Regarding the complaint to the Swedish National Contact Point for

the OECD Guidelines for Multinational Enterprises relating to

Electrolux Thailand

May 2, 2013

Recipient:

Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

Swedish Ministry of Foreign Affairs, 103 39 Stockholm, Sweden

Kristin Paulsson, counsellor, Sustainable trade and entrepreneurship

Tel: +46 8 405 39 73, e-mail: kristin.paulsson@gov.se

For AB Electrolux:

Lars Worsoe-Petersen SVP, Human Resources Sankt Göransg 143, 112 17 Stockholm, Sweden Tel: +46 8 738 60 00 e-mail: lars.worsoe-petersen@electrolux.se

Henrik Sundström VP Group Sustainability Affairs Sankt Göransg 143, 112 17 Stockholm, Sweden Tel: +46 8 738 60 00 e-mail: henrik.sundstrom@electrolux.se

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 2

1. Summary

In the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational

Enterprises (“Guidelines”), on April 9 2013, SwedWatch states that Electrolux subsidiary in Thailand

(“Electrolux Thailand”) has acted in breach of the Guidelines on four points:

1. Removing and immediately suspending the chairperson of the local trade union.

2. Encircling protesting workers with barricades and preventing them from leaving the site of the

factory.

3. Filing a lawsuit against suspended members of the local trade union in court with the aim of

terminating their employment.

4. Terminating all workers who had participated in the protests.

SwedWatch has further proposed the implementation of five recommended actions to support

Electrolux’ future compliance with the Guidelines.

In summary, for the reasons set out herein, Electrolux position is that the actions taken by Electrolux

Thailand in the context of the chain of events leading up to the dismissal of the 90 workers and the

suspension of the 8 union representatives do not amount to a contravention of the Guidelines.

It should be noted that SwedWatch’s complaint contains information regarding the chain of events that

Electrolux considers incorrect. Electrolux is willing to engage in a dialogue with SwedWatch with the

intent to clarify possible misunderstandings and to resolve outstanding matters.

With respect to the recommendations proposed by SwedWatch, and assuming that SwedWatch’s views

are (at least partly) based on incorrect and incomplete information; Electrolux does not believe that

there is a conflict between Electrolux and SwedWatch regarding such measures. Electrolux has in a

dialogue with IF Metall agreed to undertake a mediation process which includes an offer for

reemployment. Electrolux is, and has been, fully committed to respect the Guidelines.

For the above reasons, Electrolux is of the opinion that SwedWatch’s complaint should not be handled

before the Swedish National Contact Point at this point in time.

If the Swedish National Contact Point would still decide to handle the matter and issue a decision based

on the substance of the complaint, Electrolux respectfully requests to be provided with the opportunity

to complement its position regarding such items which the Swedish Contact Point considers relevant

before it renders its views on the matter.

Since the opening of the Rayong plant in 2004, Electrolux has steadily increased its investment to

establish the factory as one of our global manufacturing facilities and a center of excellence. Today there

are approximately 920 employees at the Rayong facilities.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 3

2. Electrolux standpoint

Electrolux fully respects the rights to organize and bargain collectively.

The strikes at Electrolux Thailand were illegal as they did not follow the dispute escalation process laid

down in Thai Law and also relate to items already covered by the existing collective agreement. The

current agreement is in place until December 2013 and the collective bargaining negotiation period for

the next agreement starts in November 2013.

The dismissals/suspensions shall be seen in the light of a series of events, where the strike on January 11

was not an isolated event. The local management engaged in dialogue with union representatives on a

number of occasions, from December 18 when the salary structure was first presented, including

January 10, when the first illegal strike took place. During the same period, the company experienced

reoccurring slowdowns, disruptions in the operations and a ban on overtime. During this period the

union representatives and employees received several warnings, both orally and through postings in

written form, of the potential consequences of illegal collective action.

The basic wage structure was adjusted in April 2012 and in January 2013 to comply with new legislation.

Further, in spite of the fact that this was not a bargain period, management engaged in dialogue with

the union representatives to resolve the concerns. As a result, an agreement to raise the annual bonus

for 2012 was reached on January 10. The announced salary increases were honoring the existing

collective agreement, in addition to the adjustment of the legal minimum wage.

