Hong Seng Knitting Investigation Report

On March 22, 2024, the Fair Labor Association received a Third Party Complaint regarding a Thai supplier for Nike, a Fair Labor Accredited company. The complaint concerned alleged labor violations at Hong Seng Knitting Co. Ltd. in Bangkok, Thailand in April and May 2020, during the early stages of the COVID-19 global pandemic. Nike no longer sources from Hong Seng. The complaint was filed by a member of FLA’s University Caucus.

The complaint presented three allegations:

Illegality of mandatory unpaid leave for Hong Seng workers during a pandemic-related suspension of operations at the factory;
Coercion of workers to accept this unpaid leave; and
Retaliation against workers who refused to accept unpaid leave.

FLA commissioned independent investigator Professor Panthip Pruksacholavit to investigate the allegations. Professor Pruksacholavit is an associate professor of law at Chulalongkorn University in Bangkok with a JSD in labor and employment law and comparative law.

The in-depth investigation began in May 2024, assessing information from sources including Nike; the complainant; the factory; current and former Hong Seng workers; and other organizations that have been supporting the workers. The investigator’s report was completed in December 2024 and presented the following findings.

The investigator addressed the allegation of unpaid leave during suspensions in two parts:

Legality under Thai law of leave without pay practice: Based on the investigator’s analysis of Thai law, it was not illegal to ask workers to agree to leave without pay during the suspension. However, the investigator did note that if this matter were to be brought before a Thai Labor Court, the court would assess the validity of the agreement signed by the workers, and it would consider the fairness of the agreement to the workers under a provision of the Thai Labor Protection Act.
DLPW ruling and its binding nature: The investigator identified three attempts by workers to file cases with a labor inspector at the Thai Department of Labor Protection and Welfare (DLPW) to seek payment for the duration of the leave without pay period. The first two attempts did not reach completion through the DLPW process, but in both of those cases, the factory resolved those cases and settled with the workers for the amount equivalent to the days of suspension. The last complaint reached completion in its review by the DLPW. The DPLW’s finding concluded that the consent form the worker signed was invalid because the worker had not understood the nature of the consent form. DPLW requested that the factory make payments for the days the worker did not agree to take leave. The investigator concluded that the DLPW decision was specific to this particular worker, and the DLPW decision was based on the worker’s misunderstanding—not the invalidity of the leave without pay form itself.

The investigator addressed the allegation regarding coercion in two parts:

Coercion of all workers to sign leave without pay document: Based on the investigator’s surveys and interviews with workers, she concluded that the majority of the workers were not coerced to sign the leave without pay form. Eleven workers refused to sign. The investigator found that most of the workers signed the form in an effort to help the employer reduce costs in response to the decrease in orders that occurred at the outset of the COVID-19 pandemic. They worried that the drop in orders could result in the shutdown of the factory and some feared contracting COVID-19.
Coercion of those workers who refused to sign the leave without pay document: The investigator had the opportunity to interview nine out of the eleven workers who refused to sign the leave without pay form. Out of those workers, one reported being threatened with termination if he did not sign. The worker persisted in his refusal to sign and continued to work for the factory for an additional two years.

The investigator examined the question of retaliation in three parts:

Worker who was reported to the police: One worker (W1) had been steadfast in his refusal to accept unpaid leave and was vocal about the issue. W1 had posted about the issue of unpaid leave at the factory on social media. The factory met with W1 and asked for the social media posts to be taken down as they constituted defamation under Thai law. The factory filed a police report against W1 when the worker refused to remove the posts. The investigator found that the factory was within its legal rights under Thai law to file such a report. The investigator found no indication that the police report was filed against W1 for refusing to sign the consent form.
Worker who was terminated: A second worker (W2) also refused to sign the consent form and filed a case with DLPW seeking compensation for the days of suspension. W2 concluded the DLPW case and received compensation. Later in the same year, when W2 needed to submit documentation related to residency information, W2’s submitted information was incorrect due to a mistake from the reporting agent. As a result of this mistake, the factory terminated W2 without severance rather than allow the worker to correct the mistake. The investigator found evidence that W2’s efforts to obtain compensation for the days of unpaid leave was a contributing factor to the worker’s termination.
Other workers: The investigator did not find sufficient evidence to conclude there was retaliation against other workers.

Based on the findings, the investigator made the following recommendations:

Legality of unpaid leave practice and unpaid wages: The investigator determined that the leave without pay practice of the factory complies with local Thai law. However, the investigator also noted several significant factors that have been taken into account in the recommendation: (1) there was inadequate communication regarding all available options for the workers, (2) a proper complaint mechanism for the workers was absent, (3) the existing industrial relations environment in Thailand significantly restricts the ability of workers to organize, and (4) the question of the company’s responsible divestment from the factory. The investigator notes that the events in question may have unfolded differently if the above factors had been properly addressed. Taking everything into account, the investigator recommends that the workers be compensated for the partial income loss for the period they were on leave without pay.
Coercion, harassment, abusive treatment: While the investigator did not find systematic coercion of the workers to sign the leave without pay form, she did find the workers reported harassment and abuse occurring on a regular basis in the factory (harassment and abuse were not allegations in the original complaint). Furthermore, the investigator found that the absence of effective complaint channels significantly contributed to the allegations in the complaint. With such channels in place, the workers could have found resolutions to the issues at hand. The investigator recommends the factory intensify efforts to address and eliminate the harassment and abuse issues and establish a system by which it can assess the effectiveness of such measures. The investigator also recommends that the company and the factory intensify their efforts to establish effective grievance mechanisms for the workers.
Retaliation: The investigator addressed the question of retaliation for two workers (W1 and W2 separately). For W1, the investigator recommends that the factory compensate W1 for some part of the damages suffered as a result of what happened after the factory filed its police report against W1 for the worker’s social media posts. For W2, the investigator recommends that the factory compensate W2 for the retaliatory termination of W2.

The investigator had two additional recommendations not directly related to the allegations in the complaint.

Workload and overtime pay: The investigator noted that a significant portion of the workers expressed concerns about the heavy workload and lack of additional income from overtime pay. The investigator recommends that the factory assign more realistic production targets to individual workers and offer overtime for those workers seeking additional income.
Transparency and cooperation: The investigator noted some of the challenges she faced in the investigation process due to reluctance to disclose information necessary for the investigator to verify information. The investigator highlights these challenges from this investigation as a cautionary note for future investigations.

In the coming weeks, Nike will provide a corrective action plan to implement the recommendations in the investigation report. FLA will monitor the implementation of the remediation and update this page regularly regarding the progress of the remediation.