Case study - Social Audit Process based on interviewing management and employees

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Social Audit Case Study

Table of Content

1. Methodology

2. Executive Summary 3. Social Audit Result summary 4. Social Audit Answers

Š 2012 Dragon Sourcing. All rights reserved.

Methodology of the Social Audit • The Social Audit Process is based on interviewing management and employees and checking key documentation: 1. Number of employee per department 2. Social Document verification 3. On site Security indication and Equipment 4. Social and Safety places 5. Payroll worksheets and employment contracts 6. Management Interviews 7. Employee Interview including: Child Labor Gender Discrimination Forced Labor Harassment and Abuse Freedom of association Grievance Procedures Discipline and Termination Working Hours Compensation and Benefits Environment, Health and Safety Š 2012 Dragon Sourcing. All rights reserved.

3

Table of Content

1. Methodology

2. Executive Summary 3. Social Audit Result summary 4. Social Audit Answers

Š 2012 Dragon Sourcing. All rights reserved.

Executive Summary

 Our client is a luxurious brand company, leader oi its market.  The objective of the Social Audit was to determine the workers and employees conditions at work.  This audit wasconducted in Vietnam  As a result, client was satisfied by the working conditions in this factory.

© 2010 Dragon Sourcing. All rights reserved.

5

Table of Content

1. Methodology 2. Executive Summary 3. Social Audit Result summary

4. Social Audit Answers

Š 2012 Dragon Sourcing. All rights reserved.

Social Audit Result summary FINDINGS 1. CHILD LABOR No child labor in factory 2. DISCRIMINATION No 3. FORCED LABOR No 4. HARASSMENT AND ABUSE No 5. FREEDOM OF ASSOCIATIO Yes, have labour Union in company and was voted by workers 6. GRIEVANCE PROCEDURES Good. All were solve by meeting, discussion to meet requirment of workers and management 7. DISCIPLINE AND TERMINATION Good.

8. WORKING HOURS There's over time, but comply with law.

9. COMPENSATION AND BENEFITS Good. Salary of worker is so high and have allowance for Gasoline and working hard 10. ENVIROMENT, HEALTH AND SAFETY The working enviroment is very good for workers. 4 interviewed employees are satisfied working in this factory 11. SUBCONTRACTORS No

Weight (%)

Vendor score

Yes - it is correct. We do not use child labour.

Workers are from 18Yrs or over

15%

4

Follow government law and there is no discrimination in factory

10%

4

Yes - All workers signed a contract with the company and overtime voluntarily

10%

4

Yes

10%

3

Yes

5%

4

Yes

5%

4

Yes

5%

4

Yes

5%

3

Yes

15%

4

Always to give the best working enviroment for workers

15%

4

We do not have any subcontractor

5%

4

100%

96.25

FACTORY FEEDBACK

OVERALL RATING: © 2010 Dragon Sourcing. All rights reserved.

7

Scoring Level

Score

Excellent

> 90

Good

70 - 90

Acceptable

50 - 70

Poor

< 50

Table of Content

1. Methodology 2. Executive Summary 3. Social Audit Result summary

4. Social Audit Answers

Š 2012 Dragon Sourcing. All rights reserved.

1. Number of Employee per department Department

Male + Female

Department

Male + Female

Accounting

5

Repairing

26

Administration

6

Filing FB

47

Barreling

17

Polishing FB

42

Cleaning

19

Setting FB

94

Conformity

10

Soldering FB

47

Driver

7

Filing HVP

27

Finding

47

Recutting Stone & Stone

41

Finishing

46

Wax

135

Housekeeper +Guard

57

Quality Control

67

Import & Export

8

Polishing & Setting HVP

87

Laundry

12

Bridal

48

Maintenace

12

Factice

48

Material Control

73

Special Team

95

Medical + MIS IS&IT

5

Technical

3

Planning+ Production & Purchasing

18

Customer Desk

1

Refining Š 2012 Dragon Sourcing. All rights reserved.

15

Stock 9

7

2. Social Documents verification Labor Contract

Safety training record

Š 2010 Dragon Sourcing. All rights reserved.

Working Time card record

Employee handbook Company Procedure

10

Payroll for Jan, 2012

Daily information from Labor Union

3. On site Security indication and Equipments Fire fighting evacuation map

Exit sign and fire fighting equipment

Š 2010 Dragon Sourcing. All rights reserved.