Electrolux Thailand has taken a responsible approach to adjusting the salary levels following the new

legislation in April 2012 and in January 2013, adjusting not only the lowest paid workers, but also more

senior levels. The result after the two adjustments is a slightly more compressed salary structure but

upholding the collective agreement conditions. The collective agreement will be re-negotiated in

November 2013.

A conciliation process, in accordance with the mutual understanding between Electrolux and IF Metall

on February 27, has been initiated and work is underway to complete this process. All dismissed workers

and the suspended union representatives have been offered to come back to work subject to conditions

laid out in the mutual understanding with IF Metall. The status of the conciliation process is as follows:

35 of the dismissed workers who have applied for re-employment have started to work;

The 8 union representatives have been offered to come back to work. The company will

withdraw the pending procedures involving those union representatives who agree to come

back.

Finally, Electrolux has, unrelated to the situation in Rayong, a number of activities underway to further

strengthen both the implementation of the Electrolux Code of Conduct and foundational values, and our

processes relating to industrial relations.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 4

3. Response to SwedWatch’s claims

“1. Removed and immediately suspended the chairperson of the local trade union. “

The chairperson was suspended following repeated warnings and requests for him to return to work.

Further, the union leader walked willingly to the gate and there was no use of force. Use of force is

illegal in Thailand and would further be a violation of the Electrolux Code of Conduct.

“2. Encircled protesting workers with barricades and prevented them from leaving the site of the

factory.”

This information is also incorrect. The tape was put up after the dismissal of the workers, in order to

cordon off the group from the manufacturing buildings and avoid protests taking place inside the

factories. The cordoned area was open to the factory gate and the gate was open at all times. The

dismissed workers were requested to leave the premises on several occasions. The taped area was to

define where they could remain until they chose to leave. Several toilettes were available within the

cordon area. The group was provided with water by the company. Pregnant women were specifically

attended with drink and food and also advised by the company’s Safety and Environmental Officer that

they would not be dismissed and should move to another area for their health. The pregnant women

chose to stay with the group all day long and are still employees with the company. Enclosed hereto are

pictures supporting how the tape was applied and a map over the facilities.

“3. Filed a lawsuit against eight suspended members of the local trade union in court with the aim of

terminating their employment.

Furthermore, Electrolux promised that the suspended union members would be able to return to work

and the company’s lawsuit against the eight union members would be withdrawn at the initial meeting

with the court on March 29th. This promise was however not upheld, and instead, a new hearing was

scheduled for June 5th.”

The company is prevented from taking any disciplinary action against the registered union

representatives who participated in the illegal strikes, without the approval of the Thai Labor Court.

These people were therefore, after having received several warnings in the period preceding the strike,

suspended pending a Labor Court decision. The filing of the case with the Thai Labor Court was made to

comply with the local laws.

The Thai Labor Court provides for a conciliation/arbitration process where the court shall support the

parties in reaching an agreement. The mutual understanding from February 27 between Electrolux and

IF Metall was that Electrolux and the eight suspended union representatives would participate in the

conciliation process lead by the Labor Court, scheduled for hearings on March 29. However, the Labor

Court postponed the hearing to June 5.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 5

In light of the court’s decision to postpone the procedure and in order to expedite the process the

company has delivered the offer to the union representatives outside of the formal conciliation process,

honoring the mutual understanding with IF Metall. The offer has been presented to the union

representatives.

“4. Terminated all workers who had participated in the protests. “

As described above, the dismissals shall be seen in the light of a series of events, where the illegal strike

on January 11 was preceded by reoccurring slowdowns, disruptions in the operations and an illegal

strike on January 10. Through Team leaders and union representatives, formal warnings had been

communicated and it had been clarified that the consequence of refusing to work would result in

dismissal.

