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Brandix Factory Back Online After Shutdown Over Worker Dispute

As Sri Lanka faces its worst economic crisis in 70 years, local tensions are running high.

Last week, a conflict between workers and the management of Brandix Essentials, a factory in the free trade zone of Koggala, sparked a multi-day shutdown over a disagreement about a December bonus payment.

The factory, which has 1,500 workers, was back online within a week but the scars have yet to heal. KTS Jayanthi,  a 13-year cutting assistant and member of the employee council, told Sourcing Journal of the difficulties her family has faced as food prices and inflation have gone through the roof. She said that workers banded together to demand a full one-month bonus, but the company had already made it clear that only a half month bonus would be distributed for December. 

“We felt that the extra money could really be counted on to help us through our expenses—my brother is also a garment worker, and I am not married,” she said. 

She recounted that the workers reported to the factory on Nov. 29, after the announcement was made, but sat in the cafeteria until management came to discuss the issue. Jayanthi said the workers were not pleased with the fact that the bonus would be less than the one the previous year, which was a full month. 

She said that the company reacted by sending a notice to the employees the following day that the factory would be closed. 

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The matter was subsequently taken up with the Board of Investment (BOI) at the BOI auditorium, where authorities striking over a bonus was illegal—as this is seen as a discretionary payment and an act of goodwill by a company rather than a right. 

Following a week of negotiations, the factory reopened on Dec. 6. Jayanthi said that while the factory was closed, workers’ perception began to change as reality set in. Losing a job amid the bleak economic situation was perhaps the worst that could happen. 

“It was an expectation from our side,” she said, “but I feel that it is better to have work, and the benefits that go with it.”

Darshan Uday Kumar, who has worked in the same factory in the packing department for 11 years and is president of the employee council, said that he and other workers wanted to give the management time to reconsider their decision before they agreed to a half-month bonus. “It is not an issue about a difference of opinion, but we just wanted that extra bonus,” he said. “We will continue discussion to understand how these matters will be handled in the coming months but we have accepted the situation.”

However, he noted that the company had been paying an additional Economic Relief allowance of 10,000 Sri Lankan rupees (about $27) monthly since April, and that the management had shared with the workers in previous months that orders were down and that the company was facing difficult times. 

“We had to shut down for 17 days between August and now because orders have fallen by more than 40 percent, and the workers were paid in full during this time,” said Thushara Kodithuwakku, general manager Brandix Koggala. “Our intention is to make sure that workers don’t lose their jobs, and we have been continuing our usual processes of care for the workers, including the investment in the education of the children of our employees, for whom we buy the school books, backpacks, etc., to ensure the requirements for the school year are not a financial burden for the parents who are our team members.”

Brandix Essentials in Koggala

Kodithuwakku said that a full month bonus had already been paid during the Sinhalese New Year in April in addition to the half-month bonus in December. He added that the full month December bonus in 2021 was an atypical occurrence.

However, the fact that the factory was closed so quickly when workers complained and refused to come to their stations could be seen as an act of intimidation. Suwan Perera, group head of Risk & Control at Brandix, told Sourcing Journal that more than 80 percent of the workers in the factory are women, and while workers stubbornly fought for the bonus, the factory’s priority was to ensure the safety of both the facility and the workers before tempers flared and any untoward incidents took place. “Meanwhile, our discussions were continuing to find the way forward,” he said, “and our intentions have always been to keep the workers from losing their jobs.”

“It is like the situation in a family,” said Natasha Boralessa, director of parent company Brandix Apparel Ltd. “We may have differences in opinion, but at the end of the day they are our team members, we have a responsibility to protect them. We aren’t the first company in the world to go through discussions, and the matter was resolved, with intermediaries like the BOI and the labor commission.”

She said that while the economic crisis was being felt on a global level, Sri Lanka has been impacted to a greater degree and manufacturers there needed to ensure they are able to keep their factories functioning.

Brandix, which had an estimated $1.7 billion turnover in 2021 and has 27 factories across Sri Lanka, is one of the biggest manufacturers in the country, which boasts a $5.4 billion apparel export industry. While large manufacturers are feeling the impact, small and medium companies are being hit by the changing economic situation as well, some in the Koggala free trade zone.

Consumer inflation, which was at 70.2 percent in August, according to the statistics department, fell to 61 percent in November. Tough policy measures by the government to restructure following a $2.9 billion loan from the International Monetary Fund (IMF) have brought a heavy burden. The impact on manufacturers as well as workers has been compounded by the cut back in orders from global companies over the last quarter.