Apr 2012 - FWF Audit Report – Heshan Rondor Garments ... - KTC

KTC / Mammut / ODLO / Mountain Force / UVU 

Audit Report 

Heshan Rondor Garments Limited 

鹤山华登高质时装有限公司 

10 of No. 1601 Renmin Road East, Shaping Town, Heshan City, 

Guangdong, People’s Republic of China 

中国广东省鹤山市沙坪人民东路 1601 号之十 

Apr 19-20, 2012 

Audit report – Heshan Rondor Garments Limited – April/2012 Page 1 of 45

Contents 

1.1. Name and address, contact person of management ............................................................ 3 

1.2. Short history ......................................................................................................................... 4 

1.3. Ownership of the company ................................................................................................... 5 

1.4. Workforce ............................................................................................................................. 5 

1.5. Production process .............................................................................................................. 6 

1.6. Position in the market, clients ............................................................................................... 7 

1.7. Previous audits by FWF and other ....................................................................................... 7 

1.8. Subcontracting ..................................................................................................................... 8 

2.1. Members of the audit team ................................................................................................... 9 

2.2. The process of auditing ........................................................................................................ 9 

2.3. Time schedule ...................................................................................................................... 9 

2.4. List of consulted local stakeholders ...................................................................................... 9 

2.5. Workers interviews ............................................................................................................... 9 

2.6. Members of management and staff interviewed ................................................................. 10 

2.7. List of documents consulted ............................................................................................... 10 

3. Detailed findings: Management system requirements ........................................................... 12 

3.1 Sourcing practices of the FWF affiliates Mammut, ODLO, Mountain Force and UVU .......... 12 

3.2 System of FWF affiliates to monitor and remediate working conditions ............................... 14 

3.3 Communication, consultation and grievance procedure ...................................................... 15 

3.4 Management system of factory to improve working conditions ............................................ 17 

4.0 Special positive points of interest ........................................................................................ 21 

4.1 Employment is freely chosen ............................................................................................... 21 

4.2 No discrimination in employment ......................................................................................... 22 

4.3 No exploitation of child labour ............................................................................................. 24 

4.4 Freedom of Association and the Right to Collective Bargaining ........................................... 25 

4.5 Payment of a living wage .................................................................................................... 27 

4.6 No excessive working hours ................................................................................................ 33 

4.7 Safe and healthy working environment ................................................................................ 37 

4.8 Legally binding employment relationship ............................................................................. 44 

Annex: corrective action plan (Excel)....................................................................................... 45 

This audit report is jointly owned by KTC Limited, Heshan Rondor Garments Limited – 鹤山华登高 

质时装有限公司 , Mammut, ODLO, Mountain Force, UVU and FWF. If KTC Limited, Heshan Rondor 

Garments Limited – 鹤山华登高质时装有限公司 or Mammut, ODLO, Mountain Force, UVU would like 

to share the audit report with other parties (such as other customers of the factory), they are free 

to do so. 


1. The audited company 

1.1. Name and address, contact person of management 

The registered office of the company is KTC Limited – 基仕洋行 , which is located at Rm. 609-616 

Wharf T & T Centre, Harbour City, 7 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong – 香港九 

龙尖沙咀广东道 7 号海港城九仓电信中心 609-616 室 . KTC Limited – 基仕洋行 is responsible for 

sales and marketing, supervising and managing the joint venture, bringing in money, machines 

and techniques. The factory that was audited is Heshan Rondor Garments Limited – 鹤山华登高质 

时装有限公司 , which is situated at 10 of No. 1601 Renmin Road East, Shaping Town, Heshan City, 

Guangdong, People’s Republic of China – 中国广东省鹤山市沙坪人民东路 1601 号之十 . 

The audited factory consists of 5 production buildings, 4 dormitory buildings, and 1 building for the 

kitchen and canteen. A courtyard, a basketball field, two badminton courts and parking areas are 

around the area between the front gate and the buildings. The total land area of the entire factory 

is 58,014 square meters. Factory floor map and some of the key buildings are shown as below. 

Dormitory building 

Production and dormitory 

buildings 

New production building 

Dormitory building 

Embroidering and laser 

cutting 

Factory floor map 

Factory name and gate 


Mr. Gerhard Flatz is the Managing Director of the factory. Ms. Winnie Ng – 吴惠芳 is the Director 

of the factory and responsible for operations. Mr. Joseph Ma – 马庆绵 is the Social Compliance 

Manager and responsible for wages & benefits and all social compliance related issues. 

1.2. Short history 

The audited factory was established in Heshan in 1981. Heshan Rondor Garments Limited – 鹤山 

华登高质时装有限公司 started export businesses since its establishment. The parent company – 

KTC Limited – 基仕洋行 was established in1971. First year of production with Mammut was in 

2002, first year with ODLO was in 1999, first year with Mountain Force was in 2006 and first year 

with UVU was in 2012. 

The audited factory is a private enterprise. In 1996 another garment factory, called Trio (Lao) 

Export Co., Ltd., was found in Vientiane, Laos, for the production of knitted and woven 

sportswear. . Currently there is no further plan for setting up new units/factories for production 

expansion as informed by factory management. 

Heshan Rondor Garments Limited ( 鹤山华登高质时装有限公司 ) receives very stable orders from 

clients. The factory has a total workforce of around 2377 employees, 1797 of them are direct 

production workers and 580 of them are office staff; 81% of the production workers are female 

workers, while 19% are male workers. Approximately 35% of the production workers and 50% of 

the office staff have been working in this factory for more than 3 years. In addition, 5% of the 

workforces have been working in the factory for more than 10 years. The monthly turnover rate is 

about 5% to 7% as informed by the factory management. Factory has an apprentice program in 

planning to recruit young local Heshan workers and factory intends to remain the stability of the 

workforce. 

Canteen service is provided to workers who desire to have meals in the factory. Factory has a 

symbolic charge of RMB 1 per day for meals to control unnecessary food waste (RMB 0.6 for 

breakfast, RMB 0.2 for lunch and RMB 0.2 for dinner) and approximately 98% of the workers have 

meals in the factory’s canteen. In addition, dormitory service is provided to workers free of charge, 

and water & electricity fees are also at the cost of the factory. Approximately 300 production 

workers live in the factory’s dormitory and 6 to 8 workers share a room with the size of 34.2 square 

meters. 

Canteen hall 

Canteen kitchen 


Inside of dorm room Personal locker for workers Bath centre outside dorm room 

1.3. Ownership of the company 

The registered legal-person representative of the factory is Mr Hans S. KREMMEL and Mr 

Gerhard FLATZ is the Managing Director of the factory. 

1.4. Workforce 

Total Female Male 

Total number of employees 2377 1888 489 

Management and staff 580 426 154 

Number of production workers 1797 1462 335 

Pregnant/ maternity leave N/A N/A N/A 

Apprentices N/A N/A N/A 

Juvenile workers 60 34 26 

Number of workers employed by sub-contractors N/A N/A N/A 

Home workers N/A N/A N/A 

Employees paid by time rate 580 426 154 

Employees paid by piece rate 1797 1462 335 

Number of permanent employees 2377 1888 489 

Number of fix-term employees N/A N/A N/A 

Number of interim agency workers N/A N/A N/A 


1.5. Production process 

The audited factory produces performance wear, including softshell jackets & pants; light fleece 

pulls (cotopaxi), woven pants & shirts, taped & laminated garments. The main production 

processes include cutting, sewing, bonding, ironing, inspection, packing, embroidering and laser 

cutting. 

Cutting 

Sewing 

Bonding 

Ironing 

Inspection 

Packing 


Embroidering 

Laser cutting 

Screen printing process is subcontracted to Heshan Golyce Printing Factory – 鹤山高利时印花厂 , 

which is located at Chi Kan Industrial Area, Shaping Town, Heshan City, Guang Dong, China – 中 

国广东省鹤山市沙坪镇赤坎工业区 . 

Sewing, cutting, embroidering and laser cutting machines are mainly used in this factory with 

periodical check and proper maintenance. There are totally 2421 sets of different sewing machines, 

56 cutting machines, 8 embroidering machines and 14 laser cutting machines available at the 

factory. Assembly lines are the key production system and 100% of the productions are export 

orders. Production capacity information is confidential and not disclosed in this report as required 

by management. 

1.6. Position in the market, clients 

The company produces goods for FWF affiliates. The current FWF affiliates that have active 

production orders at the factory are Mammut, ODLO, Mountain Force and UVU. Percentage of 

volume of these affiliates is confidential, as per management interview. 

In 2010, factory also produced garments for one of FWF affiliates – Jack Wolfskin and factory 

achieved remarkable improvements in social compliance with the help of Jack Wolfskin. 

Top management of the factory appreciates the buying policy of those FWF affiliates they work 

with, especially in terms of mutual understanding, good price, sufficient lead time and strategic 

partnership. 

1.7. Previous audits by FWF and other 

The factory requires conduct of social audits 2 times for this year. Before that, the factory was 

audited by buyers Li & Fung, VF and JW. This is the third time that FWF affiliates audited the 

factory. 

The factory feels FWF’s requests on social responsibilities are reasonable and understandable 

and factory would like to work together with all its clients and FWF on sustainable improvements 

on labour conditions. In May 2011, KTC Limited became the first garment factory member of FWF. 


1.8. Subcontracting 

The company uses the following subcontractors: 

Name: Heshan Golyce Printing Factory – 鹤山高利时印花厂 

Address: Chi Kan Industrial Area, Shaping Town, Heshan City, Guang Dong, China – 中国广东鹤 

山市沙坪镇赤坎工业区 . 

