Update: More Than $2 Million to Be Paid to Workers at June Textile

I am pleased to report that June Textile Company, a factory in Cambodia that was a recent producer of collegiate apparel, has agreed to pay legally owed severance to 4,000 employees who lost their jobs when the factory was destroyed by fire on March 30, 2011. For months, June had refused to pay the workers, in defiance of Cambodian law and a ruling of the country’s Arbitration Council. The WRC engaged extensively with buyers from June and its parent company, with worker and industry representatives in Cambodia, and with the ILO to bring pressure to bear on June to honor its legal obligations to the workers. Yesterday, June reversed its position and committed to pay all of the legally mandated severance – roughly $2.6 million, by our estimate.

Although, fortunately, the fire in March which destroyed the factory caused no major injuries to employees, the refusal of its owners to pay statutory compensation to the workers had become a subject of intense controversy in Cambodia’s garment industry – as we reported to WRC affiliates at the April 2011 meeting of the WRC University Caucus.  Assuming that the plant’s owners follow through with their commitment this week to pay all 4,000 former workers an estimated US $600-700 each in statutory compensation, this will mark what is, to our knowledge, the largest case so far in which labor rights monitoring efforts have succeeded in overcoming an attempt by garment factory owners to evade payment of legally

owed compensation to workers when a plant closes or goes out of business.

June Textile had been disclosed to WRC affiliate schools in 2009 and 2010 by the licensee Vantage Custom Classics as a supplier of collegiate apparel. However, as Vantage had ceased sourcing from the plant before the fire, the WRC’s efforts to press the factory’s owners to comply with their legal responsibilities focused chiefly on those international buyers that had placed orders with the factory in the period immediately prior to the fire and/or that continue to do business with its parent company. These brands include two other key university licensees: Under Armour and Russell Athletic. A copy of the most recent memorandum sent by the WRC to international buyers concerning the June Textile dispute can be found here.

These buyers, along with Carter’s (maker of OshKosh brand apparel), Gap and H&M, all reported to the WRC that they were urging the factory’s owners to resolve the situation by providing workers with their legally

due compensation. The WRC commends these buyers for their efforts in pressing June Textile’s parent company to comply with its responsibilities.

The WRC, both in Cambodia and through our regional representative in Thailand, also engaged other key stakeholders, including, the factory’s owners; the ILO’s Better Factories Cambodia monitoring program; the Garment Manufacturers Association in Cambodia (GMAC), of which June Textile’s owners are members; the Cambodian unions representing the factory’s former employees; and the AFL-CIO Solidarity Center, which provides technical assistance to Cambodian apparel worker unions.

The WRC welcomes the decision of June Textile’s owners to comply with their responsibilities to their former workers, many of whom have been in desperate circumstances following their loss of employment. The WRC will continue to monitor the situation closely to ensure that June Textile’s owners live up to this commitment by providing all legally due compensation to the former employees. We will also continue to engage in dialogue with buyers concerning the need for a more broad-ranging and sustainable solution to the problem of suppliers’ failure to pay statutory compensation to workers in factory closure cases, a violation of university codes of conduct which remains pervasive in the global apparel industry.  

You can see examples of local newspaper coverage of the dispute here and here.

Best,

Scott

Scott Nova 
Worker Rights Consortium 
5 Thomas Circle NW 
Washington DC 20005 
ph 202 387 4884 
fax 202 387 3292 
[email protected] 
www.workersrights.org