Taiwanese Footwear Giant Balks Compensation Ruling Despite Massive Profits
PHNOM PENH —
A Taiwanese owned company whose parent firm posted a more than half billion dollar profit last year has been refusing to pay compensation in line with an arbitration ruling to hundreds of Cambodian workers it made redundant.
Pou Yuen (Cambodia) Enterprise Ltd, which supplies Finnish sporting goods giant Amer Sports, gave workers zero notice when it closed its Phnom Penh factory in December last year.
It’s parent company, Yue Yuen Industrial (Holdings) Limited, is the biggest footwear manufacturer in the world, supplying the likes of Nike, Adidas, Reebok, ASICS, New Balance and Puma.
Yue Yuen posted a $519 million profit for 2017, its own annual report shows, while its parent company, Pou Chen Group, posted a more than $400 million in profits.
Yet its Cambodian subsidiary has refused to give compensation to 478 workers in line with an Arbitration Council ruling that would see them receive about $2,000 each on average – according to the Center for Alliance of Labor and Human Rights (CENTRAL).
“The factory always told the workers that they were losing profit and the reason that they shut the factory down they said was because they were bankrupt, that they didn’t make any profit and they pushed workers very hard to reach the targets,” said 38-year-old former employee Yan Bunthan. “And at the end they’re still not taking care of the workers and just run away irresponsibly without providing us with fare compensation.”
Cambodia’s Arbitration Council ruled in late February that Yan and 477 others who had worked at the company for more than two years should have been compensated as permanent employees.
That would have entitled then to compensation for lack of prior notice, indemnity for dismissal, unused annual leave, damages and final wages.
Instead, Pou Yuen treated them as fixed duration employees and gave them 5 percent of their salary only.
Wage calculations shown to VOA by CENTRAL suggests this would result in compensation payouts ranging from between $91 to $243 for workers who had stayed with the factory in some cases for more than seven and a half years.
But though the Arbitration Council effectively ruled this compensation was illegal, its decision is non-binding because Pou Yuen chose to contest it.
In an emailed response, Amer Sports highlighted the non-binding nature of the ruling and the fact that Pou Yuen had paid the 5 percent severance to some 1,900 workers.
“Pou Yuen Cambodia owns the direct relationship with their employees,” Vice President of Amer Sports Sourcing, Pascal Covatta wrote. “We are working with Pou Yuen Cambodia but also with the parent organization Pou Chen Group to find the best solution for the employees in due course.”
Calls to Pou Yuen have gone unanswered while a former assistant to the general manager told VOA she was unaware of any update in the case.
In an emailed response, Chihchien Lin of Pou Chen Group’s legal department, stood by their decision to class the workers as non-permanent employees on fixed duration contracts, noting that all but 50 workers – some 1,900 people – had taken the payments they offered.
“PYC sincerely regrets that there are still existing complaints about the termination at factory disclosure due to different interpretation on the laws regarding FDC [fixed duration contracts] and UDC [unspecified duration contracts],” Lin wrote.
“PYC will immediately reach out to the complaining employees to initiate good faith discussion, and target to reach mutual agreement on this dispute with amicability in [the] future couple of weeks based on the direction of UDC [unspecified duration contracts] as indicated in the arbitration decision.”
Lin stressed that workers had received termination payments at the expiration of each fixed duration contract since the operation began in 2010.
Moeun Tola, executive director of CENTRAL, said it was not surprising to him that a hugely profitable company would refuse to implement an Arbitration Council ruling.
“If no pressure, those companies would continue exploiting their laborers peacefully although they have [a] clear Code of Conduct to respect workers’ rights,” he said in a written response.
While Pou Yuen were entitled to choose a non-binding arbitration, defiance of the ruling still violated the ethical sourcing policies brands like Amer Sports purported to adhere to, Moeun said.
“I think Amer Spot [sic] should look at the history of AC awards so far, how people take serious about AC decision in such corrupted system in the country and should be responsible for their consumers by stop exploiting their laborers and apply their CSR [corporate social responsibility],” said Moeun Tola.
Labor Ministry spokesman Heng Sour said the government would step in to pay workers their final salary, annual leave and severance pay, but not damages or termination compensation.
“As the government we provide the compensation to workers, as we don’t want them to worry or be frustrated about their payment,” he said.
The government, he said, would pursue the foreign investors responsible for the closure or others holding liability to recuperate the sums owed, vowing that “when they come here we’ll take action”.
He shouldn’t have to look far, as Pou Yuen is still in Cambodia, according to Amer Sport’s Covatta, who said the firm is building a new, 2,800 worker capacity facility – reflecting his company’s “commitment to provide jobs in Cambodia”.
That’s cold comfort for Sor Chanthorn, the 46-year-old president of the Cambodian Alliance of Trade Unions local branch.
She said the closure had left her in financial dire straits since other factories refused to take workers of her age.
“It’s nearly one year that we have not got compensation. I went to work in the construction sector, it’s already hard because my husband got sick, he had a stroke, then he cannot move,” she said. “I cannot go to work because I have to take care of my husband and my daily life condition is very bad because I don’t have any income and I’m also waiting to get compensation from the factory.”