Social audit on workers and employees conditions at work in Vietnam

Social Audit Case Study

Dragon Sourcing Your Tailored Approach to Emerging Markets

Table of Content

© 2015 Dragon Sourcing. All rights reserved.

1. Methodology

2. Executive Summary

3. Social Audit Result summary

4. Social Audit Answers

2

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 Equipment4. Social and Safety places5. Payroll worksheets and employment contracts6. Management Interviews7. Employee Interview including:

Child Labor Gender DiscriminationForced Labor Harassment and AbuseFreedom of association Grievance ProceduresDiscipline and TerminationWorking HoursCompensation and BenefitsEnvironment, Health and Safety

© 2015 Dragon Sourcing. All rights reserved.3

Table of Content


1. Methodology




4

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 was conducted in Vietnam

As a result, client was satisfied by the working conditions in this factory.


Table of Content


1. Methodology




6

Social Audit Result summary


FINDINGS FACTORY FEEDBACK Weight(%)

Vendor score

1. CHILD LABOR Yes - it is correct. We do not use child labour. Workers are from 18Yrs or over 15% 4

No child labor in factory2. DISCRIMINATION Follow government law and there is no

discrimination in factory 10% 4No3. FORCED LABOR Yes - All workers signed a contract with the

company and overtime voluntarily 10% 4No4. HARASSMENT AND ABUSE Yes 10% 3No5. FREEDOM OF ASSOCIATIO

Yes 5% 4Yes, have labour Union in company and was voted by workers6. GRIEVANCE PROCEDURES

Yes 5% 4Good. All were solve by meeting, discussion to meet requirment of workers and management7. DISCIPLINE AND TERMINATION Yes 5% 4Good. 8. WORKING HOURS Yes 5% 3There's over time, but comply with law. 9. COMPENSATION AND BENEFITS

Yes 15% 4Good. Salary of worker is so high and have allowance for Gasoline and working hard10. ENVIROMENT, HEALTH AND SAFETY Always to give the best working enviroment for

workers 15% 4The working enviroment is very good for workers. 4 interviewed employees are satisfied working in this factory11. SUBCONTRACTORS We do not have any subcontractor 5% 4No OVERALL RATING: 100% 96.25

ScoringLevel Score

Excellent > 90

Good 70 - 90

Acceptable 50 - 70

Poor < 50

Social Audit Action Plan


Problems Action required Lead Completion date Update

Not all employees have social insurance

Implement to all employees and keep the record. HR manager

Waste material is not managed well.

Build waste management system and have a training. Factory Director

Some employees are paid by cash.

All employee payment should be paid by bank transfer. Finance manager

Suppliers are not audited. Need a system to evaluate supplier’s social responsibility. SQE manager

Table of Content


1. Methodology




9

1. Number of Employee per department


Department Male + Female Department Male + FemaleAccounting 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 15 Stock 7

2. Social Documents verification


Labor Contract Working Time card record Payroll for Jan, 2012

Safety training record Employee handbook Company Procedure

Daily information from Labor Union

3. On site Security indication and Equipments


Fire fighting evacuation map

Exit sign and fire fighting equipment

Exit Sign in Workshop Fire-fighting equipment

Exit sign & alarm Emergency lights

4. Social and Safety places


Canteen Changing Room Washing Uniform Dept

Suggestion Box Labor Union Room Infirmary

5. Payroll worksheet


Employee Attendance (unit: hour) OT (unit: hour) Salary (VND) Allowance (VND) Total Deductions Total

Name Dept and Position Entry Leave

OT on working

days

OT on Weekends

OT on Public

holiday

RegularPay / hr

Regularpay

OTPay / hr

OTpay

Perfect attendance Bonus Gross

Pay Taxes

Social+ health

+unemployment

Insurance (8.5%)

