Labour RightsCase Study - Shahi Exports Pvt. Ltd.

Group 5Sumant ShekharSharvari SarafShubham ChaudharyDisha Dhawan

Date: 17th Apr 2020 | Subject: Regulatory and Compliance Risks

Introduction & Some Core Labour Standards

● Labour Rights or Worker's Right are both Legal Rights and Human Rights relating to labour relations between

labour and employees.

● These rights are codified in national and international labour and employment law.

● In the Constitution of India from 1950, articles 14,16,19(1) (c) , 23, 24, 38, 41 & 43A directly concern labour rights

● The International Labour Organization (ILO) was formed in 1919 as part of the league of nations to protect

workers rights and later it became incorporated into the United Nations.

Some of the core labour standards:

● Freedom of association.

● The right to collective bargaining.

● The prohibition of all forms of forced labour.

● Elimination of worst forms child labour.

● Non discrimination in employment.

Difference between Labour Rights & Human Rights

Labour Rights or Worker's Right

● Both are legal rights relating to labour relations between workers and employers

● These rights are codified in national & international labour and employment law.

Human Right

● Human Rights are basic rights and freedoms that belongs to every person in the world.

● These are applied regardless are where you are from, what you believe and how you choose to live your life

unless the person breaks the law.

Some Important Labour Laws in India

● The Factories Act, 1948 - Imprisonment max 2 yrs Or fine 1L Or Both

● The Employee Provident Fund Act, 1947

● The Apprentice Act, 1961.

● The Maternity Benefit Act, 1961

● The Workmen’s Compensation Act, 1923

● The Payment of Gratuity Act, 1972

● The Payment of Wages Act, 1936

● The Industrial Disputes Act, 1947

● The Payment of Bonus Act, 1965

● The Employee State Insurance Act, 1948

Importance of Labour Laws

● Improves industrial relations.

● Protects workers from exploitation

● Helps workers in getting fair wages.

● Minimizes labour unrest

● Reduces conflicts and strikes.

● Ensures job securities for workers

● Promotes welcome environment conditions in the industrial system.

Some Common Labour Rights Violations

● Not paying required overtime wages

● Paying subminimum wages

● Not ensuring a safe workplace

● Not covering workers injuries on the job

● Misclassification of a worker

Note : It is important for all employers, no matter the size of the business, to be aware of the legal obligations they have in adhering to labour laws

Shahi Exports - Introduction

● Established in 1974 by Mrs. Sarla Ahuja.

● It has grown to become India’s largest apparel manufacturer, operating 65 factories and 3 processing

mills across 9 states.

● They have over 100,000 employees, including 67,000 women.

● Turnover crossed 500 crores in 2018

● They make university logo apparel for Columbia Sportswear and apparel for Benetton,H&M and

Abercrombie & Fitch

● They are committed to serving their customers through design-led innovation and vertically integrated

operations.

● Workers grievances relating to:○ Quality of drinking water○ Sanitation issues ○ Company- supplied transportation service○ Monthly wages they received from the company○ Sexual harassment at workplace

These issues were being informed by the employees who were members of union to KOOGU union .

● They also distributed leaflets to create awareness amongst other employees of the factory of these issues

Workers grievances

Violations by the managers

● Interrogation and Threats of Adverse Treatment for Associational Activities by Shahi Managers

and Supervisors - clear violation of workers freedom of association

● Surveillance, Attempted Bribery, Interrogation, and Other Interference with Associational

Activities by Production Manage

● Threats of Mass Termination, Interrogation, and Incitement of Workers Concerning Associational

Activities, by Shahi Production Manager to the other employees who signed the Unions document

● Sex-based Verbal Abuse and Harassment, and Attempt to Suborn False Testimony by Shahi

Managers

Violations by the managers

● Death Threats, Threat of False Imprisonment, Incitement of Violence, Physical Assaults and

