Case Brief: Uni Gears Ltd. (Bangladesh)

After extensive engagement with the university licensee, Outerstuff, the WRC has secured commitments from Outerstuff and its supplier factory in Bangladesh, Uni Gears Ltd., to comply with university codes of conduct by cooperating in the remediation of unpaid severance benefits owed to former workers at the factory. Uni Gears is a factory employing 1,100 workers that has been disclosed by Outerstuff as a manufacturer of collegiate licensed apparel.            

An investigation by the WRC found that, when the economic crisis caused by the Covid-19 pandemic upended the Bangladeshi garment industry last year, Uni Gears, like nearly every other Bangladeshi garment manufacturer, made reductions to the size of its workforce. According to the factory management and Outerstuff, however, the decrease in production levels at Uni Gears that precipitated the staff reductions was not the result of the licensee canceling existing or in-process orders, as was the case for many factories producing for other brands during this same period of time. Workers interviewed by the WRC reported that the factory accomplished this by compelling workers to resign from the factory. By doing this, Uni Gears reportedly avoided paying these workers the terminal compensation benefits required under Bangladeshi law when workers are involuntarily dismissed.

The WRC found that, because these workers’ separation from employment was not, in reality, truly voluntary, Uni Gears’ failure to pay severance benefits violated Bangladeshi law and, by extension, university codes of conduct. The impact of these compelled resignations was to deny these workers a significant source of income, that they not only were legally owed but desperately needed, during a period of intense social and economic dislocation, in a country that lacks any form of government-supported unemployment insurance or other social safety nets. 

Determining the exact number of workers who were improperly denied severance has been hindered by delays in the factory providing documentation requested by the WRC. Last week, after two months of engagement by the WRC with Outerstuff and, through this licensee, with the factory management, Uni Gears agreed to pay full legal severance benefits—equal to four months’ wages, plus an additional month’s wages for each year of service—to 11 workers whom the WRC has specifically identified to the factory as having been compelled to resign without payment of severance benefits. 

Importantly, the factory also has finally agreed to provide the WRC with a full listing of workers employed by the factory both prior and subsequent to the reduction in workforce, which will allow the WRC to identify other affected workers. The WRC will issue a full report to universities concerning this case and Outerstuff’s and Uni Gears’ implementation of the commitments to corrective action made this week once this process has been completed.

While obtaining the factory’s commitment to rectify what is, in actuality, a relatively straightforward case of unpaid severance benefits has been an overly lengthy and involved process, the fact that Uni Gears has now, through intervention by Outerstuff, agreed to begin the process of remediation is significant. This is especially true given the larger landscape in the Bangladeshi garment sector, since the beginning of the pandemic, of widespread job losses without payment to workers of legally due, and sorely needed, severance benefits. Recently published research by Bangladesh’s Centre for Policy Dialogue indicates that more than 350,000 garment workers in the country have lost their jobs in the past year as a result of the pandemic, but only 3.6 percent of the factories employing them actually paid legally mandated severance benefits.

The fact that, in this case, a factory owner has made commitments toward rectifying a denial of legally owed compensation speaks to the power of university codes of conduct in securing workers’ rights and welfare in an economic environment that remains highly precarious.

As always, we welcome any questions you may have concerning this information.