Exit Sign in Workshop

Exit sign & alarm

11

Fire-fighting equipment

Emergency lights

4. Social and Safety places Canteen

Suggestion Box

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Changing Room

Washing Uniform Dept

Infirmary

Labor Union Room

12

5. Payroll worksheet Employee

Name

Attendance (unit: hour)

OT (unit: hour)

Salary (VND)

Allowance (VND)

Total

Deductions

Total

Gross Pay

Social+ health +unemploy Taxes ment Insurance (8.5%)

Net Pay

OT on working days

OT on Weekends

OT on Public holiday

208

0

0

0

10,817 2,249,936

0

400,000 2,649,936

Dept and Position

Entry

Finishing

Leave

Regular Pay / hr

Regular pay

OT Pay / hr

OT pay

Perfect attendance

Bonus

1

Nguyen Cong Hoanh

2

Nguyen Tien Duy Finding Making

208

0

0

0

10,817 2,249,936

0

400,000 2,649,936

3

Do Hai Dang

Setting FB

208

0

0

0

10,817 2,249,936

0

2,249,936

4

Tran Ngoc Uyen

Production Office

208

28

0

0

13,702 2,850,016

5

Ly Van Hoa

Setting Factice

208

0

0

0

10,817 2,249,936

0

170,000 2,419,936

6

Lam Thi Tu Trinh

Wax

208

0

0

0

10,817 2,249,936

0

400,000 2,649,936

7

Nguyen T. Hong Thi

Filing Special Team

208

0

0

0

10,817 2,249,936

0

400,000 2,649,936

8

Huynh Tan Loc

Refining

208

18

0

0

12,019 2,499,952

9

Huynh Thanh Tung

Finding Making

208

0

0

0

10,817 2,249,936

0

2,249,936

10 Nguyen Minh Thy

Polishing Factice

208

0

0

0

12,173 2,531,984

0

400,000 2,931,984

© 2010 Dragon Sourcing. All rights reserved.

13

20,553.0 575,484.0

18,028.5 324,513.0

480,000 3,905,500

400,000 3,224,465

225,750 225,750 225,750 238,500 225,750 226,950 225,750 230,500 218,538

230,500

2,424,186 2,424,186 2,024,186 3,667,000

2,194,186 2,422,986 2,424,186 2,993,965 2,031,398 2,701,484

6. Management Interview PART I: MANAGEMENT INTERVIEW General Information

Management interview included: -

Child Labor Gender Discrimination Forced Labor Harassment and Abuse Freedom of association Grievance Procedures Discipline and Termination Working Hours Compensation and Benefits Environment

1

Does the factory have its own social policy? If yes, obtain a copy.

Yes (to be shown on site)

2

Who is responsible for overall compliance of the factory? (Name and position)

Mr Lo Quoc Thanh - HR& Admin Manager

3

Does the factory experience any social compliance audit previously?

No

If yes, please specify audit date, customer, who done the audit?

4

Does the factory obtain any labor law exemptions from its local government? If so, No obtain a copy of the exemption.

5

Any seasonal/ temporary/ part-time employees? Using any recruitment agent ?

No

6

What percent of employees have you brought in from other countries/ provinces?

Around 1 %

7

Which countries/ provinces do they come from?

9 people from France and 1 person from Hong Kong

8

What rate of employee turnover does the factory experience yearly?

4.7%

9

What is the age of the youngest person you would hire?

Workforce Profile

Child Labor 10 Is there any employees between 16 and 18 years of age (young workers)?

18 years old No

if yes, how to identify their age is in line with the labor law?

11 How does the factory verify age during recruitment?

12

via the ID card and CV

If the factory employs juvenile workers who require protective restrictions, what shifts and tasks do these workers perform?

13 Does factory keep copies or records of ID document of workers?

Yes

Discrimination

Š 2010 Dragon Sourcing. All rights reserved.

11 What are the criteria for promoting workers?

Skill and fair performance

12 What actions are taken if a worker is discovered to be pregnant?

Worker continues to work at their position

13

Are women permitted to return to their position and paid at the same rate after their maternity leave?

Yes

14

Is equal salary for equal work for male and female workers implemented at the factory?

Yes

15

Any mandatory physical health check is carried for workers at recruitment or employment stage?

14

No. Just based on the health certificate from the medical centre or hospital.

6. Management Interview PART I: MANAGEMENT INTERVIEW

Working Hours

Forced Labor 16

If contract workers are employed, what is the length of time of the contract (in years)?

17 Can the contract be ended early? If yes, under what circumstances?

18

Does the factory hold employees original documents, such as ID card, passport, work permit?

