Settlement reached in PT Sarasa case

Nov 2nd 2004, In February 2004 the PT Sarasa factory in Indonesia that produces for Polo Ralph Lauren, announced that it was closing down after workers demanded the annual wage increase provided for in their collective bargaining agreement.

More background info on this appeal >>

The last month of pressure on buyers and management to settle the PT Sarasa resulted in an agreement on October 11. The agreement included the promise to re-open the factory, under new investment, and reinstate 800 workers. This is good news, however the terms of the agreement are not in keeping with Indonesian legal standards, and are not up to the standards of the verdict reached in this case by the Central Labor Court (the P4P court).

Read the Sarasa agreement >>

Several PT Sarasa clients, including Polo Ralph Lauren, The Limited, and Jones New York, contacted management to push them to settle this dispute. These interventions were likely an important factor in persuading Sarasa management to return to the negotiating table. Continued pressure from these brands could result in a settlement that meets domestic legal standards.

December 2004 update!:
PT Sarasa Nugraha is expected to reopen in January 2005;
management has promised to reinstate 800 workers. At this point in time, the campaign to pressure management to improve upon the agreement that was reached with workers in October has been suspended. However, the CCC will continue to monitor the situation at PT Sarasa and should continued efforts be needed to see that management lives up to the promises already made, requests for action will be posted to the website. The CCC thanks everyone who has helped to push for justice for the workers at PT Sarasa Nubraha!

The main points that need to be changed in the current agreement if legal compliance is to be achieved are: reinstatement of the 800 people with their previous seniority levels and without a three-month trial period, payment of a severance package consistent with the P4P's verdict to the 200 employees accepting termination, and full payment of five months back wages to all employees. Both management and employee representatives agreed that employees can choose among themselves which 800 of the employees will return to work in the reopened facility.

The employees' bargaining committee decided not try to press further for the rights of employees that have already accepted the 25% x PMTK severance package over the past several months (thus, the total number of employees bargaining for a solution at this point is 1000).

One last issue not addressed in the agreement, but which the returning employees have expressed great concern for, is that of daily transportation to and from the factory. PT Sarasa used to provide daily transportation through contract with a local bus company. It has not yet been agreed that the new investors will also provide this transportation. Many of the employees live far from the Balaraja plant and would have to pay up to Rp 11,000 (approx. 50% of their daily salary) if this transportation is not provided.

The CCC is pleased that complete closure of the Balaraja Unit has been avoided and that 800 workers have been promised reinstatement. Continued monitoring of the situation will be needed to ensure that management lives up to these promises, and that in the future union rights will be respected at PT Sarasa factories.

At this time the CCC, the Campaign for Labor Rights in the United States, and other labor rights advocates working on this case continue to encourage the companies that produced their goods at PT Sarasa to push PT Sarasa management to bring the settlement up to legal standards. Please send a message to the brands thanking them for the action they have taken to push for respect for workers' rights at PT Sarasa and request that they contact management again to bring the October 11th settlement up to Indonesian legal standards.

The Main Differences between the Severance Packages of the Central Labor Court's Verdict & PT Sarasa Owners