New WRC Report: Hong Seng Knitting (Thailand)

We write today to share a new report concerning labor rights violations at Hong Seng Knitting, a garment factory in Thailand that supplies university logo apparel to Nike.

Through documents, worker interviews, and written exchanges with factory management, the WRC uncovered an illegal wage theft scheme, carried out by the factory from May through October 2020. The factory coerced workers to acquiesce to this scheme and retaliated against workers who spoke up against it. The factory has deprived workers of nearly $600,000 in legally mandated wages, an average of $172, or more than 15 days’ wages, per worker.

The violations stemmed from the factory’s desire to evade a law that sustains workers’ income during periods of low production. Under the law, if a factory temporarily suspends workers, it has to pay them a reduced wage, so workers still have some income to support their families.

When the pandemic caused orders to drop, Hong Seng wanted to suspend workers but did not want to pay the legally required partial wage. To avoid paying, management compelled workers to sign a form falsely stating that they wanted to take voluntary unpaid leave. Management then used the falsified forms to justify depriving workers of their pay.

There is overwhelming evidence that the leave was involuntary and that the scheme was illegal. This includes credible testimony from numerous workers that they were pressured to sign the leave forms and a ruling from the Thai government that the forms do not constitute a lawful basis to deny workers their wages.

When some workers resisted the scheme, management responded with threats of dismissal and other forms of retaliation and intimidation. Most egregious, factory management retaliated against one worker, a Burmese migrant, by reporting him to the police. The worker had expressed concerns about the nonpayment of wages to other workers via Facebook messenger. Fearing unjust imprisonment in a country where police treatment of migrant workers is often both arbitrary and brutal, the worker was compelled to flee the country, along with his wife and infant son.

The WRC has engaged with Nike extensively regarding this case, beginning in August of 2020. Unfortunately, while Nike has acknowledged that violations occurred, it has only supported corrective action in a small number of cases, representing less than 1% of affected workers. Our report discusses Nike’s position in depth and includes a statement from Nike, but, in short, it is Nike’s position that most workers volunteered to take unpaid leave, even though all of them could have chosen to be paid. Nike has not offered an explanation for why hundreds of workers would freely choose to give up wages to which they were legally entitled.

We will continue to engage with Nike, and with the non-collegiate buyers at the factory, to seek full remediation, including back pay for all affected workers and just compensation for the worker who was forced to flee the country. The University Caucus representatives to the WRC board have also written directly to the factory to encourage the owner to take further steps to address the WRC’s findings.

The full report is available here. As always, we are available to discuss the report and answer any questions you may have.