Wells Apparel, Nicaragua

On July 20, 2020, the Fair Labor Association (“FLA”) initiated a Third Party Complaint concerning the factory Wells Apparel Nicaragua (“the factory”) based on the allegations filed by a former board member of the Luis Alonso Velasquez union. At the time the FLA accepted the complaint, it confirmed that FLA Participating Company Amer Sports was sourcing from the factory. 

The former union board member alleged violations of worker rights, principally concerning freedom of association, in relation to a retrenchment implemented by the factory between March and May 2020. More specifically, the board member alleged: 1) factory management had dismissed six union board members (including him) who were entitled to fuero sindical protection  without complying with legal requirements; and (2) there was a potential risk that an additional union official currently under maternity leave would also be unlawfully dismissed.

The FLA accepted the case at Step 2 of the Third Party Complaint process. Under Step 2, Amer Sports had up to 45 days to make an assessment and develop relevant remediation. Alternatively, Amer Sports could have waived the 45-day period and have the FLA designate an independent third party to assess the situation and, as appropriate, make remediation recommendations.

Amer Sports chose to conduct an assessment of the allegations and to provide the FLA the opportunity to then review and assess any follow-up information provided by the factory.  The FLA, jointly with Amer Sports, put together a list of questions for, and documents required from, the factory as part of this investigation. These specifically concerned the employment relationship and termination of the complainants, as well as the factory’s industrial relations and freedom of association policies and practices, among other relevant issues.

The factory responded to the questions and two rounds of follow up inquiries from the FLA and Amer Sports. In addition, the FLA´s Regional Manager for the Americas interviewed the six dismissed union board members on August 15, 2020 and received additional information from them as part of the assessment process.

Following this, the final assessment of the allegations was conducted by the FLA’s Regional Manager.  The FLA based its conclusions and recommendations on the review of the documents provided by the factory through communications with Amer Sports, coupled with information obtained during interviews with the six dismissed union board members and other workers. The assessment focused on the allegations concerning the potential illegal dismissal of six of the seven union board members, as the FLA confirmed that the seventh board member returned to work following her maternity leave and is currently an active worker in good standing at the factory.

The assessment resulted in the following conclusions:

• The six Complainants were no longer entitled to fuero sindical protection by the time they were terminated by Wells Apparel. Based on the documentary review the FLA confirmed the union had undertaken, on April 20, 2020, a restructuring election of its board through which seven union officials were expelled from the board. The newly elected union board was registered and authorized on April 29, according to a Certification. An internal decision from the union modified and extinguished the six workers’ official board status and, as a consequence, their fuero sindical protection.
• As a result, the assessment of the allegations was focused on verifying whether the factory complied with its bylaws and with the FLA Workplace Code of Conduct and Compliance Benchmarks with respect to the termination of the six complainants.
• Based on the assessment of the information provided by the factory and the interviews conducted with the six workers and an additional interview with a witness, it is not possible to conclude that Wells Apparel terminated the six based on anti-union animus.
• However, the assessment also revealed that there were inconsistencies with respect to compliance with the factory ́s own bylaws pertaining to the workers’ terminations.
• Moreover, the current practices for termination due to economic reasons are not fully aligned with the FLA Code of Conduct and Compliance Benchmarks, leaving room for discretionary implementation of workers’ termination through a retrenchment process. The absence of clear procedures and supporting information also could serve to hide a discriminatory basis for the actions taken.

As part of the assessment process, the FLA made a number of recommendations to the factory, focused on steps to strengthen factory’s policies, procedures, and practices in managing terminations and retrenchments to reduce the opportunity for potentially discriminatory decisions in the implementation of any further layoffs by the factory.

The final assessment report was posted on the FLA website on October 7, 2020.  Following that, Amer Sports worked jointly with Wells Apparel to put in place a remediation action plan and set out the steps needed for its implementation. That action plan is the focus of this report.