In late August 2022, more than 800 workers at the apparel factory, GO Haiti (Garments of Haiti) picked up severance checks totaling $330,000, the equivalent of almost three months’ wages per worker, that were paid for by Hanesbrands, the US apparel company that had been the factory’s main buyer. Hanesbrands informed the WRC that it was stepping in to provide the funds after the factory’s owner decided to close the plant, in order to ensure that the workers who had made its goods would receive all their legally required severance.
The closure of the factory hit workers especially hard, particularly given the severe impact Haiti’s ongoing political and economic crisis is already having on the lives of workers and their families across the country. Hanesbrands paying these funds is notable not just because of the desperate situation facing garment workers in Haiti, but because, as the WRC has documented extensively, around the world garment workers are regularly robbed of their severance. This included an estimated $500 billion to $850 billion owed to garment workers globally within the first year of the pandemic due to factory closures.
Hanesbrands’ intervention exhibits the positive results of nearly two decades of WRC engagement with this brand. Hanesbrands’ proactive response to the closure at GO Haiti reflects its willingness to remedy and, increasingly, to prevent severance violations in the company’s global supply chain. It also demonstrates the ability of brands, generally, to be proactive rather than reactive in protecting workers’ legal rights to severance when their supplier factories close.
Apparel factories operate on thin margins to attract and keep buyers in a competitive market. Left to their own devices, factories cannot or do not set aside funds for future severance obligations to workers. When buyers stop purchasing from a factory, it may trigger layoffs or closure exactly at the time when the employer may be least able to pay workers’ severance. GO Haiti’s owner decided to close after several key clients, including Hanesbrands, informed him they were ending their sourcing relationship with the factory.
Hanesbrands recognized that as the factory’s largest buyer, its decision could lead to the plant’s closure and the risk of the factory owner’s default on severance owed to workers. The company requested information from the factory owner to determine the severance owed to each worker and provided the funds needed to avoid this occurring. On August 31, Hanesbrands reported to the WRC that 827 out of 835 workers—more than 99 percent—had collected their severance checks.
The WRC has worked with Hanesbrands on many occasions over the past two decades to ensure payment of millions in severance to workers in its supply chain around the world. In 2009, Hanesbrands pressed the owner of the Estofel Factory in Guatemala to pay $500,000 in severance owed to nearly 900 workers. In 2015, Hanes provided $550,000 to remedy nonpayment at the Salvadoran factories Manufacturers del Rio and Central American Cutting Center.
In 2016, Hanes worked proactively with the WRC to ensure that another factory in Haiti, Multiwear, paid terminal benefits to workers when it closed. In 2019, Hanes contributed, along with Gap and American Eagle, to a fund totaling $1.3 million for severance payments at the CSA Factory in Guatemala, and in 2020 provided $400,000 to correct severance theft from workers in Indonesia.
Hanesbrands’ commitment to ensuring workers at GO Haiti received their legally due severance payments is to the brand’s credit, but, unfortunately, its proactive stance remains an exception rather than the rule in the global apparel industry. Today, factories that supplied major brands still owe hundreds of millions of dollars in severance to workers who lost their jobs at the beginning of the Covid-19 pandemic, when buyers canceled orders en masse.
Brands should immediately remedy these thefts, either by requiring their suppliers to pay workers what they are owed or, as Hanesbrands did here, provide the funds to pay. Brands should also, as a matter of general practice, take proactive action to ensure severance obligations are met when their withdrawal or reduction of orders might lead to factory closures, as Hanesbrands did in this situation. The WRC joins worker rights advocates globally in pressing brands for a sustainable industry-wide solution to the ongoing global epidemic of severance theft from garment workers: the creation of a legally enforceable Severance Guarantee Fund, which ensures workers receive their full severance whenever large-scale nonpayment occurs. Under this proposal, brands would contribute an annual premium—estimated at less than 10 cents per garment—into a fund for workers’ severance after a factory closure or mass dismissal, if the factory’s owner is unable or cannot be compelled.
Photo credit: Marcel Crozet / ILO (a Haitian garment factory)