Several of the workers that participated in the illegal strike initially, did go back to work. Those who

continued to refuse to resume work received several warnings that the consequence of their actions

would be dismissal. 90 persons were dismissed following the strike. All 90 dismissed employees have

been offered to be rehired on conditions laid out in the mutual understanding with IF Metall.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 6

4. Response to the indicated breaches of the OECD Guidelines for MNEs

V. Employment and Industrial Relations

Point 1 a)

“Respect the right of workers employed by the multinational enterprise to establish or join trade unions

and representative organisations of their own choosing.”

[SwedWatch further refers to the right to collective bargaining and the ILO convention 98 where

workers should be protected from anti-union activities by the employer. SwedWatch claims that the

removal of the Union leader by use of force and the dismissal of the striking workers are clear anti-union

activities.]

Electrolux is firmly supporting the right to establish or join trade unions. Electrolux has also supported

the forming of unions at the Rayong facilities. The company negotiated a collective agreement by the

end of 2011 with the union representatives, covering 2012 and 2013. Additionally, in 2010 and 2012,

the company arranged visits by IF Metall at the Rayong facilities to inform employees, union

representatives and management regarding union representation and social dialogue.

During the salary revision in 2012/2013, the local management engaged in dialogue with union

representatives on a number of occasions, although the timing was outside the bargaining period – i.e.

from December 18 when the salary structure was first presented, including on January 10 when the first

illegal strike took place.

The collective actions did not follow applicable regulation and employees were warned of the

consequences of continuing the illegal strike.

Point 3)

“Promote consultation and co-operation between employers and workers and their representatives on

matters of mutual concern.”

[SwedWatch claims that the company did not engage in sufficient dialog and that insufficient

information was not provided by the company to the union representatives for them to negotiate

effectively and that a written warning should have been enough – the dismissals and suspensions were

too radical actions.]

Extensive information was shared and discussed with the union representatives during formal

union/management meetings on December 18, 19 and 21. The salary structure was also posted on

notice boards following an all employee meeting on December 21.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 7

During the first illegal strike on January 10, the management and the union leader met to once more

discuss the salary revision and the union’s additional request regarding the transfer of temporary

contract workers to be transferred to permanent positions. An agreement was met on January 10

covering:

1. The bonus increase from 1.85 to 2.0 monthly salaries for 2012;

2. Introduction of new KPIs with a potential benefit in April; and

3. Sub-contracted employees to be transferred to permanent positions.

The union leader agreed that the issue regarding wage structure was closed and that work would be

resumed. With respect to warnings and other measures taken by Electrolux Thailand preceding the

dismissals and suspension, see above.

Point 1e)

“Be guided throughout their operations by the principle of equality of opportunity and treatment in

employment and not discriminate against their workers with respect to employment or occupation on

such grounds as race, colour, sex, religion, political opinion, national extraction or social origin, or other

status, unless selectivity concerning worker characteristics furthers established governmental policies

which specifically promote greater equality of employment opportunity or relates to the inherent

requirements of a job.”

[SwedWatch claims that the agreement to rehire the dismissed workers, but at the same time proceed

with a legal case against the union representatives constitutes a discriminatory act against the union

representatives.]

There is no discrimination between any of the workers in Rayong, including between the suspended and

the dismissed workers. According to Thai law the company is not allowed to take any disciplinary action

against union representatives without the approval of the Thai Labor Court. A procedure has been

initiated to comply with local laws. As described above, the union representatives have been offered to

return to work under the same conditions as the dismissed workers.

II. General Policies

Point A5)

“Enterprises should: (..) Refrain from seeking or accepting exemptions not contemplated in the statutory

or regulatory framework related to human rights ,environmental, health, safety, labour, taxation,

financial incentives, or other issues.”

[SwedWatch claims that Electrolux aims to dismiss the union representatives through the legal

proceedings, and this would be a way to seek exemptions in the regulatory framework.]

As the company is not allowed to take any disciplinary actions against the union representatives without

the approval of the Thai Labor Court, the filing is consistent with the regulatory framework. The purpose

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 8

of this regulation is to ensure that union representatives are protected from discriminatory disciplinary

actions due to their union activities.

IV. Human Rights

Point 1)

“Enterprises should (..) Respect human rights, which means they should avoid infringing on the human

rights of others and should address adverse human rights impacts with which they are involved.”