Battery, and Verbal Abuse, including on Account of Sex, Caste and Religion, by Shahi Managers. ○ Caste-based Verbal Abuse, Death Threat of False Imprisonment Against Employee by Shahi Human

Resources Manager ○ Assaults and Batteries Incited, Organized and Committed by Shahi Production Managers and Human

Resources Managers Against Two Employees○ Religion and Sex-based Verbal Abuse and Physical Assault Directed by Shahi Human Resources Manager

Against Employee , theft of personal property ,gender based verbal assault and battery was being committed by the managers

● Besides the managers beaten and thrown out the employees who were part of the union and a

threat in the mind of other employee was being created .

● They suppressed the media coverage (Deccan Herald) reporting its management's responsibility

for the violence of the factory

Recommendations from WRC and Compliance

● Workers who have been physically assaulted and suspended from their jobs must be returned to work with full back pay. - Complied

● Compensation for their injuries, pain and suffering, and loss of personal property. - Complied

● A written apology from the company. - MOU Signed with workers.● Termination of all the managers identified in the report as directing or

perpetrating physical violence or death threats against workers. - Terminated only after foreign pressure.

Cause Analysis

● Lack of practicality of SOPs in HR and management communication● Policies not practiced ● Top-down communication● Problems of family owned businesses● Where does the buck stop? Top Management, Owners?● Tone at the top

Stakeholder Mapping

Employees

Suppliers

Clients

Government

Owners

Societies of Apparel

Mfgs

Control

Influence

Concern

Contractual Workers

Daily Wagers

Creditors

Debtors

Trade Unions - KGWU

Competitors

WRC

Impact

● Reputational loss● Widely covered in foreign media - The Guardian.● Indian media had to be managed - Deccan Herald● PR expense

Website Comparison PR efforts reflected through Website

July 24, 2018

Dec 2, 2018

Website Comparison About Page

July 4, 2018Nov 26, 2018

Remediation as New C-Suite Executives

● Full support to WRC and local police.● Internal investigation of the matter. ● Making policies more robust - HR, Code of Conduct and Ethics, Health and

Safety. ● Recognise Karnataka Garment Workers Union.

○ Setup a channel of communication with management. ○ Organise formal elections to make a union representative. ○ Create a checklist of existing demands and negotiate.

● Create an Internal Audit Committee

Remediation as New C-Suite Executives

● Training and Development Modules○ Periodic T&D for Line Supervisors, Middle Management on Industrial

Relations. ● Take periodic feedback, worker satisfaction assessment. ● Grievance redressal system ● Whistleblowing Mechanism - Rewarding mechanisms for workers for disclosing

wrongdoings. ● Communication through public addresses, SMS and notice boards.

Example of an Ethical Company

NG Apparels

NG Apparels

● NG Apparels is a trusted private label clothing manufacturer.● Commenced in the year 1995.● Located in Ludhiana, North India.● Earned huge clientele across different countries.● Annual Turnover- Rs. 2 - 5 Crore

NG Apparels

● Total Number of Employees - 101 to 500 People,

● Cater wide variety of fabrics.● High Quality Standards● 200,000 Men’s Polo T-Shirts for American brands annually.● Provide all kinds of OEM and ODM services.

Services They Offer:

● Pattern Making and Grading

● Sampling Development● Printing● Embroidery● Special finishes on fabrics or garments● Custom Buttons, Zips, Pullers etc● Custom Tags, Labels, Heat Transfers, Product Stickers etc● Shipping

Ethical Clothing Brand

Business operations done ethically on the principles of transparency, accountability and honesty for sustainable growth along with delivering value to their customers and creating opportunities for their employees.

● No debt-bonded labour● Focus on women empowerment

Ethical Clothing Brand

● No Discrimination ● Minimum wastage & carbon footprint ● Health and Safety ● Ethical hiring & standards

Ethical Clothing Brand

● Ethical Psychology● Transparency● Green WorkPlace● Ethical labour practices policy.

Thank You