Contact person: Mr. Zhang Ruiming – 张瑞明 

Phone: 86-13702294193 

This has not been part of this audit. However, the audited factory keeps a good monitoring system 

at its subcontractor and follows FWF requirements to forward the Code of Labour Practices to it 

and requires the subcontractor to incorporate the Code into its business practices. 


2. The audit process 

2.1. Members of the audit team 

Mr. Wincent Ou – audit team supervisor 

Ms. Christina Liu – OHS inspector 

Ms. Zhu Ying – worker interviewer 

2.2. The process of auditing 

The audit team met with good co-operation from the management, workers and all other consulted 

persons and organisations. Whatever information was requested was provided. The audit team 

finds that the audit process has yielded sufficient reliable information to be able to draw 

conclusions and establish requirements on most issues. However, the audit team cannot rule out 

the possibility of there being issues of non-compliance that have not been reported in this audit 

report. 

2.3. Time schedule 

The audit was conducted on April 19-20, 2012. 

Initial workers interviews were held in the same month. 

Thereafter the audit team visited the factory premises on April 19-20, 2012, when the inspection of 

the factory, the management interviews, the document inspection and some worker interviews 

were conducted. 

2.4. List of consulted local stakeholders 

FWF consulted the following organizations on the current state of affairs in China regarding the 

labor standards in the FWF code of labor practices, as quoted in the annex: 

. Labor Action China (LAC), Hong Kong 

. Worker Empowerment (WE), Hong Kong 

. Institute of Contemporary Observation (ICO), Shenzhen 

. Labour Education and Service Centre (LESN), Hong Kong 

. China Women Working Network (CWWN), Hong Kong 

. Joint Peking University-Polytechnic University China Social Work Research Centre (Beijing / 

Hong Kong) 

. Hong Kong Liaison Office of the international trade union movement (IHLO), Hong Kong 

. China National Textile and Apparel Council (CNTAC), Beijing 

. Shanghai Textile Association, Shanghai 

2.5. Workers interviews 

22 workers were interviewed prior to the date of the audit. Individual meetings were held with them 

outside the factory premises after working hours. The workers were guaranteed that their 

employer would not know the identity of the interviewees. (More details of the profile of these 

workers cannot be divulged for purposes of confidentiality). Short interviews were also conducted 

with the workers on the shop floor on the days of the visit to the factory - these were aimed at 

eliciting technical details that came up during the audit. 

In addition, an hour-long meeting was held with 45 randomly selected workers of the factory. This 

group included workers from different categories and there were both men and women who 

attended the meeting. All interviews were conducted in the absence of any staff or management 

representatives, assuring the respondents total confidentiality of the views that they expressed. 


Copies of the translated version of FWFs information sheet for workers were distributed and also 

pasted on each notice board, and an oral explanation was given particularly to interviewed 

workers. The information sheet suggested to workers that they could contact FWFs complaints 

handler in China in case they needed further information about the audit, or wished to report any 

complaint or grievance related to working conditions in the audited company. FWFs complaints 

handler in China would pass any communication on to the FWF bureau in Amsterdam. This was 

also discussed with the management. 

2.6. Members of management and staff interviewed 

The audit team met and had detailed discussions with: 

Mr. Gerhard Flatz, the Managing Director of the factory 

Mr. Joseph Ma – 马庆绵 , the Social Compliance Manager of Heshan Rondor Garments Limited 

and KTC Limited, based in Heshan. 

Ms Connie KWOK – 郭惠仪 , the Marketing and Communications Manager of KTC Limited, based 

in Heshan. 

2.7. List of documents consulted 

General/ financial Available / Not Kept / 

Not Complete / Falsified 

or not Applicable 

Proof of registration or factory licenses for operation, employment, Available 

etc. 

Policy manuals 

Available 

Information material about Code of Labour Practices and the FWF, Available 

used to inform workers and subcontractors. 

Flow chart of the production process. 

Map of the factory, specifying type of operations in every room, 

including if applicable, the distinctions with other companies/legal 

entities on the premises. 

Production records and order records. 

Labour issues 

List of all workers, including date of appointment, gender, birth 

date, function 

Working hours records over the last 3 months, and possibly longer, 

as to be discussed during the inspection, and an "attendance 

register" (who signs this?). 

Overtime register. 

Records of all employees / personal files specifying names, birth 

dates (including proof of age), identity document number, sex, 

function, wage scale, date of employment. 

Permits for young workers 

Leave register, including leave payments. Applications for all kinds 

of leave. 

Grievance files 

Disciplinary notices 

Employee manuals, (certified) standing orders or factory rules 

Contracts between management and recruiting agencies 

Time cards for all employees. 

Payroll journals, or wage lists showing base wages, incentive or 

bonus earnings, gratuity, hours, deductions, net pay and gross pay. 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Not Applicable 

Available 

Available 


All piecework rates and piecework calculations (or other incentive 

system rates and calculations – base plus, attendance bonuses, 

quality incentives, etc.). 

Payroll deposit slips, payroll checking account ledgers and deposit 

receipts for tax and benefit deductions. 

Payroll tax calculations, records and reports. 

Proof of payment of social security fees. 

Official authorization for overtime hours. 

Copies of payslips as handed out to workers. 

Collective bargaining agreement or any other document specifying 

the working conditions. 

Employment contracts of all workers. 

Documentation of elections of workers representatives, either 

provided by management or the factory union. 

In cases of 100% union membership: check signatures of workers 

for agreeing to have union dues subtracted from their wages. 

Occupational Health and Safety 

Accidents register. 

Sicknesses register. 

Fire certificate. 

Proof of payment for inspection of fire extinguishers, electric 

appliances, elevators. 

Maternity leave register. 

List of pregnant workers 

Any other legally required registers concerning the labour laws and 

labour situation: 

Available 

Available 

Available 

Available 

Available 

Available 

Available 

Available 



Available 

Available 

Available 

Available 



Available 

The records maintained for law purposes were kept in good order and provided the information the 

team needed. 


3. Detailed findings: Management system requirements 

3.1 Sourcing practices of the FWF affiliates Mammut, ODLO, Mountain Force and UVU 

Interviews with management for sourcing practices of Mammut 

Management state they have been working with Mammut since 2002; factory enjoys very good 

and smooth working relationship with Mammut. 

Mammut places orders with factory on a regular basis and the volume in 2012 has increased 

by 52% compared with the volume in 2011. Detailed quantity is confidential to be disclosed in 

this report. 

Generally speaking, Mammut places orders 8 times a year and each time with 2,000 pieces 

per style. 

Mammut allows 60 days for factory to make the samples and they confirm samples in a timely 

manner. 

Management inform no penalties or rejections have ever happened since the business 

between the factory and Mammut began. 

Management confirm Mammut has never placed rush orders with the factory since the 

cooperation began. 

Management state they experienced zero delay of shipment in 2011; and the only reason for 

late shipment is due to delay of material. 

Price of Mammut is very good. 

Management state they are working together with Mammut like one company. 

Interviews with management for sourcing practices of ODLO 

Management state they have been working with ODLO since 1999; factory enjoys very good 

and smooth working relationship with ODLO. 

ODLO places orders with factory on a regular basis and the volume in 2012 has increased by 

43% compared with the volume in 2011. Detailed quantity is confidential to be disclosed in this 

report. 

ODLO confirms samples in a timely manner. 

Price of ODLO is very good. 


between the factory and ODLO began. 

Management confirm ODLO has never placed rush orders with the factory since the 




Interviews with management for sourcing practices of Mountain Force 

Management state they have been working with Mountain Force since 2006; factory enjoys 

very good and smooth working relationship with Mountain Force. 

Mountain Force places orders with factory on a regular basis and the volume in 2012 has 

increased by 25% compared with the volume in 2011. Detailed quantity is confidential to be 

disclosed in this report. 

Mountain Force confirms samples in a timely manner. 


between the factory and Mountain Force began. 

Management confirm Mountain Force has never placed rush orders with the factory since the 




Price of Mountain Force is very good. 


Management state they are working together with Mountain Force like one company. 

Interviews with management for sourcing practices of UVU. 

Management state they have been working with UVU since 2012, and UVU is the youngest 

client that starts to work with their factory; while, factory has high expectation towards setting 

up good working relationship with UVU. So far, they cannot comment too much on the 

sourcing practices of UVU. 

UVU confirms samples in a timely manner. 


between the factory and UVU began. 

Management confirm UVU has never placed rush orders with the factory since the cooperation 

began. 

Management state they experienced zero delay so far working with UVU; and the only reason 

for late shipment in the future could be caused by delay of material. 

Price of UVU is very good. 

These comments from management apply to the sourcing practices of all FWF affiliates – Mammut, 

ODLO, Mountain Force and UVU. 

 

 

 

 

 

 

 

 

Management state ODLO, Mammut, Mountain Force and UVU have a very good order 

planning system and they always allow sufficient lead time for factory to arrange production 

schedule, normally the lead time is 4 to 5 months up to 300 working days. 

Management state the cost of material has increased by 5% to 10% in 2012; and they 

initiatively increase 15% to 20% of the wage for workers. Management state they communicate 

these increments when negotiating price with FWF affiliates, and all these 4 affiliates always 

show understanding and supportive. 

Management state prices are negotiated on order basis with FWF affiliates; factory will 

produce some samples and offer the price quotation. Then the affiliates will sit down to 

negotiate the price and make order confirmation with the factory. 

Management state they appreciate FWF affiliates’ buying policy in terms of mutual 

understanding, very good unit price, sufficient lead time, and effective & smooth 

communications. 

Management state they only produce high quality performance wear and their craftsmanship is 

based on the vast experience of their long serving staff and is expressed in the utmost 

attention to minute details and they often use additional costly working steps to ensure the best 

possible performance, look and comfort. 

Management state the aim of their factory is to grow with its brand partners who also strive for 

perfection in performance manufacture. 

