use, providing same salary and benefits to short-term contracts, or automatic open-ended contracts for workers after 2 fixed term contracts or two years’ employment. According to the company “labor flexibility remains one of the key components to ensure that individual companies survive and grow...”

Full response

"Given that labor is only one component of production, labor flexibility remains one of the key components to ensure that individual companies survive and grow. Conditions in the supply chain do not exist in a vacuum, but are affected by local and global economic and social circumstances. We understand that individuals cannot be fully flexible in the global economy; hence PUMA supports legal and extra-legal measures to ensure that worker welfare is addressed. It is guaranteed within PUMA’s Code of Conduct that all worker income must be paid on time and in accordance with local labor law. Each PUMA supplier must provide a copy of a formal working contract to employees and the vast majority of our indirect employees are hired on unlimited-period working contracts to ensure that they have continued access to benefits that accrue over the length of their service. In countries where fixed-term contracts do not impede the accrual of tenure-based benefits or rights, we do not strongly enforce open-ended contracts. We believe that there is no need to do this, as the factories themselves would want to keep their workers who have already acquired certain skills. However, we do investigate against any unlawful termination. We have also strengthened our policies and monitoring regarding apprenticeship schemes and have in fact been able to stop a few cases of questionable apprenticeship programs as part of our compliance auditing routine."

Asics

ASICS will not commit to ensuring workers engaged in its core business are signed to open-ended contracts. The company says that it has not audited to assess whether there are economic disparities between fixed duration contract workers and permanent workers

Full response

"A part of factories workers under open-ended duration contracts. Even if it is fixed duration contracts, the workers are receiving fair treatment. Auditing investigation does not reach to economic disparity between fixed duration contract workers and permanent workers. It is not clearly confirmed, however most of the local laws stipulate that the employee is automatically hired on an undetermined duration contract after working long term."

Response Key

The brand claims to implementing all components of this proposal or has agreed to implement them within Play Fair's proposed timeframe.

The brand is currently implementing or has agreed to implement some of the essential components of the proposal but has refused to implement, has overlooked, or has raised issues with one or more important components; or, the brand agrees to implement the proposal but not within Play Fair’s proposed timeframe.

The brand has refused to implement the essential components of the proposal.

The brand has misunderstood or failed to comment on the proposal; or the brand is considering the proposal, but has yet to make a decision.