"Garment workers have lost out on $4bn of severance pay, says rights group", 5 February 2024

More than £4bn in wages has been withheld from millions of garment workers making clothes for western clothing brands over the past 15 years, according to new estimates on severance “wage theft” in the global fashion industry.

The Worker Rights Consortium (WRC)…says that garment workers have been denied billions of pounds of legally mandated severance pay, which they should have received after being sacked or losing their jobs due to brands cancelling orders or factory closures….

“It doesn’t grab headlines, but when workers lose their jobs and are then denied severance they spent years earning, it has devastating consequences for them and their families,” said Scott Nova, executive director at the WRC….

“Apparel brands have known about severance theft for years but have done nothing to stop it. Their voluntary labour standards have allowed them to ignore the problem with impunity,” Nova said.

The WRC highlighted an ongoing case involving workers at a factory making Disney products in El Salvador, which it claims owes 250 workers a total of £1.4m in severance pay. For some, their share of the total is the equivalent of more than two years’ wages.

The factory, Style Avenue…ceased production in February 2023 and closed in May, making hundreds of workers unemployed.

Disney had granted a licence to Outerstuff, a US designer and manufacturer of licensed children’s sports clothing, to make Disney children’s clothing. The clothing was made at the factory and was co-branded with the logos of US National Football League (NFL) or National Basketball Association (NBA) teams.

The WRC says that one of the owners of the factory was temporarily jailed for failing to pay healthcare and pension contributions for employees. Instead of being paid what they were owed, the WRC says that Style Avenue employees were paid about £45 each, less than 1% of their legal entitlement.

The WRC claims that this failure so far to pay workers made Outerstuff an outlier in the industry and that as companies making clothes for certain brands, including for the NFL and the NBA, were subject to enforceable labour standards, that obliges them to repay stolen severance pay.

In response to the WRC’s claim, Outerstuff claims that the WRC’s analysis is factually inaccurate and denies that it is obliged to pay the severance money. However, after the Guardian approached Outerstuff for comment, the company confirmed it would pay nearly $1m.

In a statement to the Guardian, Outerstuff said it “takes and has consistently taken worker rights very seriously. We manage a structured, global compliance programme that outlines and requires a code of conduct for all our suppliers. At this time, despite our strong feeling that we have met all licence requirements, Outerstuff is nonetheless working on a structured plan that will provide nearly $1m in finances to the workers as soon as possible.”

Nova said: “In addition to Outerstuff, you have Disney with annual revenue of $89bn, the NFL and its teams with $18bn, and the NBA with $11bn. With combined revenue of $120bn, you would think these brands could scrape together $1.8m to pay the workers who sewed their onesies the money they earned.”

Disney, the US National Football League and the NBA have also been contacted by the WRC to appeal for them to intervene in the dispute. They did not respond to requests for comment from the Guardian…