Management understands the concept of Asia Floor Wage and the other living wage 

benchmarks FWF collected from local stakeholders. Management think the Asia Floor Wage 

might not be suitable for all factories in Asia, because of different purchasing power of 

currencies and different local minimum wage standards for different countries even for different 

cities within one country. 

Wages for a regular working week of some workers (mostly in the cutting and inspection 

department) are below the living wage benchmarks that FWF collected from local 

stakeholders. 

Interviews with workers 

Workers state they have no idea if any rush orders have ever been placed by Mammut, 

Mountain Force, ODLO or UVU, since they have little knowledge of any information related to 

specific clients. But they know the organization of Fair Wear Foundation via the posters at their 

factory and through training provided by management. 


Consultation of local stakeholders 

Long working hours are not only and entirely the responsibility of the garment factories. If 

foreign clients give their suppliers little time to finish a manufacturing order, factories have no 

choice other than to intensify the production process. Further enhanced by shortages of skilled 

low-cost labour and high pressure on delivery times from international buyers, excessive 

overtime is widespread in the worldwide garment industry. 

Document inspection 

Production records are properly kept by factory which clearly indicate all orders per client. 

Records of order dates, lead-times and date of shipments per client are properly kept in file for 

review. 

Inspection of the work place 

N/A 

3.2 System of FWF affiliates to monitor and remediate working conditions 

Interviews with management for monitoring system of Mammut 

Management state Mammut has a rigorous control over its suppliers’ social compliance system; 

they are very serious on improvements of labour standards. Every time after the audit, 

Mammut will have deep discussions on CAP with factory. 

Management state Mammut has discussions with the factory on the remediation and CAP of 

the FWF audit in 2011. 

Management feels Mammut’s requests on social responsibilities are reasonable and 

understandable, and the factory has an impression that Mammut is serious on CSR and has 

shown commitment in working together with the factory. 

Management state representatives from Mammut constantly visit their factory to have 

discussions on price, quality, strategy and CSR issues. The most recent visit by Mammut was 

at the beginning of April 2012. 

The factory welcomed the FWF audit approach. That’s why after the first FWF audit in 2009, 

the factory was interested to become a member of FWF and in May 2011, factory became the 

first garment factory member of FWF. 

Management state they follow Mammut’s requirement to have the FWF Code of Labour 

Practices posted and provide training on the Code elements to workers. 

Interviews with management for monitoring system of ODLO 

Management feels ODLO’s requests on social responsibilities are reasonable and 

understandable, and the factory has an impression that ODLO is serious on CSR and has 


Management state the director from ODLO visits their factory twice every 3 months to have 

discussions on price, quality and strategy issues. But ODLO does not have special attention on 

CSR during their visit. Instead, ODLO uses FWF’s resources to monitor factory on 

improvements of labour standards. 

Management state they follow ODLO’s requirement to have the FWF Code of Labour Practices 

posted and provide training on the Code elements to workers. 

Interviews with management for monitoring system of Mountain Force 

Management feels Mountain Force’s requests on social responsibilities are reasonable and 

understandable, and the factory has an impression that Mountain Force is serious on CSR and 

has shown commitment in working together with the factory. 

Management state representatives of Mountain Force visit their factory to have discussions on 

price, quality, and suggestions on technique twice every 3 months and Mountain Force will 

also pay attention to the compliance status of factory and give some input for betterment of 


labour standards during their visit. 

Mountain Force will use the FWF’s resources to monitor the labour conditions at factory and 

require factory to take action for remediation. 

Management state they follow Mountain Force’s requirement to have the FWF Code of Labour 

Practices posted and provide training on the Code elements to workers. 

Interviews with management for monitoring system of UVU 

Management feels UVU’s requests on social responsibilities are reasonable and 

understandable, and the factory has an impression that UVU is serious on CSR and has 


UVU will use the FWF audit reports to monitor the labour conditions at factory and require 

factory to take action for remediation. 

Management state they follow UVU’s requirement to have the FWF Code of Labour Practices 

posted and provide training on the Code elements to workers. 


Most workers interviewed are aware of the social audits happening in the factory but they 

cannot distinguish which client initiates which audit. 

Workers show awareness towards the organization of Fair Wear Foundation and they know 

their factory is producing garments for FWF affiliates. 

Workers acknowledged improvements are made after audit, and the most impressive 

improvement is that there is no longer to work on Sunday, they can have 1 day off per week. 

Besides, some workers also show satisfaction towards factory’s efforts to increase their wages, 

but some think there are still room for improvement on piece price. 

Workers state they are aware of the FWF Code of Labour Practices and they receive training 

on Code elements. 

Workers state they receive training on PRC labour laws. 


N/A 


Factory keeps the FWF Code of Labour Practices and PRC Labour law in file. 


FWF Code of Labour Practice with FWF complaint mechanism has been posted publicly in the 

factory. 

3.3 Communication, consultation and grievance procedure 

Interviews with management 

Management state they brief workers on employment terms and conditions during workers 

orientation training. 

Management state they arranged training on FWF Code of Labour Practices to workers and 

had the Code posted for workers’ information after the FWF audit in 2011. 

Management state they take workers grievance seriously and if there is any worker’s 

grievance occurred, factory encourages workers to contact the personnel manager and the 

factory will deal with the issue as rapidly as possible. Such grievance may be resolved by an 

informal discussion between the workers and the line manager or supervisor. If the grievance 

cannot be dealt with by informal discussion, then it can go to a more formal procedure through 

workers committee, general meeting or suggestion box. 

All grievances should be taken care of within 10 working days. 


Factory encourages the involvement of workers committee into the resolve of workers 

grievances and in case the internal grievance channel has been generally exhausted, the 

workers are free to call FWF local complaint handler or choose formal legal options such as 

arbitration. 

Factory makes good records of all workers complaints and factory’s response. All together in 

2011, factory received only a handful of complaints, the total is less than 10 and factory took 

action to settle workers complaints in a timely manner. 

Some key complaints from workers and action taken by factory in 2011 were: workers 

suggested installing a projector and screening with hi-fi system so every night the security 

guards can display DVD movies for workers to watch; it is now being shown at 8 o’clock every 

night. Factory changed all sport facilities by building one extra storey for setting up one 

basketball full playground and two badminton courts, on the ground floor; factory also installed 

three brand new table tennis tables. Factory acquired new bats, rackets and basketballs etc 

and these gears for sports are changed from time to time due to wear and tear. Factory also 

increased the frequencies of shuttle bus for workers going out shopping. Factory listened when 

workers complained about certain piece rate prices were too low on specific orders; and took 

action to investigate and adjust the rates if their voices proved to be substantiated. 

Mr. Flatz, the managing director of the factory is quite open to listen to workers’ complaints and 

he took immediate action to respond to one of the workers complaints regarding eating too 

much cabbages at factory canteen; the cabbage is seasonal vegetable and factory cannot 

afford to provide out-of-season vegetable to workers. 

Management state they forward the FWF Code of Labour Practices to its screen printing 

subcontractor and require it to follow the Code for business practices. 


Workers confirm they are briefed of the employment terms and conditions during their 

orientation training. 

Workers confirm they are aware of the PRC labour law and FWF Code of Labour Practices. 

Workers have not mentioned any important or serious issues on labour relations or labour 

conditions in the factory, and, feel that the factory are transparent and clear on employment 

terms and wage calculation. 

Workers have a good understanding of the factory’s grievance procedures and they know 

there are 3 stages for grievance; the 1 st stage is to discuss complaint with line supervisor; the 

2 nd stage is to submit the complaints in written form to suggestion box; and the last stage is to 

call FWF local complaint handler or turn to the labour department. 

Workers state normally factory takes effective and immediate action for their complaints. For 

example, factory installed new recreation facilities, such as basket ball court, badminton court, 

and hi-fi movie display system. 

Workers do not have any serious complaints on labour relations and conditions to report. 

Workers complain about the food quality in canteen and they hate eating cabbage everyday. 

Workers expect to have lunch at 12:00 instead of the current time of 13:00. 

Some workers are not satisfied with the unit price and they expect better unit price and better 

welfare. 


Firms in China frequently receive multiple audits. It is the norm for Chinese suppliers to look for 

ways to circumvent accurate fact findings. Instructions to workers on what to say to auditors is 

one of the methods suppliers frequently apply to this end. 

At times, even if a code of conduct is posted in the workplace in Chinese or even the local 

dialect, workers still do not understand how the code functions. Not understanding how the 

code functions, workers often do not feel at ease talking with auditors about the truth of the 

work environment. 



Information of PRC labour law and New Labour Contract Law is kept in file. 

FWF Code of Labour Practices is kept in file. 

Factory keeps a register of complaints and suggestions of workers and of the factory’s 

response. 

The grievance procedures are well enacted which is in accordance with what management told 

the audit team. 


Suggestion box is installed. 

FWF Code of Labour Practices with the complaint handling procedure is observed posted in 

many places of the factory, where is accessible to all workers. 

The hi-fi movie display system is installed on the ground floor under the basketball court. The 

movie screen can be pulled down when playing DVD at night. 

One full basketball court, two badminton courts and three table tennis tables are observed. 

Suggestion box 

FWF Code of Labour Practices 

Hi-fi movie system 

Basketball and badminton courts Table tennis 

3.4 Management system of factory to improve working conditions 


Management state they have a sound social compliance system in place to monitor and 

improve its labour standards. 

Mr. Joseph Ma – 马庆绵 is the social compliance manager responsible for the entire 

compliance system and leading the team to implement social standards. 

Management state they envisage continuously improving working conditions by knowing all 

applicable legal requirements to ensure that their factory operates in compliance with the law. 

