Worker Compensation: What happens to workers when factories close?

When our 28 members joined the Alliance, they signed a Member Agreement that outlines the commitments each company agrees to uphold throughout the tenure of Alliance membership. Responsibilities include the creation of a Worker Safety Fund, part of which is used to support workers that are temporarily displaced due to factory safety concerns or remediation activities. After a critical safety coIMG_20141211_100910ncern has been identified, the factory may have to suspend partial or full production based on the inspection findings and recommendations of the National Tripartite Committee Review Panel. In order to reduce the impact these closures place on workers, the Alliance shares in the compensation to workers so there is no loss of income while the factory is being remediated. This compensation also helps support workers during their employment search if the factory is permanently closed. Supporting worker compensation is an important initiative of the Alliance because it ensures workers will receive their wages or separation benefit while also reducing the burden placed on factory owners, who are already facing potentially high remediation costs. To date, the Alliance has disbursed hundreds of thousands of dollars (USD) to more than 4,300 workers at four factories.

The most recent example of worker compensation is the case of Maggie & Liz Corp. (Pvt.) Ltd. in Chittagong. During an inspection, cracks and other deficiencies were found in building beams, columns, and slabs. NTC Review Panel recommendations included demolishing the top floor immediately, which requiredIMG_20141211_141401 temporary suspension of factory operations during the month of November. As per Alliance policy, we offered to pay up to 50% of worker wages for that time period, with the other 50% covered by the factory. After a physical verification of previous payment records and other required documents, funds were disbursed in cash to 233 out of 247 workers on December 11th with the support of BRAC. Alliance staff, nine BRAC officials, the factory Managing Director and a BGMEA representative were present for the disbursal, which took roughly four hours. A few of the workers were absent on the fund disbursal date and the Alliance is working with factory management to fix another payment date for those employees. Factory production resumed again on December 1st and workers resumed their positions immediately.

BRAC is an international development organization based in Bangladesh with a mission to empower people and communities in situations of poverty, illiteracy, disease and social injustice.

During the payment disbursement, workers reported feeling safer because their factory has been inspected by the Alliance and they now have assurance that critical structural issues have been addressed. Workers were also happy to receive payment for the month of November 2014 to compensate for the factory being non-operational during the renovation time. Similarly, factory management was supportive of Alliance efforts to investigate and support immediate remediation because their business risks have subsequently decreased.

While we hope that safety concerns will not result in factory closures in the future, we are ready to support impacted workers as the need arises. We are committed to working with factory management and workers to reduce the effect that building and fire safety issues may have on worker financial well-being.