Attributing responsibility and seeking remedy: The case of Neo Trend’s workers

The case of the deserted workers at Neo Trend, an apparel company in Turkey, is certainly one that has lessons. There is no disagreement that a number of workers were left unemployed after Neo Trend’s owner closed the company, stripped its assets and left workers without due severance, notice, and other allowances. 

The employer has a responsibility to make right this breach of workers’ rights and in theory, should be held to account in local law. However, Neo Trend’s owner had absconded, and workers would face difficulties in pursuing recourse through legal means. In this case, ETI member NEXT had been sourcing from Neo Trend. Clean Clothes Campaign (CCC) members filed a complaint to ETI on behalf of Neo Trend’s former workers. In response to ETI’s investigation of the complaint, NEXT provided evidence of orders received, and the full amounts paid for those orders. The evidence demonstrated a significant gap in time between the last order and when the company was closed. This was at the time of the onset of COVID which only served to complicate matters.

Attribution

When considering complaints, ETI uses two points of reference. The ETI Base Code, which sets out the rights of workers and the UN Guiding Principles on Business and Human Rights (UNGPs), the international framework that gives guidance on the responsibilities of business to respect workers’ rights. In this framework the concept of attribution is important. This means the extent to which the company has directly caused or contributed to the harm done. While it took time to determine and examine all the evidence available, ETI concluded that in this case it was not possible to demonstrate that the action or inaction of NEXT had caused or directly contributed to the harm to workers, given the time factor and the actions taken by the company in line with government guidance due to COVID. ETI has a robust process for complaints which is overseen by the ETI Board and in this case when appealed was considered by a committee comprising a trade union, NGO, and company member, chaired by our neutral board chair.

Remedy

We agree with CCC, the workers affected clearly deserve recompense for the harm done. Legal recourse, although there in theory, in practice was not accessible and very unlikely to have succeeded. The clear villain in this case is the owner of Neo Trend who knowingly closed the business without informing workers or paying what they were owed, even though the company had been paid for orders delivered.

In other cases, ETI has determined member companies to be at fault and has required recompense which has been delivered. While we strongly agree that the Neo Trend's workers have been treated poorly, the evidence to hand and our interpretation of the UNGPs did not lead us to the decision to compel company member NEXT to deliver recompense. We recommended NEXT consider a good will gesture but stopped short of demanding this.

Responsible closure

During COVID and through the current cost of living crisis many factories and businesses are struggling or indeed ceasing to trade. It is incumbent on them and their customers to ensure that if this is inevitable, then at the very least workers are fully paid salaries earned, any severance and ideally compensated for the fact that they will take time to find new employment. At this time buyers should be undertaking greater financial due diligence to understand which suppliers might be at risk and working with them to secure their future where possible, or to close responsibly if not.

Mandatory human rights legislation

Member organisations, campaigners and other stakeholders pushing for progress in global supply chains have limitations in what they can achieve, this is why ETI alongside many others has been advocating for effective mandatory human rights due diligence legislation, to strengthen the ability to hold companies to account on the impact they have on human rights. Laws already exist in Germany, Norway, and France. The UK has fallen behind in providing support for companies already undertaking human rights due diligence and ensuring that this is the norm through the support of legal requirements. We will continue to advocate for mandatory legal measures which align with the UNGPs, require effective stakeholder engagement, make specific considerations for people of heightened vulnerability, and include root cause analysis.