Net Pay

1 Nguyen Cong Hoanh Finishing 208 0 0 0 10,817 2,249,936 0 400,000 2,649,936

225,750 2,424,186

2 Nguyen Tien Duy Finding Making 208 0 0 0 10,817 2,249,936 0 400,000 2,649,936 225,750 2,424,186

3 Do Hai Dang Setting FB 208 0 0 0 10,817 2,249,936 0 2,249,936 225,750 2,024,186

4 Tran Ngoc Uyen Production Office 208 28 0 0 13,702 2,850,016 20,553.0 575,484.0 480,000 3,905,500

238,500 3,667,000

5 Ly Van Hoa Setting Factice 208 0 0 0 10,817 2,249,936 0 170,000 2,419,936 225,750 2,194,186

6 Lam Thi Tu Trinh Wax 208 0 0 0 10,817 2,249,936 0 400,000 2,649,936 226,950 2,422,986

7 Nguyen T. Hong Thi

Filing Special Team 208 0 0 0 10,817 2,249,936 0 400,000 2,649,936

225,750 2,424,186

8 Huynh Tan Loc Refining 208 18 0 0 12,019 2,499,952 18,028.5 324,513.0 400,000 3,224,465 230,500 2,993,965

9 Huynh Thanh Tung Finding Making 208 0 0 0 10,817 2,249,936 0 2,249,936

218,538 2,031,398

10 Nguyen Minh Thy Polishing Factice 208 0 0 0 12,173 2,531,984 0 400,000 2,931,984

230,500 2,701,484

6. Management Interview


General Information1

2

3

4

Workforce Profile5

6

7

8

Child Labor9

10

11

12

13

Discrimination11

12

13

14

15

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

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

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

PART I: MANAGEMENT INTERVIEW

Does the factory have its own social policy? If yes, obtain a copy. Yes (to be shown on site)

Mr Lo Quoc Thanh - HR& Admin Manager

No

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

What are the criteria for promoting workers?

Yes

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

9 people from France and 1 person from Hong Kong

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

Yes

Worker continues to work at their position

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

via the ID card and CV

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

18 years old

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

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

4.7%

Does the factory experience any social compliance audit previously?

What rate of employee turnover does the factory experience yearly?

Which countries/ provinces do they come from?

No

Does the factory obtain any labor law exemptions from its local government? If so, obtain a copy of the exemption.

Around 1 %

No

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

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

Skill and fair performance

How does the factory verify age during recruitment?

Yes

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

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

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

6. Management Interview


Forced Labor

16

17

18

19

20

21

Harassment and Abuse22

23

Freedom of Association24

25

26

27

Grievance Procedures

28

29

Discipline and Termination 30

If yes, please show copy?

31

32

33

PART I: MANAGEMENT INTERVIEW

Yes. Following the vienamese labour law

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

Is there any abuse occurred or has been reported at this facility?

What actions have been taken to correct such incidents?

Is there a recognized union in this facility?

Yes

Yes

How do the factory employees bring work-related issues and grievances to management’s attention if there is no union?

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

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

Yes

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

Yes

1 year, 3 years and then, inlimited contract

No

No

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

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

NAIf yes, why, for how long?

Yes

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

Are workers assigned overtime on a voluntary basis?

Are workers in this facility covered by a collective agreement?

Are the union representatives chosen by management? No

Meeting - Discuss - Agree solution - Action

Are the disciplinary rules align with local government authority? Yes

Does the company keep record of fines / disciplinary action?

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

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

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

How does the factory communicate the disciplinary rules to workers? Hand book - Notice board - Face to face meeting

Working Hours34

35

36

37

38

39

40

41

42

43

44

Compensation and Benefits45

46

47

48

49

50

51

52

53

54

55

Environment, Health and Safety56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

Subcontractors71

72

Yes

Have workers been trained to use PPE? Yes

Are there fire extinguishers in all sections? Yes

Does the factory have a fire alarm? Yes

Are all emergency exits unblocked and unlocked at all time? No

Yes

Are workers trained for fire precaution and evacuation? Yes

Are evacuation drills practiced? Yes

Yes

Yes

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

Yes

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

3 hours per day maximum

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

Do any employees perform work at home?

System to record the time spent per worker

48h

1 shift

8 hours/ shift

What are the standard employee working hours per week?

How many shifts does the factory work?

What are the hours for each shift?

When are your peak months of production?

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

March - April -October - November - December

depend on order

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

2,250,000 vnd

Are any workers excluded from receiving benefits?

