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AMSTERDAM – Japanese fast fashion brand, Uniqlo, is at loggerheads with a group of labour rights NGOs about its refusal to compensate Indonesian workers who were left owed wages and severance payments when their employer – a former Uniqlo supplier factory – went bust.

In April 2015, two Indonesian clothing factories, including Jaba Garmindo, closed down without paying severance payments and several months of wages to its workforce. The factory closures followed the bankruptcy of the company after its major buyers, most notably Uniqlo, withdrew their business from the factory.

Labour rights activists from War on Want, Labour Behind the Label and the Clean Clothes Campaign now claim Uniqlo has a “moral” responsibility to the workers and, among other things, cites the UN Guiding Principles on Business and Human Rights(UNGPs) which states that it is the responsibility of international operating companies to ensure human rights are respected in their supply chains, “through active prevention and mitigation of adverse human rights impacts.”

The NGOs also cite previous examples where companies such as Nike, adidas, H&M and Walmart have agreed to contribute to the payment of severance claims in cases where a supplier went bankrupt.

However Uniqlo’ parent company Fast Retailing claims it has no obligation to compensate the workers, claiming it cut business ties with PT Jaba Garmindo in October 2014 due to quality issues and it was several months after that the company went under. “Fast Retailing has no legal obligation pertaining to this matter, including the responsibility to financially compensate former PT Jaba Garmindo employees,” said the business in a statement.

Asked whether Uniqlo’s obligation was a legal or moral one, Sam Maher of the Clean Clothes Campaign said: “It’s definitely a moral one. I think legally its more complicated. As with all supply chain issues it is really a grey area as I outlined above – companies like Uniqlo operate on an international level, which has standards and norms, but no enforcement infrastructure. If you apply international standards for multinational business the obligation on them is to carry out proper due diligence to ensure that their business decisions do not directly or indirectly cause labour rights abuses. This is the situation for all abuses whether is is child labour, factories collapsing or unpaid severance.

“This means that when a brand like Uniqlo decides to pull its business from a factory it has a responsibility to check that the decision won’t lead to workers’ rights violations.”

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