Karnataka Labour Dept finds Wistron did not record deduction in pay for workers

TNM accessed the Labour Department’s inspection report of Wistron’s manufactory in Kolar and found several violations of labour laws.
Wistron Corp's building
Wistron Corp's building

Contract employees at Wistron’s iPhone manufacturing unit in Karnataka’s Kolar were not given offer letters, employment contracts and were denied salary slips on request, the Karnataka Labour Department has found. “When asked to produce, the (company) did not,” the report says. The inspectors also found that contract employees were not given offer letters, employment contracts and were denied salary slips on request. The report indicates that contracting companies including Quess Corp, Adecco India Ltd and Creative Engineers violated norms related to hiring personnel. However, it does not specify whether the other violations it noted were incurred by Wistron or the contracting companies. 

The Karnataka Labour Department visited the plant on December 12, the day thousands of disgruntled workers vandalised the factory, alleging that their repeated requests to pay deducted wages and overtime amounts were stonewalled. The Labour Department found several violations of the Contract Labour (Regulation and Abolition) Act 1970 and the state government’s rules pertaining to this legislation. The inspection was conducted by Kolar district’s inspectors working in the Labour Department -- Lokesh Kumar and Renuka Prasad. 

Sources with the Labour Department told TNM that a report including the inspection’s findings were sent to the Union Labour Ministry. “We don’t know what action the Union government will want us to take. In such a situation, the contracting companies could be blacklisted,” a senior official with the Labour Department said. 

The Labour Department official also said that its “findings” based on multiple inspections and interactions with company representatives indicate violations by the contracting companies.

What the report states

The report, signed by Rajeshwari, the Labour Officer in Kolar district Labour Office, noted that contractors including Quess Corp Ltd, Adecco India Ltd and Creative Engineers had hired more people without prior approval of the labour department. “Contracting companies Creative Engineers and Quess Corp Ltd, had obtained permission to hire 2,350 and 1,350 employees for Wistron. They hired 2,410 and 1,511 personnel in total and had not obtained permission to hire the additional employees. Adecco India Ltd had obtained permission to hire 3,000 employees but they hired 111 additional personnel without prior approvals,” the report added. 

However, the most important finding was that the workers salaries were deducted, which was in violation of the Contract Employees (Regulation and Abolition) Rules. According to the rules, salaries can be deducted if there is a record of employees taking unpaid leave, or if it is proved that any damages were caused to the company’s infrastructure due to the said employees’ action. “No explanation was given regarding the deduction in pay,” the report noted.

TNM spoke to several employees who stated that every month three or four days’ pay was deducted despite them having worked those days and that this had gone on for over six months. Employees said that despite multiple requests submitted to Wistron’s to the HR Department, no action was taken to rectify the deduction in pay.

An earlier report submitted by the Department of Factories, Boilers and Industrial Safety, had stated that overtime wages for the housekeeping staff were not paid. The report also stated that the company violated section 8 of the Minimum Wages Act where complaints of employees were not officially recorded. 

The report also found that the company had violated norms under the Industrial Employees (Standing Order) Act 1976, where the management’s decisions were not effectively communicated with the employees. However, this report does not specifically state whether these violations were incurred by Wistron specifically or the contracting companies.

What the human resource contracting companies claimed

A source at Quess Corp told TNM on condition of anonymity that Wistron hasn’t been able to meet with the increased workload coming its way, especially after the lockdown ensuing the pandemic. “They went up from 2,000 employees to nearly 10,000. The unprecedented increase in workforce in a rather abnormal pandemic situation impeded their ability to put systems that would have enabled them to discharge their fiduciary responsibilities,” the source said.

He also said that Wistron had failed to maintain a good relationship with its workers. “If there is an issue at the plant, they should have been able to call somebody, there should have been community connect that they generated like someone to mediate between bureaucracy and legal resources. Hence there was a rampage. And that’s where I think the focus should be as you analyse this issue,” the source added.

Industry sources also say that service providers such as Quess Corp, which is a listed company, are expected to follow the same level of governance as a Wistron or Apple is, and as service providers, they will also begin looking at clients keenly and whether or not they want to work with them and under what circumstances.

Responding to TNM, another contracting company, Randstad India said that it strictly abides by the law of the land and that it has a zero-tolerance approach to non-compliance.

“We are working with Wistron Corp to identify the root cause of the problem. As a responsible organization committed to the welfare of our staff, we believe in upholding our values of fair employment practices and pay structure. At this juncture, we are committed to do everything that is necessary to ensure the safety and well-being of our employees deputed to Wistron and will continue to work with the authorities,” Paul Dupuis, MD and CEO, Randstad India said.

Is Wistron accountable?

Employees that TNM spoke to said that when they approached Wistron’s HR Department, they were informed that the company had handed over wages to the contracting companies. When employees approached the contracting companies, they were informed that payments disbursed by Wistron were made and that the contracting companies only disbursed the money received from Wistron, the principal company. 

Speaking to TNM, Professor Matthew Babu, adjunct professor at National Law School India University in Bengaluru and Director of Centre for Labour Studies, said that both the contracting companies and the principal company, in this case Wistron, are accountable to ensure that labour laws are not violated. 

“The principal employer should ensure that the wages are paid properly and it should appoint personnel to monitor whether contracting companies are also following these norms. They can’t escape so easily. First of all they get labour at cheapest price and don’t pay minimum wage and overtime, which is a violation of the Minimum Wages Act,” he said. 

He said that such lack of monitoring would be counterproductive to increasing investment in Karnataka as employers would prefer to work in states where such systems are in place and function properly. “It is the job of the principal company to ensure that all contract employees are registered and should ensure that management’s decisions are communicated properly. This seems like a blame game,” he added. 

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