1 year, 3 years and then, inlimited contract Yes. Following the vienamese labour law No

34 What are the standard employee working hours per week?

48h

35 How many shifts does the factory work?

1 shift

36 What are the hours for each shift?

8 hours/ shift

37 How are working hours tracked (e.g. time card)?

System to record the time spent per worker

38 What is the maximum working hours per week at this factory?

3 hours per day maximum

39 What are the maximum working days per week at this factory?

6 days

40 What are the average overtime working hours per week?

depend on order

41 When are your peak months of production?

March - April -October - November - December

42 Do any employees perform work at home?

No

If home work is performed, how are employees paid?

If yes, why, for how long?

NA

19 Are workers assigned overtime on a voluntary basis?

Yes

20 Are workers free to quit their job within legal framework?

Yes

21

Do all workers receive paid leave according to statutory regulations (including statutory and / or religious holiday)

Yes

44 Does the factory have written policy on working hours, rest and vacations?

Yes

Compensation and Benefits

Yes

45 What is the minimum wage rate paid for regular time work?

2,250,000 vnd

46 Are all workers paid overtime at the legal rate?

Yes

47 Is any workers paid less than the legal minimum as their base wage?

No

If yes, describe: 48 Are any amounts withheld from employees' wages?

Harassment and Abuse 22 Is there any abuse occurred or has been reported at this facility?

43 Does worker have at least one day off in every 7 days of working?

No

23 What actions have been taken to correct such incidents?

49 What day of the month / week do workers receive their pay?

on the fifth of each month

50 How are they paid? (By cash/ ATM/ cheque/ Others)

Mainly by ATM , some case by cash

51

Freedom of Association

Is the employee given a payslip which has information to allow them to check their wages and see all deductions and bonus?

Yes

53 Are any workers excluded from receiving benefits?

25 Are workers in this facility covered by a collective agreement?

Yes

54

If there is a union in this facility, do union workers get same treatment as nonunion workers?

27 Are the union representatives chosen by management?

29 What is the procedure for management to follow-up an issue or grievance?

Yes

55 Are all workers provided social insurance as per local legal requirement?

Yes

Environment, Health and Safety

No

56 Does factory have proper sign boards on the area of operations?

Yes

57 Does factory have dormitories?

No

If yes, are dormitories separated from production building / warehouse?

58

Through their Supervisor or can go direct to the HR dept.

Meeting - Discuss - Agree solution - Action

Discipline and Termination 30 Is there a rule of the disciplinary and termination policy in the factory?

Does the factory have written policy on compensation, compensation methods and benefits that is communicated to workers?

Yes

Grievance Procedures How do the factory employees bring work-related issues and grievances to 28 managementâ&#x20AC;&#x2122;s attention if there is no union?

Yes

Does factory provide access to basic sanitary and hygienic needs, such as drinking water and properly maintained bathroom facilities?

Yes

60 Are all emergency exits unblocked and unlocked at all time?

No

61 Does the factory have a fire alarm?

Yes

62 Are there fire extinguishers in all sections?

Yes

63 Are workers trained for fire precaution and evacuation?

Yes

64 Are evacuation drills practiced?

Yes

65 Are workers provided appropriate PPE by factory?

Yes

66 Have workers been trained to use PPE?

Yes

67 Are any chemicals and flammable products used in the production?

Yes

68

31 Does the company keep record of fines / disciplinary action?

Yes

69 Does factory have MSDS displayed for each chemical and flammable products?

70 Does factory have first aid kits?

32 Are the disciplinary rules align with local government authority?

Yes

33 How does the factory communicate the disciplinary rules to workers?

Hand book - Notice board - Face to face meeting

Š 2010 Dragon Sourcing. All rights reserved.

Yes

59 Are there emergency exits on all floors?

( Company regulation ) - Company will give new worker Policy book

If yes, please show copy?

Yes

Are there any legally required employee benefits for which the factory pays?

52 No Please specify.

24 Is there a recognized union in this facility?

26

No

If yes, for what reason and how much?

Does factory have assigned area to store these chemical and flammable products?

Yes Yes Yes

Subcontractors

15

71 Does this factory use subcontractors for any operation?

If yes, which ones?

72

Is there any control over the subcontractors to ensure they are comply to the local labor practice?

No

7. Employee Interview Child Labor 1

Employee interview included:

Which year you were born? Did the factory check your ID card when you first joined?

