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Supply Chain Innovation

Wells Apparel Nicaragua Final Report

Publication date: 
Wednesday, October 7, 2020

On June 30, 2020, Participating Company Amer Sports contacted the Fair Labor Association to communicate that it had received a complaint from a board member of the union at the factory Wells Apparel Nicaragua, from which the company sources products. The complaint alleged that (1) factory management had dismissed six union board members, who were entitled to fuero sindical protection, without complying with legal requirements; and (2) there was a potential risk that an additional union official currently under maternity leave would also be unlawfully dismissed.

Amer Sports shared with the FLA the information sent by the union board member, as well as that provided by the factory (as part of its internal preliminary assessment). The FLA agreed to review the information in light of Nicaragua’s legal framework on Freedom of Association and the FLA’s Workplace Code of Conduct and Compliance Benchmarks, and to provide Amer Sports with an initial assessment of the allegations to evaluate any potential noncompliance – whether with national laws or FLA standards.

Based on the assessment of the information provided by the factory and the interviews conducted with the complainants and an additional interview with a witness, the report finds that it is not possible to conclude that Wells Apparel terminated the six complainants based on anti-union animus. However, it also concludes that there are inconsistencies with respect to compliance with the factory´s own bylaws pertaining to their terminations. Moreover, the current practices for termination due to economic reasons are not fully aligned with the FLA Code of Conduct and Compliance Benchmarks, leaving room for discretionary implementation of workers’ termination through a retrenchment process. Finally, the absence of clear procedures and supporting information could serve to hide any potential discriminatory basis for the actions taken.

In light of the above, the report makes four recommendations:

  1. The factory should develop a comprehensive management system to handle terminations and retrenchments – including clear procedures to ensure the implementation criteria for making termination decisions are fully consistent with national law as well as the FLA Workplace Code of Conduct and Benchmarks and buyers’ Codes of Conduct. This system should include clear steps for implementing and documenting workers’ performance reviews in the context of any termination decisions.
  2. The factory should ensure that all workers terminated between March and May 2020 receive a copy of both their termination letter and finiquito. In addition, the factory should establish a clear and transparent communication channel through which the concerns of any worker about the calculation and payment of their severance can be addressed.
  3. In order to minimize the negative effects of the layoffs, the factory should provide rehiring priority to those workers terminated in March, April, and May 2020 who have skills and qualifications comparable with those of new applicants.
  4. The factory should review and consider rehiring the six complainants who were terminated in May 2020, based on the evidence presented and reviewed that shows the factory (1) did not demonstrate that its termination decisions were objectively made, and (2) was not in compliance with its own bylaws and the FLA Workplace Code of Conduct and Benchmarks.  The factory should provide information to the company, to be shared with the FLA, if it determines that this rehiring is not possible – including the reasons for reaching such a decision.
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