Management state they constantly review the work rules and the employment handbook to 

ensure that they comply with current law. 


Factory also conducts monthly internal compliance audits to identify the areas that need 

improvement, and then take immediate remediation action. Besides, factory uses the other 

external audit results as a benchmark to ensure the quality of their internal monitoring program. 

Management state in order to enrich workers daily life, they invest money to build a karaoke 

room within the factory and serve for their workers free of charge. 

Management state they proactively increase the piece wage of workers by 15% as of March 1, 

2012. 

In order to reduce the excessive overtime hours and consecutive working days, factory recruit 

200 more production workers in 2012 to share the workloads; and bring in 300 brand new 

sewing machines and 1 new automatic cutting machine to increase the capacity, so that they 

can guarantee at least one day off in a week for all workers and control the weekly working 

hours to be around 60 in the year round. 

Factory commissioned a company named Timeline Consultancy to conduct a survey of piece 

rate workers’ overall satisfaction towards the factory in 2011. The survey data was then 

combined and correlated to help factory identify strengths and weakness, as seen from the 

eyes of workers. According to the survey, the average overall satisfaction of factory scores 

3.22 out of 5. 32.6% of the workforce shows satisfaction with factory; 56.2% regard the factory 

as “so-so”; while 10.6% were dissatisfied with factory. Generally speaking, the piece rate 

workers are fairly satisfied with factory. 

Following the results of the employee Satisfaction Survey Study the satisfaction survey, 

Timeline Consultancy has been commissioned to conduct training and capacity building for 

mid-level management staff in 2012 in hope of facilitating factory to establish a harmonious 

labour relationship, enhance employee retention and be more competitive. The training 

focuses on 1) disciplinary punishment; 2) conflict management and employee seeking for help; 

3) interdepartmental communication; 4) employee communication; 5) employee retention 

promotion; 6) creation of positive work environment; 7) cooperation at workplace. 

Management state they commit themselves to sustainable improvement of workers welfare, for 

 

this purpose, the social insurance coverage rate is increased to 67% in 2012 from 60% in 2011. 

Management state they host the carnival to entertain workers on a yearly basis; in the carnival, 

some workers will perform some of their own shows, meanwhile, factory also commissions 

outside performers to entertain workers. 

Management state they have a long-term service bonus to award workers of 10 years, 15 

years and 20 years of seniority; the prizes for employees having served the factory for 10 

years is HK$1,000, while 15 years, 20 years, 25 years and 30 years, the veteran employees 

can be awarded different gold coins. As of June 30, 2010, there are totally 116 workers 

awarded for long-term service bonus. 

Management state they have set up a fund to help poor workers children with education; they 

also donate money to schools to support the local education. 

Factory distributes a stainless-steel key chain to workers with 1 year of seniority on their 

birthday date as of Jan 1, 2012; and the key chain is carved with the signatures of Mr. Gerhard 

Flatz and Ms. Winnie Ng. 

Management state they also make efforts to contribute to the environmental protection; for 

management staff canteen, factory is using bio-diesel instead of diesel to cook meals, which is 

a better environmentally friendly fuel. And they are now in the process of pilot-scheme the biodiesel 

fuel at the management canteen, once it proves to be economical and practical; factory 

will change the fuel system of workers’ canteen. In addition; in 2012, factory also plans to 

install an energy recycling system for the air conditioning unit that is projected to save the 

energy consumption from air conditioning by at least 20%. 

Factory is in planning an apprentice program, to recruit young workers and provide training to 

them; there are 3 levels of trainings, apprentice of elementary skill level – medium skill level – 

senior skill level; during these three levels, factory will help these apprentices to apply 

qualification certificate from local government, so that they are able to better develop their 

career. 


Management state their efforts to improve the labour standards have positive influence on 

workers’ loyalty, efficiency, product quality and maintenance of low turnover rate. 


Workers confirm they know Mr. Joseph Ma – 马庆绵 is the compliance manager responsible 

for the labour standards at the factory. 

Workers are satisfied with the overall working conditions at the factory; and they do not have 

any serious complaints regarding health and safety to mention. 

Workers confirm factory will adjust the wage on a yearly basis and the increase of wage in 

2012 is 15% as of Mar 1, 2012. 

Workers confirm that factory conducted a satisfaction survey at the workshops. And they follow 

their opinion to make their own judgement towards the survey; basically, they are satisfied with 

the factory, especially in terms of recreation facilities, wage increase, factory’s efforts to reduce 

OT etc. But the young workers interviewed (aged 20 to 22) show dissatisfaction in living 

conditions, working hour management, production management and their own work towards 

the factory. These younger workers express less working hours and higher income, so that 

they can enjoy their personal life. 

Workers do not know in what areas factory make contribution to the environmental protection. 

Workers confirm factory has the long-term service award for the workers with more than 10 

years of seniority; most workers think it is too far away from them by arguing that who can 

envisage what will happen in 10 years and they expect factory can review the long-term 

service award to make it a bit short, so that more workers can benefit from this kind of award. 

Workers state they know if they have difficulties in supporting their children with education, 

they can apply for a certain kind of help and subsidy from the factory; but all workers 

interviewed reflected that they have never applied for the education fund from factory. 

Workers state factory has announced the policy to distribute a stainless-steel key chain to 

them on their birthdays; yet, all workers interviewed state they have not received the key chain 

so far, as their birthdays are not coming. Workers state the key chain is better than none, and 

not very meaningful to them, they prefer more down-to-earth benefits or gifts. 

Workers confirm there is a carnival every year, where they enjoy themselves with some 

performances by outside entertainers or in-house workers. 


N/A 


Factory has made improvement after the initial social audit conducted by FWF audit team in 

2011 and most remarkable improvement lies in wage and working hour’s section; wage has 

been increased by 15% and average weekly working hours are controlled to be around 60 

hours in a year round. In addition, factory made a satisfaction survey and in planning providing 

training to mid-level management staff as to build a more harmonious working relationship. 

Documents in these regards are reviewed by audit team. 

The compliance system to monitor the labour standards of the factory is established and the 

social compliance team is responsible for implementation of the system to improve labour 

standards and evaluate compliance status on a regular basis. 

Bio-diesel fuel purchasing contract is reviewed by audit team. 

Long-term service award record for 91 workers as of June 30, 2010 is reviewed by the team. 


Bio-diesel fuel contract 

Long-term service award name list 


All workshops are very clean, tidy and maintained in a condition that will not post any hazards 

to workers. 

The factory area is also spacious and clean, and has equipped with good leisure facilities. 

Rock garden fish pool A view from the window of one workshop 

New automatic cutting machine is observed using in the cutting workshop. 

The key chains are given to workers when they are on birthday. 

 

 

There is a barbecue area within the factory available for production workers’ use. 

Karaoke lounge is available in the factory that provides free services to production workers 

upon reservation. 

Barbecue field 

Karaoke lounge 


4. Detailed findings: Labour standards 

4.0 Special positive points of interest 

Factory management are cooperative and positive to support the audit team during the twoday 

field audit. Whatever information requested is promptly provided for audit team to review. 

Factory management are willing to advance the working conditions and labour standards of the 

factory and make remediation accordingly, also they are open to accept all non-compliances 

identified by audit team and commit to take the corrective action plans according to the 

proposed timeframe in the CAP report. 

Factory commissioned Timeline Consultancy to conduct a piece-rate workers satisfaction 

survey towards the factory and draw the learning from the survey for building a more 

harmonious working relationship. 

Factory is in planning an apprentice program, to recruit young workers and provide training to 

them; there are 3 levels of being mature, apprentice – intermediate – expert; during these 

three levels, factory will help these apprentice to apply qualification certificate from local 

government, so that they are able to better develop their career. 

Factory makes efforts to improve the welfare and benefits of workers and invest money to 

bring in new machines, recruit more workers to reduce the excessive overtime hours. 

Factory makes efforts towards the contribution of environment protections by using bio-diesel, 

control energy consumption of air conditioners. 

4.1 Employment is freely chosen 


Management state all employment at their factory is freely chosen, it is not allowed to use any 

forced or indentured labour. 

Workers are not required to lodge deposit with factory and all original documents are kept by 

workers themselves. 

Workers can resign from the factory freely by submitting the resignation letter 30 days in 

advance before they quit. All due wages and benefits will be paid to workers accordingly. 

All employees are paid punctually via bank transfer on the 15 th every month for wages of the 

previous month. 

Movement during working hours, especially access to toilet and drinking facilities is not 

restricted. Workers can leave the factory when they are off duty. 

Factory does not advance payment to workers. 

Security guards’ attitudes are courteous and will not restrict workers’ movement after working 

hours. 


Workers confirm they are free to choose to work or not work in the factory as they desire. 

No forced labour is used. 

Workers confirm they are free to have OT not or as they desire, in case they do not feel like 

working for OT, they can notice the team supervisor in advance. 

Workers confirm that they can easily resign from the factory with an advance notice of 30 days 

and all due wages and benefits will be paid to them accordingly. 

Workers inform they can access drinking water and toilet facilities during working hours without 

any restrictions. 

Workers confirm that they can leave the factory premise when they are off duty. 

Workers confirm they receive their wages punctually via bank transfer on the 15 th each month 

for wages of the previous month. 



Forced labour is not common in the private sector in China. 

Ordinarily, firms rely on economic measures to limit the mobility of workers in garment factories. 

Measures common to Chinese garment factories are delayed wage payments, security 

deposits at the time of employment, fines for absenteeism, refusing overtime, etc. 

The Spring Festival is a time of job hopping for Chinese migrants. Migrants frequently switch 

employers after they return from a vacation in the countryside. Employers frequently refuse to 

pay workers’ wages around this time in the hopes of maximizing the number of workers who 

return to the firm after the festival. 