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

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

Does this factory use subcontractors for any operation?

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

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

Are workers provided appropriate PPE by factory?

Are any chemicals and flammable products used in the production?

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

Does factory have first aid kits?

Does factory have dormitories?

Are there emergency exits on all floors? Yes

Yes

No

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

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

No

If yes, which ones?

Mainly by ATM , some case by cash

No

Yes

Are any amounts withheld from employees' wages?

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

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

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

If yes, for what reason and how much?

Yes

on the fifth of each month

Yes

Yes

No

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

If yes, describe:

No

If home work is performed, how are employees paid?

Yes

Are all workers paid overtime at the legal rate?

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

Yes

Yes

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

What are the average overtime working hours per week?

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

6 days

7. Employee Interview


1

2

Yes No

3

> 16Y 16 - 18Y 18 - 20Y > 20Y

4

5

Yes No

6

Yes No

7

Yes No

8

Yes No

9

Yes No

10

Yes No

11

12

Yes No

13

Yes No

14

Yes No

15

16

Yes No

Meeting, Dissuss, Remind with The Supervisor or HR Department

Child Labor

Discrimination

Forced Labor

Harassment and Abuse

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

X

Mandatory leave

Freedom of Association

X

Discipline and Termination

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

Is there any penalty if resign within the contract period?

does not know since her dept is only female

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

X - just check health one time per year

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

Is OT voluntary?

X

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

Free to resignatePosition stand

X

X

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

X

X

Any workers' representative or workers' committee in this factory?

X

What is the grievance procedure in this factory?

Grievance Procedures

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

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

X

Yes - unlimited contract - Keeping a copy

What is the youngest age working in this factory?

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

Depending on the mistake ,factory will remind, advise and if it is very heavy mistake, I will be fired

She was born in 1978 - Yes

X

Does your supervisor/line-leader yelling or abusing to you?

What happened if you broke the factory rules?

Employee 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



17

0 - 3Y 3 - 6Y 6 - 10Y > 10Y

18

< 40H 40 - 48H 48 - 56H > 56H

19

0 - 6H 6 - 9H 9 - 12H > 12H

20

21

< 4D 4 - 6D 6 - 8D > 8D

22

0 - 5D 5 - 7D 7 - 10D > 10D

23

24

0 - 3D 3 - 5D 5 - 7D > 7D

25

X

26

Yes No

27

15 - 20D 20 - 30D 30 - 45D > 45D

28

Cash Card Cheque

29

Yes No

30

Yes No

31

Compensation and Benefitsv 18 DAYS

How many annual leave do you have per year?

max 18 hrs/week

How many rest day per month?

The supervisor record and time record machine

X

working 19 Yrs

X

How to tracking the regular and OT hours??

How is the OT salary calculated?

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

X

How long you have been working in this factory?

48h/ week

X

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

5/3/2012 - insurance

What is the standard working hours per week?

What is the average OT hours per week?

Working Hours

Do you have payslip given?

How many day off for the last public holidays? Any holiday pay?

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

X

Follow government law (150% basic salary on normal day, 200% basic salary on weekend, 300% on holidays)

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

Piecely-rate Daily-rate Hourly-rate Monthly-rate

Yes - Allowance for Gasoline+ quality of the work

Are you paid by cash/card/cheque?

5th of each month

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

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



32

Yes No

33

Yes No

34

2 - 4P 4 - 6P 6 - 8P > 8P

35

Yes No

36

Yes No

37

Yes No

38

Yes No

39

Yes No

40

X

41

Yes No

42

Yes No

Bad Poor Acceptable Good

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

Is dormitory clean? (if applicable)

N/A

X

Do you stay in the dormitory?

How many people per room? (if applicable)

Is dormitory free of charge? (if applicable)

Is canteen free of charge? (if applicable)

Do you eat in the canteen?

X

Is canteen sanitary and clean? (if applicable)

X

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

What do you think about the working condition here?

X

X

Environment, Health and Safety

X

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

X

N/A

Date post:	15-Apr-2017
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Social audit on workers and employees conditions at work in Vietnam

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