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H&M to End Short-Term Labor Contracts With Suppliers

Swedish fast fashion clothier H&M said it will soon adopt stricter requirements for its suppliers, particularly where short-term fixed labor contracts and undeclared facilities are concerned.

The retailer released the statement following publication of a Human Rights Watch (HRW) report titled, “Work faster or get out,” which highlighted labor rights abuses in Cambodia, calling out H&M as well as Marks and Spencer, Gap and Joe Fresh for doing business in these ill-outfitted facilities with subpar labor standards.

HRW’s report noted that an unnamed direct supplier to H&M subcontracted work to un-vetted, smaller factories. Team leaders at one of the company’s direct suppliers reportedly told workers to work at a subcontractor facility on their day off, Sunday, to supplement their incomes as the original supplier wouldn’t be providing them overtime. The workers then labored at the other factories without overtime pay.

“By outsourcing the work to a subcontractor, factory 1 was able to bypass labor law provisions governing overtime wages and a compensatory day off for night shifts or Sunday work,” according to HRW’s report.

H&M responded saying they had requested information about the factories in order to follow-up on the alleged issues, but HRW has yet to provide the information. The retailer touched on topics highlighted in the labor conditions report.

The retailer has been publishing its supplier lists since 2013, and last year it expanded that list further to include subcontracted factories that are approved to perform designated outsourced work.

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Using a non-approved facility, or undeclared unit as H&M calls it, can lead to the supplier’s termination.

“When we do find an undeclared unit we require the suppliers to presents an action plan which shall include a management system with a clear policy, well documented and fully implemented and communicated routines, designated responsible staff, and a control and follow up mechanism to prevent repeated violation,” H&M noted.

With regard to contracts, the retailer said, it would revise its requirements so that suppliers employing workers over two years on fixed duration contracts will be in violation of its code of conduct. Suppliers found to be in violation will have to create a remediation plan for how to transfer the workers from fixed to un-fixed duration contracts.

“We recognize that the frequent use of short term, fixed duration contracts, in the Cambodian garment industry constitutes an illegal breach of workers’ rights, which needs to be addressed by us and other buyers.”

H&M also addressed its efforts to pay workers a living wage. The retailer noted that it is working on revising its purchasing plans to reduce production peaks, enabling factories to better prepare for the right capacity—meaning the supplier could have the factory running during low season and keep workers employed.

“We are evaluating and further improving our purchasing practices to ensure it enables our suppliers to pay a fair living wage and reduce overtime. Our purchasing practices should enable our suppliers to pay a Fair Living Wage,” the statement said.