Wherever workers are in debt to management, auditors should pay attention to the possibility 

that the debts become a method of extorting or restricting the freedom of workers. This issue 

requires some pragmatism, however. Chinese employers sometimes lend money to workers in 

times of emergencies. Though this does present some risks where freedom of employment is 

concerned, the willingness of employers to lend emergency financing to workers does save 

lives when workers need hospital attention after accidents or serious illness. 

In rural regions of eastern and northern China, there are factories that adopt a pay system that 

mimics the seasonality of work in agriculture. They will only pay workers once or twice a year, 

resembling the reward system of the harvest. As there are few factories in those regions, 

workers have no choice but to accept the system. However, factories in more industrialized 

districts no longer use this system of wage payments. 


Factory has set up a policy manual including all Codes of FWF, and the policies regarding 

employment is freely chosen is as below. 

Factory has never used any forced, indentured or prison labour since the establishment. 

If a worker wants to dissolve his labour contract, a notification in written form should be given 

to the employer concerned 30 days in advance 

During the probation period, worker may notify the employer of his decision to dissolve the 

labour contract at any time. 

In addition to the force labour policy, factory also enacts the guideline on preventing force 

labour; for example: overtime hours must be voluntary; workers are not disciplined for refusing 

to work overtime; all workers are voluntarily present. No workers are imprisoned or locked in 

the factory; No locked gates or doors are used which prevent workers from exiting. 

All workers’ personnel files are well kept in file, which include copies of identification cards, 

application forms and personnel resume. 

No documented evidences are found the business behaviours of the factory indicate forced 

labour. 


Factory walkthrough confirm that workers can freely access to toilet and drinking water 

facilities. 

Workers can leave the factory compound while they are off duty without any restrictions. 

4.2 No discrimination in employment 


Management state workers are recruited and promoted based on the ability rather than culture 

background, gender, religious beliefs, sexual orientation, nationality etc. 

Women enjoy the equal rights of employment as men. In providing employment, it is not 

allowed to refuse employment of women on sex grounds or raise the employment standards 

for women, except when the jobs or work posts are not suitable for women as provided for by 

the State. 


Workers’ wages are paid equally in proportion to their working efficiency and quality and there 

is no discrimination on wage payment. 

No pregnancy test is required for female workers during recruitment and employment. 


Workers state there is no discrimination in the factory; otherwise, they will not stay with the 

factory for a long time, as it is quite easy to find a similar job in the nearby area. 

Workers state they are employed and promoted based on their ability rather than race, culture 

background, gender etc. 

Workers state they are paid by piece rate, the more they produce, the more money they earn, 

and the piece price is fair, so there is no discrimination on wage payment. 

Female Workers confirm that they are not required to take pregnant tests before or during their 

employment. 

Workers state they enjoy very good working relationship with management team and their 

supervisors treat them fairly with respects. 


‘Equal pay for equal work,’ is a common practice for factories in this region. 

Many factories avoid employing too many male workers since they find that women are more 

obedient and less likely to express grievances. When the region was first developing the 

garment sector, firms actively discriminated against men, hiring only women. With the relative 

shortage of labour in the area, firms are now hiring more men. Though firms oftentimes 

discriminate against men for lower paid positions, they likewise tend to hire only men for 

positions that oftentimes involve more machinery, require more skill and are paid more than the 

positions that women work more frequently. 

Promoting equality for women has been a prominent part of communist propaganda. The issue 

of gender equality raises political sensitivities. Discrimination against women is often in the 

form of discrimination against pregnant and married workers. Discrimination against older 

workers is a widespread practice in China, and affects women in particular. 

The Chinese give a lot of attention to the region of origin of people. At times, this is just a 

manner of thinking without any negative attachments. However, this thinking is often tied to 

prejudices against people of different regions. 

Maternity leave is rare in garment factories in the area, and discrimination against pregnant 

and married workers is widespread. Auditors need to adjust requirements tied to maternity with 

sensitivity to the possibility that they will aggravate discrimination against pregnant and married 

workers. 

The Chinese system of family planning requires citizens to register pregnancies and births. 

The current system contributes to discrimination against migrant workers. Migrants are not 

permanent residents of the cities where they work, and therefore, they are formally not 

permitted to raise a child within the city. This sometimes affects the ability of migrants to obtain 

documents they need. Some try to use this system to exclude migrants from maternity leave 

by requiring documents that migrants have difficulty obtaining. Some employers look to the 

system of family planning for excuses to fire migrant workers being pregnant. 


Non discrimination policy is enacted. 

According to the policy, factory will employ, pay, promote, and terminate workers on the basis 

of their ability to do the job, rather than on the basis of personal characteristics or beliefs. 

In providing employment, factory will not refuse employment of women on sex grounds or raise 

the employment standards for women, except when the jobs or work posts are not suitable for 

women as provided for by the State. 

No documented evidences are found that female workers are required to take pregnant tests 


efore or during their employment. 

Reviews of payroll records do not find any discrimination practices in wage payment. 

No documented evidences are found workers are subject to any discrimination. 


Both female and male supervisors are observed in the workshop. 

Gender divisions are visible in the factory, female workers dominate most sections, while male 

workers can also be observed in different departments. 

4.3 No exploitation of child labour 


No child labour is allowed to work in the factory; all workers must be above the age of sixteen. 

Management state factory has an age verification system in place to make sure all workers’ 

age is amount 16 years old. The HR associates will check the origins of ID cards and make 

comparison of the pictures attached on ID card with appearance of candidates. 

Management state there are currently 60 juvenile workers working in their factory, and factory 

follows the legal requirements to provide them with physical examination 3 times during their 

juvenile status; the first examination was held at the time of hire, the second was held when it 

has been 1 year as of the first time; the third time is when they amount the age of 18. In 

addition, all juveniles are registered with local government and they are not engaging in 

hazardous positions that endanger the growth of the mind and body. 

Management state in the workers satisfaction survey, the younger demographic (21 to 25) 

showed the most dissatisfaction among all major categories including living conditions, working 

hour management and production management. On the other hand this age group also 

showed the highest ambition to become line leaders and line supervisors and showed a strong 

sense of knowing their rights when it came to working hours and overtime. This age group 

reflects one child per family generation that grew up with an ever-increasing western influence. 

Factory knows that these younger workers are the key to their success in the future and this 

survey has made it clear that factory need to focus on attracting, managing and retaining the 

younger workforce in China. 

Therefore, factory are planning to launch the apprentice program at their factory; to recruit 

young workers and provide training to them; after they are mature, factory will help them apply 

for qualification (skill) certificate from local government, so that they can better develop their 

career. In addition, Mr. Gerhard Flatz, the managing director of factory state he will like to enrol 

more local Heshan young workers into the apprentice program in hope of keeping the turn over 

rate low, build workers’ loyalty towards their factory when they are young and of course, this 

also contributes a little bit to the society safety. 


Workers state it is a huge factory with more than 2,000 workers, they do not know each other 

quite well; but interviewees confirm no child labour is used. 

Juvenile workers are interviewed and they confirm they mainly work in the sewing department 

as auxiliary workers; and they took physical examination at the cost of factory. 

Workers inform that they are required to present their original ID cards for age verification at 

the time of hiring. And factory only keeps the copy of ID card for record purpose. 


There are firms in the area that exploit juvenile workers aged 16 to 18, though this is not the 

most prominent workers’ rights violation. Juvenile workers are more likely present in the 

summer time, when more juveniles are likely seeking employment. 

The number of juvenile workers in the southern region is likely to rise with the relative shortage 

of labor in the area. 


The practice of employing workers under 16 has not been a widespread practice in the 

garment sector of this region. However, during 2008 child labour has increasingly been found 

due to increasing labour market shortages. 

Sending young workers away from the factories to mislead auditors is a widespread practice. 


No child labour policy is enacted. 

Factory also enacts guidelines on preventing child labour. 

The factory has hiring policies and procedures that ensure that the minimum age of workers 

corresponds to all local laws 

The age of each worker is verified prior to his or her employment. 

Updated personnel files are maintained for each worker. Such files have copies of basic 

worker information such as an identification card, birth certificate, school leaving certificate or 

other documentation. 

Factory maintains a list of workers who by age are restricted to certain hours and operations. 

The factory ensures that these workers are not working beyond the restricted hours or in 

hazardous positions. 

Child labour policy indicates those if factory discovers workers below legal age, they will follow 

FWFs child labour policy for remediation to help them either go back to school or provide the 

minimum wage for a standard working week. 

As per review of all workers’ application forms, personnel resumes and labour contracts, no 

worker under 16 years old is identified and the youngest worker employed in the factory is 16 

years of age. 

A list of 60 juvenile workers, with date of birth, on-board date etc is provided for review. 

Physical examination records for juvenile workers are reviewed by the team. 

Registration with local government for juvenile workers is reviewed. 


No child labour is identified during factory walkthrough. 

Juvenile workers are mostly engaging in the sewing workshop. 

4.4 Freedom of Association and the Right to Collective Bargaining 


A union has been set up in the factory. The union has a secretariat of 60 – 70 persons 

nominated from every production departments without democratic elections. 

The union secretariat is formed by consultations and nominations (without election) from every 

department and from every unit in the sewing department. There are about 60 – 70 worker 

representatives in the union secretariat and the personnel manager, Mr. Wen Jian Hui – 文建 

辉 , is appointed the chairman of the union secretariat by the official district union. 

Management state the union has regular meeting to discuss something workers concern. 

These meetings depends on the necessity; sometimes 2 meetings a month; sometimes only 1 

meeting every 2 month. 

The factory has consulted the union on matters related to Chinese New Year holiday 

arrangements and transportation for workers from other provinces to go home. The most 

recent discussion in regard to arrangement of transportation support occurred on Nov 11, 2011. 