[SwedWatch claims that the encircling of the workers by tape and security guards is a breach of human

rights. If the company has another version of the situation, an investigation should be initiated to

determine facts.]

The cordon tape was not an infringement on the workers’ freedom to voluntary leave the factory area.

The tape was put up in order to cordon off the group from the manufacturing buildings and avoid

protests taking place inside the factories. The cordoning ensured a defined space where the dismissed

group could remain until they chose to leave the site.

The cordoned area was open to the factory gate and the gate was open at all times. See attached

pictures. The dismissed workers were requested to leave the premises on several occasions. Several

toilettes were available within the cordon area. The group was provided with water by the company.

Pregnant women were specifically attended with drink and food and also advised by the Safety and

Environmental Officer that they would not be dismissed and should move to another area for their

health. They chose to stay with the group all day long and are still employees with the company. See

attached pictures and the map over the facilities.

I. Concepts and Principles

“Obeying domestic laws is the first obligation of enterprises. The Guidelines are not a substitute for nor

should they be considered to override domestic law and regulation. While the Guidelines extend beyond

the law in many cases, they should not and are not intended to place an enterprise in situations where it

faces conflicting requirements. However, in countries where domestic laws and regulations conflict with

the principles and standards of the Guidelines, enterprises should seek ways to honour such principles

and standards to the fullest extent which does not place them in violation of domestic law.”

[SwedWatch claims that Electrolux has acted in breach of the OECD Guidelines, but there is no Thai

legislation that justifies these breaches.]

As described, the company has acted in accordance with Thai labor laws, and in accordance with the

mutual understanding reached with IF Metall and not acted in violation of the Guidelines. Electrolux

refers to the information set out above, which provides Electrolux views on the chain of events, etc.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 9

4. Electrolux response relating to the recommendations

The recommendations by SwedWatch coincide with the company’s approach, both in relation to the

recent events in Thailand and in general.

“1. Withdraw the lawsuit against the suspended members of the trade union and allow them to return to

work;”

All suspended union representatives have been offered to come back to work on same employment

conditions as prior to January 11, in line with the discussions with IF Metall. This includes that union

representatives express their intent to act according to Thai law and collective agreements. On these

conditions, Electrolux will withdraw the case from the Labor Court.

“2. Establish clear guidelines and mechanisms for the management of complaints and inquiries from

employees;”

Training activities are planned for union representatives and local management in Thailand, to help

normalized industrial relations and a constructive social dialogue, supported by IF Metall.

Additionally, Electrolux is continuously working to strengthen industrial relations, including developing

clear global guidelines on industrial relations for the company, supported by training activities.

Discussion is ongoing to further enhance implementation of the International Framework Agreement.

Electrolux is also rolling out a global Ethics Program, including training and a 3rd party operated Helpline,

where employees can anonymously report concerns. Implementation in Asia, including Thailand, is

underway.

“3. Carry through on the verbal decision to offer the terminated employees reemployment and ensure

that their reemployment does not lead to conditions worse than their previous employment;”

All dismissed workers and suspended union representatives have been offered to come back to work on

same conditions, in line with discussion with IF Metall.

“4. Implement centralised ethical policies and guidelines for negotiation routines throughout the entire

organisation through internal training activities.”

Please see point 2 above.

“5. Electrolux should improve its follow up of the global framework in Thailand in order to thereafter, as

far as possible, comply with the contents of the OECD Guidelines.”

Please see point 2 above.

As part of Electrolux ambitions in this field, the company is currently updating its Code of Conduct and

Workplace Standard, with the aim of further clarifying labor standards, including grievance mechanisms,

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises

relating to Electrolux Thailand

May 2, 2013 10

in line with the UN Guiding Principles on Business and Human Rights, the OECD Guidelines 2011 and the

International Framework Agreement.

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises relating to Electrolux Thailand

May 2, 2013 12

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises relating to Electrolux Thailand

May 2, 2013 13

Regarding the complaint to the Swedish National Contact Point for the OECD Guidelines for Multinational Enterprises relating to Electrolux Thailand

May 2, 2013 14