She was born in 1978 - Yes

2

If he/she was born on 1993 to 1995, does physical check free carried for the juvenile by factory? (if applicable) Yes

-

Child Labor Gender Discrimination Forced Labor Harassment and Abuse Freedom of association Grievance Procedures Discipline and Termination Working Hours Compensation and Benefits Environment

3

No

X

What is the youngest age working in this factory? > 16Y

16 - 18Y

18 - 20Y

X

> 20Y

Discrimination 4

What actions are taken by factory if you are pregnant? (if applicable) Mandatory leave

5

Yes 6

X

Free to resignate

X

No

Is equal salary for equal work for male and female workers ?

Yes

7

Position stand

Are you permitted to return to the position and paid at the same rate after maternity leave? (if applicable)

does not know since her dept is only female

No

Are you carried mandatory physical check at recruitment or employment stage?

Yes

No

X - just check health one time per year

Forced Labor 8

Did you sign any contract with the factory? How long? Any copy with you?

Yes

9

Yes - unlimited contract - Keeping a copy

No

Do you need to pay any deposit or (training/ tools) fee when you first joined the factory?

Yes

No

X

10 Is OT voluntary?

Yes

X

No

Harassment and Abuse 11 What happened if you broke the factory rules?

Depending on the mistake ,factory will remind, advise and if it is very heavy mistake, I will be fired 12 Does your supervisor/line-leader yelling or abusing to you?

Yes

No

X

Freedom of Association 13 Any workers' representative or workers' committee in this factory?

Yes

X

No

14 Do union workers get same treatment as non-union workers?

Yes

X

No

Grievance Procedures 15 What is the grievance procedure in this factory?

Meeting, Dissuss, Remind with The Supervisor or HR Department

Discipline and Termination 16 Is there any penalty if resign within the contract period?

Yes

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No

16

X

7. Employee Interview Working Hours 17 How long you have been working in this factory?

The Employee interview is done by a native speaker and in a separated room to ensure the confidentiality of the information

0 - 3Y

3 - 6Y

6 - 10Y

> 10Y

48 - 56H

> 56H

9 - 12H

> 12H

6 - 8D

> 8D

working 19 Yrs

18 What is the standard working hours per week? < 40H

40 - 48H

48h/ week

19 What is the average OT hours per week?

0 - 6H

6 - 9H

max 18 hrs/week

20 How to tracking the regular and OT hours??

The supervisor record and time record machine 21 How many rest day per month? < 4D

4 - 6D

X

22 How many annual leave do you have per year?

0 - 5D

5 - 7D

7 - 10D

v

> 10D

18 DAYS

Compensation and Benefits 23 How is the OT salary calculated?

Follow government law (150% basic salary on normal day, 200% basic salary on weekend, 300% on holidays) 24 How many day off for the last public holidays? Any holiday pay?

0 - 3D

3 - 5D

X

5 - 7D

> 7D

25 Are you paid by piece rate? daily-rate? hourly-rate? monthly-rate?

Piecely-rate

Daily-rate

Hourly-rate

Monthly-rate

26 Do you have basic salary? Any other allowance/incentive received?

Yes

Yes - Allowance for Gasoline+ quality of the work

No

27 How often are you paid? On which day? On time?

15 - 20D

20 - 30D

30 - 45D

5th of each month

> 45D

28 Are you paid by cash/card/cheque?

Cash

Card

X

Cheque

29 Do you have payslip given?

Yes

X

No

30 Is OT salary also paid at the same day as regular pay?

Yes

X

No

31 When did you receive your last month salary? How much you received ? Any deduction?

5/3/2012 - insurance

Š 2010 Dragon Sourcing. All rights reserved.

17

X

7. Employee Interview Environment, Health and Safety 32 Do you stay in the dormitory?

Yes

No

X

No

N/A

33 Is dormitory clean? (if applicable) Yes 34 How many people per room? (if applicable) 2 - 4P

4 - 6P

6 - 8P

> 8P

35 Is dormitory free of charge? (if applicable) Yes

No

N/A

36 Do you eat in the canteen?

Yes

X

No

37 Is canteen sanitary and clean? (if applicable) Yes

X

No

38 Is canteen free of charge? (if applicable) Yes

X

No

39 Did you experience any fire drill? When was the last time?

Yes

No

X

40 What do you think about the working condition here?

Bad

Poor

Acceptable

41 Are you free access to the water and toilet at anytime during work?

Yes

X

No

42 Are you provided any PPE by factory free of charge? (if applicable) Yes

X

Š 2010 Dragon Sourcing. All rights reserved.

No

18

Good

X