Trade union collected opinions from workers on deratization after Spring Festival and held 

discussion on how to proceed with representatives on Feb 10, 2012. 

Trade union had discussion on assignment arrangements for logistics personnel after the 

Spring Festival in 2012. 

Mr. Gerhard Flatz, the managing director of the factory states on his point of view, the factory 

never interferes workers to join or form any kind of union or committee; and he prefers to have 


dialogues or communications instead of bargaining with workers representatives on labourrelated 

issue. Mr. Gerhard Flatz understands sound social dialogues between management 

and worker representatives are very important. In order to improve the situation and attain a 

sustainable progress, they will try to facilitate training for management staff and worker 

representatives with regard to the right of freedom of association, collective bargaining, China 

Labour Law, FWF’s Code of Labour Practices and representative skills, so that they will have 

at least some basic knowledge and information on this subject. 


Workers who had interviewed are aware of the existence of a union and after training provided 

by management, they know some key member of the union. 

Workers inform their rights to freely association is not limited by factory. They can choose to 

join or form any kinds of labour unions as they desire. 

Workers confirm trade union has several meetings a year to discuss the issues they concern, 

such as transportation support in Spring Festival; termination of rats after the Chinese New 

Year, holiday arrangement in Spring Festival and Carnival. 

Workers confirm they are not required to submit union fee. 

Workers state no strike has ever happened before. 

Workers do not have intention to set up a union that runs by themselves independently without 

the involvement of managerial levels, instead, they expect the current trade union can do more 

job to have dialogue with management team on improvement of their welfare and benefits 

issues. 

Workers inform that they can express their concerns & suggestions to managerial levels orally 

or via the suggestion box, and management can solve their problems and give the response to 

them within a short time. 


Freedom of association is restricted in China. All unions must affiliate with the government 

controlled All China Federation of Trade Unions (ACFTU). Since branches of the ACFTU in the 

local area oftentimes have strong economic ties to the regional government and private 

entrepreneurs, workers find that unionizing through the ACFTU does not protect their collective 

interests. Most garment factories in the area do not form formal trade unions. Factories are not 

obliged to facilitate unionization or alternative forms to represent workers. However, they are 

obliged not to suppress workers’ collective actions. 

The new Labour Contract Law (LCL), effective as of 1 January 2008 stipulates control of 

higher level ACFTU branches and officials over grassroots unions and worker representatives 

not yet in a union. 

There is no national law specifically governing collective bargaining procedures but only 

regulations on collective contracts. However, a collective contract established in line with the 

regulations is legally binding. A few cities (ao. Shenzhen, Shanghai and Wenling) issued 

regulations that provide details on collective contracts. 

Employees in the garment sector have little awareness and knowledge of their rights. NGO’s 

attribute this to the poverty of the Chinese inner provinces, from where most workers are from, 

and government policies that prioritize economic development over social protection. In this 

context, workers are forced to accept their conditions to maintain their income and provide for 

the subsistence of their families. Labour NGOs in China emphasize the need for democratic 

unions to take more determined steps to protect workers’ rights. 


The written policy in regard to Freedom of Association is reviewed, and according to the policy 

workers are free to organize and join legal workers’ organization (unions or similar 

organizations) without discrimination. Also, factory will not discriminate, penalize, threaten, 

restrict or interfere with workers choosing to lawfully form or join unions or associations. 


Factory has formal communication channels such as suggestion boxes so that workers have 

opportunities to raise issues of concern and to have those issues addressed by management. 

The factory has kept minutes of regular meetings with union. 

Information of the union registration and members of the secretariat are kept. 

There is no collective bargaining agreement in place. 


Employee’s handbooks are posted on notice boards in open area of the factory. Employee’s 

benefits and wage calculation are mentioned in the handbook. 

Opinion boxes are found outside of the dormitory, canteen and in the shop floor. 

Employee handbook 

Suggestion box 

4.5 Payment of a living wage 


The management state all production workers are paid by piece rate while office staff are paid 

by hourly rate or monthly wage. 

Management state wages for production workers include piece output wage, extra payment of 

RMB 3 per hour for regular OT, an extra subsidy of RMB45 per day for work being arranged on 

Saturdays or Sundays, a 10% of piece output wage for full attendance bonus and RMB 50 per 

month transportation subsidy for workers not living in the factory’s dormitory. 

Management state they take the OT premiums into consideration when setting the unit price of 

different type of work for all workers. For this purpose, the unit price has been increased by 

15% as of Mar 2012. 

In order to make the payroll records look tidy and in compliance with the legal requirements. 

Factory follows the legal minimum wage standards to formulate the payroll. The payroll 

structure consists of regular wage (RMB 950 /month), regular OT premiums (150%), weekend 

OT premium (200%), bonus and deduction of insurances. The bonus here includes production 

bonus (piece wage deduct hourly wages), plus all kind of available subsidies and benefits. 

Factory make a comparison between the ultimate gross piece wage of workers and gross 

wages that being calculated in terms of hourly rate, of which the higher standard is applied for 

paying workers. In this way, factory secures they pay workers at least the local minimum 

wages and legally required overtime premium. 

All workers are entitled to paid annual leave, paid statutory holiday leave, paid maternity leave 

and paid sick leaves as legally required. 

Factory also has a yearly bonus that is 10% of the total earning of each worker of the last year, 

which is distributed to workers at the end of the year. 

Factory provides canteen services to workers and factory only has a symbolic charge of RMB 

1 per day for 3 meals, as to control some bad behaviour of food waste. The cost for the 3 


meals is estimated to be RMB 12 a day. 

Factory provides dormitory service to workers free of charge; and even workers do not need to 

pay for the electricity and water fee. 

A payslip with all necessary information is distributed to workers for wage confirmation on the 

payday. And during daily operation, each worker also keeps a small record specifying the 

amount they made every day. In case workers find any case of miscalculation of wage, the 

financial department will double check with workers. 

Wage is paid punctually on the 15 th of next month for wage of the current month via bank 

transfer. 

Management state they make a wage analysis based on data available of all production 

workers from Jan 11 to Dec 11 and Jan 12 to Mar 12. They conclude that the average wage 

that workers take home is RMB 2479.83 per month in these 15 months survey. (Please refer to 

the Wage Analysis in the below Document Inspection Section for more information). 


Workers state they are paid by piece rate plus RMB 3 per hour as regular OT allowance and 

additional RMB 45 extra payments for working on Saturdays and Sundays. 

Workers state they are informed of the unit price and generally speaking factory raise the unit 

price on a year basis and the range is from 15% to 20%; the most recent raise is 15% as of 

March 1, 2012. 

Workers state they have a small book to record the daily production on their own and their 

piece output wages are precisely calculated by the financial department for most of the time. 

Workers state they can earn at least RMB 950 per month for a 40-hours-week. 

Workers understand that factory also makes a calculation of how much they can earn based 

on working hours, in case their piece wage is less than the hourly wage, factory will pay them 

the hourly wage to make sure it follows legal requirements on minimum wage and OT 

premiums. 

Workers who do not live in the factory dormitory confirm they have RMB 50 per month as 

transportation allowance. 

Workers confirm they have 10% of piece wage as full attendance bonus. 

Workers state at the end of the year, 10% of their yearly income will be distributed to them as 

annual bonus. 

Workers confirm they only pay RMB 1 for 3 meals a day eating at the factory canteen; but they 

are not sure about the actual cost for the meals. 

Workers state that wages are paid through the bank on the 15 th of the next month. 


In comparison to other FWF countries in South and East Asia, China has the second highest 

GDP per capita but also the highest income inequality. Minimum wages in China are locally 

defined and differ much within provinces, even within a one hour-driving distance. 

Most garment workers are paid by piece rates. The wages they receive in the peak season are 

ordinarily enough to provide for the needs of their families. However, in low seasons, wages 

are often lower. In case of tight production quotas take home wages for a standard working 

week may fall below the local minimum wage, resulting in a trend among workers to work extra 

shifts to get better pay. 

Though some employers report workers work excessive overtime in secret without 

management permitting it, managers elsewhere commonly report concerns with worker theft 

and electricity expenses. It is unlikely workers could arrange overtime on the production line 

without the knowledge and consent of shop floor managers. 

The regional legal minimum wage is RMB 950 a month; or RMB 5.46 an hour. 

Wage levels defined by the Asia Floor Wage Campaign is RMB 2244 a month 

According to research carried out by DGZ centre wages for a regular working week in the 


Yangtze River Delta (Shanghai and surrounding provinces) and the Pearl River Delta 

(Shenzhen, Dongguan, Guangzhou and surrounding municipalities) are respectively 1606 

Yuan /month and 1417 Yuan /month. 


Payroll records of Mar, Feb 2012 and Dec 2011 are reviewed by audit team. 

The structure of the payroll consists of regular payment, OT premiums, bonus and deductions. 

The final gross wage on the payroll records that workers get is consistent with the amount 

reported by workers during interviews. 

The audit team concluded all workers are paid at least the local minimum wage of RMB 950 

per month; regular overtime and weekend overtime premiums are paid to workers at 150% and 

200% of their regular wage rate according to legal requirements. 

Audit team randomly selected 12 employees from cutting, sewing, bonding, ironing, packing 

and inspection department in Mar 2012, Feb 2012 and Dec 2011 respectively; the average 

take-home wage for these 36 samples are RMB 2532.4. And the average take-home wage for 

12 selected workers in Mar 2012 is RMB 2996.9. 



stakeholders. 

KTC – Heshan Rondor Average Monthly Wages Analysis for production workers: 


Explanation of the wage analysis: 

Of all the monthly clusters, Feb-2011 is the lowest because of CNY holidays, but this year 

CNY holidays started from 20th Jan to 5th Feb, that is the prime reason for both Jan-2012's 

and Feb-2012's average earnings were even relatively less than January 2011. 

