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El Salvador: Garment workers owed $2.3 million severance pay after sudden closure of Global Brands Group major supplier; Global Brands Group did not respond

In November 2018, Hong Kong-based labour groups issued a joint letter to Global Brands Group requesting it take responsibility to ensure full payment of severance for 824 garment workers employed by Global Brands Group major supplier L.D El Salvador, which closed suddenly in March 2018. According to the letter, Global Brands Group - whose portfolio includes Disney, Mattel, Barbie, Fortnite and Star Wars - was one of L.D's largest buyers in the run up to its closure. 

The letter states that the 824 affected garment workers are collectively owed USD 2.3 million (approx. USD 2,800 each) in outstanding wages, legally-mandated severance payments and other terminal benefits, which the factory owner has refused to pay. Instead, the owner has fled the country abandoning all responsibility to the workers. 

Global Brands Group has offered to pay the workers a one-time “humanitarian” payment of USD 300,000, while expressly denying any further commitments. Labour groups say the payment represents "a portion of what the workers are owed for their labor and is by no means an act of “humanitarian” charity". 

In March 2019, Business & Human Rights Resource Centre wrote to Global Brands Group inviting it to respond to the allegations in the joint letter. Global Brands Group did not respond. 

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Company non-response
20 March 2019

Global Brands Group did not respond

Author: Global Brands Group

29 November 2018

El Salvador: Joint letter requests Global Brands Group pay severance owed to workers after garment factory closure

Author: Hong Kong Confederation of Trade Unions, Global Monitor & Workers Empowerment

"Joint Letter: Labour Right violations undertaken by Global Brands Group's sourcing partner in El Salvador", 29 November 2018

...We are contacting you regarding your sourcing relationship with the L.D. El Salvador... factory (LD) in El Salvador... Global Brands Group (GBG)... was one of LD’s largest buyers in the period leading to its sudden shut down on March 7th of this year. This special relationship leaves you with obligations to the workers... and a responsibility to ensure the factory operated within the confines of Salvadoran law...

As you are aware... the owner of LD... refused to pay workers two weeks of outstanding wages, legally-mandated severance payments, and other terminal benefits totaling $2.3 Million USD [and]... went so far as to flee El Salvador... This failure to meet outstanding financial obligations is negatively impacting the 824 former workers of LD, who are owed an average of $2800 (USD) under Salvadoran law.

...LD workers were relying on severance payments legally-owed to them to support themselves and their families until they were able to find new work.

...where a factory owner fails to meet severance obligations... it is typical, and many buyer codes of conduct require, for brands sourcing from the factory to ensure compliance... including paying all legally-mandated severance. Unfortunately, GBG is choosing to disregard this responsibility... and has instead offered workers a one-time “humanitarian” payment of $300,000 USD, while expressly denying any further commitments.

...the sum owed to the works amounts to less than 1% of GBG’s 2017 revenues... More so, the payment represents a portion of what the workers are owed for their labor and is by no means an act of “humanitarian” charity on the part of GBG.

...we encourage you to justly compensate workers and meet your legally-required severance obligations... by covering the $2.3 Million USD owed to LD workers in its entirety...

Read the full post here