Ethical Performance
inside intelligence for responsible business


Nike endorses settlement on supplier’s unpaid overtime

March 2012

A Nike supplier has agreed to pay Indonesian workers $1m (£630,000, €750,000) in compensation for unpaid overtime after a decision that could have implications for other multinationals’ supply chains.

PT Nikomas reached the out-of-court settlement after 11 months of negotiations over unpaid overtime of 600,000 hours by 4,500 workers.

Nike endorsed the payment, saying it was pleased the company was tackling past problems, but that it would also monitor practices at the factory.

The payout looks likely to spread beyond the practices of one Nike factory. Abuses of working hours and proper payment elsewhere in Indonesia, thought to be widespread, are expected to be targeted now, especially given the Indonesian Protocol, an agreement signed last year by many textiles companies allowing the free formation of unions.

The Indonesian trade federation Serikat Pekerja Nasional said: “This has the potential to send shock waves through the Indonesian labour movement.

“Now that the precedent has been established, the leadership at SPN is gearing up to take on the fight for any workers who have been subjected to forced overtime without pay. We have only just begun.”

Companies with suppliers in Indonesia, including Adidas and Puma, as well as other Nike factories, could come under scrutiny.

The PT Nikomas payout, however, was limited by Indonesian law, which allows compensation going back only a maximum of two years.

Nike | Asia | Supply Chain Ethics

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