Since Feb-2011, the special allowance working on either Saturday or Sunday had changed 

from RMB37 to RMB45 per 8 hours and the OT allowance climbed from RMB2.5 to RMB3 per 

hour. Both affected workers' take home pay. 

The overall piece rate wages had soared 15% since March 2012, which also affected the 

surge of hardship allowance. This explains the overall earnings in different age groups in 

March are the highest in our 15 month analysis. 

Irrespective of the working ages, the average of workers' incomes in our 15 month income 

analysis is RMB 2479.83. If we excluded the workers who had worked with the factory for less 

than one year, the average went up to RMB 2537.07. 

In general and in average calculation, the longer working ages, the higher incomes. However, 

it is not necessary true in certain working age groups as indicated in the table. 

The average of March incomes is RMB 3320.04, which is regarded as representative as our 

latest benchmark that our workers can earn in the forthcoming months. 


Piece rate wage calculation method is posted for review by workers. 


Wage Ladder 1: wages for a regular working week of 40 hours 

 

 

 

 

 

 

 

All figures on the wage ladder are wages of normal working hours for cutting, sewing, bonding, 

ironing, inspection and packing workers. 

The wage ladder was developed on the basis of payroll data available for Mar & Feb 2012, and 

Dec 2011. 

The hourly rate of each worker is calculated by using the gross wage divide by the total 

working hours, then use the hourly rate multiply the regular working hours to get the data of 

regular wage. 

According to the available data, the lowest wage for a regular working week for sewing, 

bonding, inspection and packing workers is RMB 950 per month, which meet the legal 

minimum wage of RMB 950 per month. The lowest wage for a regular working week for ironing 

workers is RMB 1444 per month, which is more than the industry average of RMB 1417. 

Mode of payment for cutting, sewing, bonding, ironing and packing workers range from RMB 

1566 to RMB 1916, this illustrates that most workers are paid in between the industry average 

wage and Asia Floor Wage. 

Highest wages paid to sewing, bonging, ironing and packing workers range from RMB 2303 to 

RMB 2844, which is higher than the Asia Floor Wage of RMB 2244 per month. 



stakeholders. 


Wage Ladder 2: wages for a regular working week plus benefit 

All figures on the wage ladder 2 are regular wage plus benefit for cutting, sewing, bonding, 

ironing, inspection and packing workers. 

Factory provides canteen and dormitory services to workers; workers only pay RMB 1 for 3 

meals a day; and according to management, the cost for 3 meals a day is RMB 12 and they 

provide 26 days of meal to workers; thus the meal benefit is RMB 286 (11*26). The cost for 

one dormitory room is RMB 300 and 6 workers share a room; so the cost per dormitory per 

worker is RMB 50; these benefits are included into the calculation of wage ladder 2. 

The lowest regular wage plus benefit for sewing, bonding, inspection and packing workers is 

RMB 1286, which is below the industry average of RMB 1417. 

Mode of regular wages plus benefit for cutting, sewing, bonding, inspection and packing 

workers range from RMB 1583 to RMB 2054, this illustrates most workers are paid in between 

the industry average wage and Asia Floor Wage. Mode of payment for ironing workers is RMB 

2252, which is more than the Asia Floor Wage. 


Wage Ladder 3: wages for a regular working week plus OT and benefits 

 

 

 

All figures on wage ladder 3 are gross wages including OT compensation and benefits of 

cutting, sewing, bonding, ironing, inspection and packing workers. 

Mode of gross wages of inspection and packing workers are 1998 and RMB 2192 respectively, 

which are in between the wage level of industry average and Asia Floor Wage; 

Mode of gross wages of cutting, sewing, bonding and ironing range from RMB 2427 to RMB 

2997, this illustrates most workers are paid more than the Asia Floor Wage of RMB 2244. 

4.6 No excessive working hours 


All workers punch time card to record all hours worked, including OT. 

Normal working hours at their factory is 8 hours a day from 8:30 to 17:30 with 1 hour of lunch 

break from 13:00 to 14:00. Overtime starts from 18:30 up to 23:00 depending on production 

schedule. Average workers have 2.5 regular overtime hours 4 to 5 days a week. 

Management state some workers might punch time card earlier of later than the official 

working time of the factory because they are paid by piece rate and they want to have more 

production output; such as, some workers resume working after the quick lunch at 13:30/40; 

some workers leave the premise at 18:00 in case no OT is required. Factory makes a precise 

calculation of all working hours including OT and pays workers accurately based on the 

working hours that recorded. 

No work is arranged on Sunday any more after the FWF audit in 2011. 

Peak season is from October to January of next year; while low seasons are 2 or 3 months 

after the Spring Festival. 

All overtime hours are totally voluntary in the factory; workers can be easily granted not to 

perform OT with an advanced notice to supervisor. 

Factory is able to control the average weekly working hours to be around 60 hours in the year 

round; however, the working hours in peak season might exceed the standards of 60 hours, up 


to 74 hours a week. 

Factory makes a calculation of weekly working hours for all piece rate workers from Jan 11 to 

Mar 12; and for these 15 months, the statistics of average weekly working hours for all workers 

are 56.87 hours. In the most recent month of Mar 2012, the average hours per worker per 

week are 58.41 hours. Most excessive overtime hours occurred in Jan 2012, when the 

average working hours for all workers are 63.13 hours and 109 out of 1405 workers worked 

more than 72 hours a week. For more information, please refer to the below working hours 

analysis. 

Heshan Rondor Garments Ltd Working Hours Analysis: (sample size: all piece-rate workers) 


Workers state they punch electronic time cards to record their working hours. 

Workers state the normal working hours are 8 hours a day from 8:30 to 13:00; 14:00 to 17:30. 

They have 1.5 to 5.5 hours of regular OT for 4 to 5 days a week in peak season and have 

around 2.5 regular overtime hours for 4 days in normal season. 

Peak season is from October to January of next year; while low seasons normally are Feb, 

Mar and Apr. 

Workers confirm they can enjoy 1 day of rest in a week as of 2011. They cannot recall from 


which month onwards, but some workers state it is the factory’s decision to make improvement 

on working hours after audit initiated by FWF. 

Workers state they are satisfied with the current working hours at the factory; not too busy and 

not too free. 

Workers state they averagely work for 60 hours a week in the year round, while in peak 

season, they exceed the limits of 60 hours, and sometimes they work up to 74 hours. 

Workers confirm they work voluntarily for all overtime hours and no production quota is 

imposed. In case they do not feel like working for overtime hours, they are free to do so, by 

giving an advance notice to their team supervisors. 


According to Chinese law, standard working hours are a maximum of 8 hours a day and 40 

hours a week. 

Excessive overtime is one of the most prominent workers’ rights violations in garment factories 

in the region. 

Many garment workers work seven days a week and have to work till midnight every day. At 

times, workers themselves want a lot of overtime since their wages are otherwise too low, and 

they need money to support their families. More commonly, however, firms will penalize 

workers’ wages if they refuse to work overtime. 

It is very common for factories to apply for government permits for compressed workweeks. 

Whereas such permits only allow factories to squeeze a maximum amount of working hours 

within a limited timeframe, factories tend to increase the standard amount of weekly working 

hours to the maximum amount allowed by the permit. 

Long working hours are not only and entirely the responsibility of the garment factories. If 

foreign clients give their suppliers little time to finish a manufacturing order, factories have no 

choice other than to intensify the production process. Further enhanced by shortages of skilled 

low-cost labour and high pressure on delivery times from international buyers, excessive 

overtime is widespread in the Chinese garment industry. 


Working hour’s records of Mar, Feb 2012 and Dec 2011 are reviewed by audit team; altogether 

36 samples from different departments are selected for calculation of workers working hour’s 

status. 

Averagely workers work around 60 hours a week; yet in peak season, workers work more than 

60 hours and the maximum is 74 hours. 

Some workers worked more than 3 regular overtime hours up to 5.5 hours per day; and 32 out 

of 36 sampled workers worked more than 36 overtime hours a month up to 139 hours as per 

review of attendance records of Dec 11, Feb and Mar 12. 

A quick scan of the past 7 months time records (Oct 11 to Apr 12) is performed and audit team 

concluded that all workers have at least one day off on Sunday each week. 

Overtime analysis sheet: registered numbers of overtime hours (sample size: 36 workers) 

Mar 2012 

Worker Department Week1 Week2 Week3 Week4 Week5 Total 

hours 

Total 

OT 

daily 

OT/days 

Cosec. 

WD 

Max. 

WH/week 

Audit report – Heshan Rondor Garments Limited – April/2012 Page 35 of 45 

Average 

WH/week 

1 Cutting 31.5 63 55.5 63 63 276 100

8 Ironing 30.5 67 67 61 65 290.5 114.5 3.5/17 6 65 66.02 

9 Inspection 34.5 67 67 61 69 298.5 122.5 3.5/21 6 69 67.84 

10 Inspection 32.5 67 67 67 67 300.5 124.5 3.5/22 6 67 68.30 

11 Packing 27 55.5 52.5 54 55.5 244.5 68.5

for 1 to 2 weeks. Average working hours for these 12 sampled workers are 55.88 hours. 6 out 

of 12 sampled workers worked in excess of 3 regular overtime hours per day (e.g.3.5 hours) 

for 6 to 13 days. 

In Dec 2011, 9 out of 12 sampled workers worked in excess of 60 hours (e.g. 63.5 to 74 hours) 

for 1 to 4 weeks. Average working hours for these 12 sampled workers are 62.92 hours. 9 out 

of 12 sampled workers worked in excess of 3 regular overtime hours per day (e.g.3.5 to 5.5 

hours) for 1 to 24 days. 

32 out of 36 sampled workers worked more than 36 overtime hours a month up to 139 hours. 

A calculation of these 36 workers for these 3 months (Mar, Feb 12, and Dec 11) concludes that 

the average weekly working hours are 60.81 hours, which exceeds the limits of 60 hours. 


Electronic time punching machines are observed. 

4.7 Safe and healthy working environment 


Management state they have a team responsible for the health and safety conditions of their 

factory. And the team will inspect the factory on a daily basis; in addition, the internal audit 

team conduct audit once a month to make sure their factory is compliance with all legal 

requirements on health and safety. 

Factory conducts fire drills twice a year at dormitory and production areas. 

Injuries seldom happen at the factory and factory makes a good record of all injuries. 

Factory has qualified first aid reconsiders that can take care of the slight injuries occurred at 

workshops with the help of first aid medicines available at first aid kits. 

Factory has established labour safety and health care policies and the outlines include fire 

safety, chemical safety, electrical safety, machine safety, noise, dust, and ergonomics. 

Emergency exits on all floors must be clearly marked, well lit and unblocked all the way by 

drawing lines on each sewing floor, warehouse and all production floors so that no obstacles 

on paths. Any goods or materials blocked the paths have to be moved away to ensure 

evacuation through emergency exits must always be possible during working hours. 

Factory has only one chemical material, which is cleaning detergent in liquid form. As it is 

easily evaporated, they do store those in plastic tanks with properly labelled and safely stored 

in a hut within the factory compound. 

The persons in charged of boilers, lifts, compressor room, generator and special electrical 

equipment have to be qualified persons by obtaining recognized certificates. The Electricity 

and water department’s staffs are well trained and they have to conduct routine checking of 

every electrical plants and equipment because of wear and tear causing fire or accidents. 

All sewing machines, button and special machineries have all been installed protection guards. 


Workers are provided gloves when operating cutting machines. Before new machineries are 

put into operations, workers are trained how to use and put alert of the steps to be done in 

case of accidents. Also, safety check is conducted for every machine on a regular basis. 

Factory has a team of cleaners to work two to three times a day to clean every corner of the 

factory complex. The masks are provided when they do their jobs. In certain departments like 

workers in kitchen and cooks have to get health certificates from recognised medical centres. 

Workers are trained when they arrived at our factory, included how to sit when sewing the 

garments. They are advised to change the sitting gestures after an interval of time. 


Workers are satisfied with the health and safety conditions of the factory and they have no 

health and safety concerns that might endanger their life or health to mention. 

Workers confirmed they are required to wear personal protective equipments (earplug, gloves, 

masks etc) when working and they receive training on why and how to use PPEs. 

Workers confirm they have fire drills twice a year, both at dormitory and production areas. 

Workers confirm they seldom have injuries at the factory; and in case they are injured and 

being sent to hospital for cure, all expenses can be reimbursed by the local insurance bureau 

as they are covered by injury insurance. 

Workers confirm they are trained on health and safety issues, such chemical safety, machinery 

safety, fire safety, how to properly release body strains by proper gestures etc. 


Since garment factories use relatively few chemicals and the government pays a lot of 

attention to fire safety, the most prominent health and safety issues in garment factories are 

tied to the long working hours and manufacturing quotas. The industrial accident rate is still 

quite high in China, and therefore safety is essential to issues of the workplace. 

Ergonomic hazards are prevalent. However, people are not aware of them and often accept 

the situation as the way things are. Since the long term health hazards of poor ergonomics are 

significant, auditors should always pay attention to them. 

Chinese labour law requires firms to establish a health and safety committee to administer safe 

practices at work. Staff and workers are both allowed to form this committee. 


Factory keeps records of OHS trainings, fire drills, and inspection logs for fire fighting facilities. 

Policies and guidelines on OHS are kept. 

All legally required certificates and documents, such as licenses, certificates for special 

machines, health certificate for canteen staff, fire permit, waste disposal permit, etc are 

available for review and in valid condition. 

The factory has kept records of accidents and injuries. 

Training records in regards to health and safety are maintained. 

Factory keeps good production records, including warehouse in/out records, broken needle 

records etc. 



Entire factory is well organized and maintained in clean and tidy conditions, which is 

comfortable to work in. 

All aisles and exits are kept clean and unobstructed. 

All aisles are marked with lines and arrows to indicate the direction of evacuation; exits are 

equipped with emergency light and lighting exit sign. 

 

 

Evacuation map is properly developed and posted in the factory. 

Safety instructions and warning signs of properly use of personal protective equipments are 

available in the workshop. 


All sewing machines are well maintained and equipped with pulley guards. 

4-needles-6-strings sewing machines are equipped with partial ventilation system to absorb 

the cotton dust. 

 

 

Fire fighting equipments – extinguishers and hydrants are inspected on a monthly basis and 

well maintained. 

Explosive-proofed lights are available in warehouse. 

 

 

Entire factory is equipped with CCTV surveillance system. 

Factory provides metal glove to cutting workers. 


Active carbon mask is provided to workers handling detergent. 

Earplug is provided to workers in the embroidering department. 

 

 

Electricity box is well maintained with proper cover. 

Fire alarm system is available in the entire factory; and flashing alarm system is available in 

the embroidering section where noise level is high that may fail the sound alarm system. 

 

 

Chemical warehouse is equipped with fire fighting equipments and MSDS is posted. 

Chemical stored at warehouse is well maintained and protected by second containment from 

leakage. All the tanks of detergent are being stored in containers with cover. 


Workers toilet is clean and tidy. 

Drinking water facility is available outside the workshops. 

 

 

First aid kit with sufficient medicines is available at each workshop. 

Eye-washing facility is available at the cleaning section. 

 

 

Health and safety instructions are posted. 

Proper posters of gesture in regards to ergonomics of lifting and movement are observed. 


The following is picture evidence of the remediation made by factory for findings of the 

FWF audit in 2011. 

 

 

The wooden box storing detergents in the rear section is now properly protected by a metal 

container from leakages. 

Factory takes immediate action to equip the tank for diesel placed at the back of the senior 

staff canteen with secondary containment from leakages and a shelf to protect damages from 

the rain and sun. 

 

 

New fire alarm system has been installed within the embroidering section, where it can be 

heard and easily visible to workers. 

Factory has painted a warning yellow-and-black line and ‘be aware of the step’ on the ground 

to remind people of the potential danger. 


4.8 Legally binding employment relationship 


Management state they have signed labour contracts with all workers and each worker is 

distributed a copy of contract for reference. 

In order to encourage more workers to join social insurance, factory conducted a briefing for its 

workers, especially for new workers, on the importance and benefits of joining social insurance 

and their rights after retirement or when they are sick and cannot attend to work etc. 

Factory make efforts to increase the social insurance coverage rate gradually year by year and 

roughly an 8% increment are made every year. 

Compared with the coverage rate of insurance (60%) of last year (2011); as of Apr 2012, 67% 

workers have been registered with all 5 kinds of social insurances. In addition, for those who 

do not have government insurance, factory covers them with commercial injury and medical 

insurance. 


Workers confirm they have signed contracts with factory at the time of hire and they receive a 

copy for reference. 

Workers confirm factory arranged training on the importance of buying social insurance to 

encourage them to participate into the insurance scheme. 

Some workers state they do not want to buy insurance arguing that they do not want to pay for 

the insurance, or they are not sure how long they will stay in Heshan City of Guangdong. 


Though many garment factories sign contracts with workers, these are often only a matter of 

words on paper which may contain terms prohibited by Chinese labour law. Workers are not 

often offered a copy of the contract and the conditions of the contract are not often met. 

Employment agreements are valid even if they are not registered with the government if 

employer and employee have both signed the agreement. 

Since January 1st 2008, the Labour Contract Law came into force; all workers should have a 

contract. Via the widespread publicity concerning the implementation of this law, workers are 

aware of the right of a valid contract. 

China lacks a national social security system. Migrant workers 80% of their accumulated social 

insurance entitlements if they transfer their money between local governments in case they 

move back to their home province before the clearance period is completed. Factories tend to 

take this as a reason to not pay their share of social insurance to migrants, nor offer them 

adequate compensation. 

The central government of China is currently designing a nationwide system; however there is 

no clear timeline for implementation and the current draft text is not specific on how a 

nationwide system should be implemented. 

Stakeholders recommend that, as long as the present situation exists, FWF affiliates ask 

factories to offer migrant workers alternative means for social security. Most important is to 

ensure that factories do pay their contribution on social security to workers. 

According to research carried out by DGZ centre approximately 75 % of workers have a written 

contract with their employer. The common contract period is 1 to 3 years. Less than 10% of all 

rank-and-file workers have a permanent contract. A substantial amount of employers requires 

workers to sign two different version of their contract. Respectively 50% and 79% of workers in 

the Yangtze River Delta and Pearl River Delta are not informed about the content of their 

labour contract by their employer. Labour rights and occupational hazards are generally not 

stipulated in contracts. 



As per review of social insurance receipt of April 2012, 67% workers have been registered with 

all 5 kinds of social insurances. In addition, for those who do not have government insurance, 

factory covers them with commercial injury and medical insurance. 

Training records in regards to strengthening the importance of buying insurance are reviewed 

by the team. 

Base on review of all employees' personnel files provided by factory management, copies of ID 

cards and personal information registration are properly contained in the personnel files. 

All employees have properly signed the labour contracts with the factory. Furthermore, the 

contracts are legal and have properly included all mandatory clauses as legally required. 


N/A 

Annex: corrective action plan (Excel)

Apr 2012 - FWF Audit Report – Heshan Rondor Garments ... - KTC

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