Dear friends,

Workers waiting outside of Hermosa to demonstrate for their rights.

We are contacting you to ask for your support for the workers of the Hermosa factory in San Salvador (EL Salvador), which closed in may last year leaving 190 workers (among whom were 64 trade union members) jobless.

The factory has a history of violations of labour standards, specifically concerning payment of wages and social security provisions. The closure followed shortly after the workers had registered a union. After the closure, it turned out the owner, Mr. Montalvo, has failed to pay 353.000 USD of the legal premiums for social security and pension funds since 1996, building up a huge debt with various government agencies.

Since the closure, workers have been demanding to be re-hired as well as payment of their legally due severance money, pension fund money, outstanding wages, and overtime payments (since 2004).

The workers' legal representatives estimate that for 63 of the organized workers the amount due in outstanding wages and various other payments (excluding pension funds) amounts to an additional minimum 127,823.30 USD.

Workers are holding both the brands sourcing from Hermosa over the past years and the government responsible. Buyers at Hermosa include Wal-Mart (White Stag), Nike, Kids Connection, adidas, Reebok, Russel Athletic and Speedo . So far, none of these demands have been met.

Please find below a short history and some background to the case, steps taken towards the buyers, the owner and the Salvadorian authorities to date, and an action request.

The Hermosa workers need your support!

Violations of payments have been occurring repeatedly over the years, including illegal deduction of wages for illness, delaying of payments, failure to pay overtime salaries or maternity benefits. The owner for example deducted quotas for credits and the social housing fund from the salaries, but did not transfer it to the banks/ the fund. As a result the housing fund sent eviction orders to the workers. When workers asked the owner to pay them regularly he told them he had no money. But at the same time he opened a second factory in Guazapa ("MB Knitting"), which is still producing today.

Around Christmas 2004 a group of workers decided to form a union at Hermosa, which was registered at the ministry of labour on April 3, 2005. On April 18 the union applied for an investigation of the Hermosa factory at the Ministry of Labour. The workers informed the Ministry about the debts Hermosa had with them and about the labour rights violations. In a meeting at the Ministry on May 2 the Hermosa owner admitted there were problems in Hermosa but asked for more time to pay outstanding wages till he had new orders. In the same week he brought the raw materials from Hermosa to MB Knitting and also some of the machines. He told the workers that he would stop production and suspend the workers for three months. On May 11 some of the workers occupied the cafeteria of the factory till June 8. When they received a decision of the labour court that their occupation was illegal and that they should take up work again on June10, they left the factory. When workers came to the factory on June 10 they found a sign that work will start again on July 13, which never happened.

Some workers (none members of the union) were since then rehired by the second plant owned by Mr. Montalvo. The remainder were discharged with the promise they would be rehired, which to date also did not happened.

Since then, workers have been protesting the closure, demanding for the factory to re-open and for them to be re-hired, and that their legally due severance money, pension fund money and outstanding wages as well as overtime payments would be paid. The owner claims to have placed many of these employees on unpaid suspension, a legal status that enables an employer to delay payment of severance when a factory is temporarily closed, pending the resumption of operations. The time period allowed for this status however has elapsed.

In El Salvador several civil society groups formed a coordination to support the Hermosa workers. These include the women's organizations Las Melidas, Las Dignas, ORMUSA, MSM, the unions CSTS and FEASIS, FESPAD and La Mesa Sindical de la Maquila (Round union table of the Maquila). The workers have undertaken many actions, including protesting in front of the Hermosa factory for months, they organized a demonstration at the ministry of labour, and blocking the streets to the second factory of the Hermosa owner, and a demonstration in front of the Hotel where the adidas representative for social affaires was hosted.

There is strong evidence that Hermosa workers, who have participated in demonstrations and other activities in protest of the facility's practices, have faced blacklisting by other garment factories in the area. This group of workers has also been subjected to acts of intimidation and threats of violence in response to their vocal criticism of Hermosa. Workers now are punished triple: not only did they work for years in a factory that failed to respect national and international labour standards, they also lost their jobs due to organizing (which is their right) and are discriminated against when it comes to rehiring, and finally they do not get their severance pay (which they are legally entitled to).

On October 10 2005 the CIR (member of the German Clean Clothes Campaign) first contacted adidas. The company subsequently sends a representative to El Salvador, and asked GMIES (a local independent monitoring group) to assist them in their investigations, and in contacting the workers and the groups supporting them. Since GMIES has a good cooperation with CIR and its El Salvador partners, the Clean Clothes Campaign (CCC) approved of this step, but urged adidas to hasten, since the workers financial situation was quite desperate. On 7 December CCC International contacted Nike and Russel Athletic, both of whom indicated they would investigate the matter, and cooperate with adidas. As these three brands all are Fair Labour Association (FLA) members CIR filed a complaint to the FLA as well. CCC asked Maquila Solidarity Network (MSN) to contact Wal-Mart, which was done on December 20. Over the past months, the US based Worker Rights Consortium also contacted several of the brands, and has raised the issue with the universities, who hold licensing contracts with adidas, Nike and Russel. CCC also recently contacted Reebok, whose connection became confirmed earlier this month, and Speedo.

CCC underlined in its communication that, even though legally the responsibility to pay severance pay belongs to the employer, in this case it is clear that given the many outstanding debts of the owner who faces criminal action due to fraud, this will not happen in any foreseeable time. Also, workers reported an anti-union attitude by management and irregular payment of wages for a long time prior to the closure. Most of the brands sourcing from Hermosa have codes of conduct and monitoring programmes, which clearly failed to identify and address these violations. Given the long history and systemic character of the violations, the monitoring programmes should have picked them up, especially since CCC and US labour groups have repeatedly reported violations at Hermosa to adidas since the year 2000, and in 2003/2004 also to the FLA. Brands therefore share the responsibility for the current situation of the workers, and should take concrete action to settle the matter to the satisfaction of the labour groups. adidas has taken some steps to address the severance and back pay issues, in cooperation with Nike, Russel Athletic and the FLA. Reebok also reports supporting these efforts. Representatives have met with government officials, worker representatives, and factory representatives to discuss how the factory's remaining assets, including machinery, can be liquidated in order to generate the necessary funds. The possibility to re-open the factory subject to future orders was also looked at. However these prospects appear to be complicated by legal claims on the factory's assets from other creditors. These creditors are claiming a right to all proceeds of the sales of Hermosa's assets, even if these sales produce revenue in excess of the amount actually owed to the creditors by the factory. It seems doubtful that the creditors will relinquish their expansive claims; it is also unclear whether the funds generated by the sale of these assets would be sufficient to cover the debts owed to workers even if the other creditors do relinquish some or all of their claims. Wal-Mart so far has done nothing at all.

CCC since has urged the brands to set up a fund to make sure that the workers at least receive the money now, and not only when the ongoing negotiations between the authorities, the owner and the brands get settled. Since both the legal system and the brands monitoring programmes have failed to ensure these workers their rights, and given the complexities on the legal side as cited by the brands themselves, this would surely be the responsible action on their part. So far however, the brands have been unwilling to do this, and suggested that instead they should be given more time to find a solution with the local authorities. The workers however have by now completely lost faith in this process, and are asking for increased public pressure.

With respect to the issue of blacklisting, adidas and Russell have acknowledged that this may be a problem and have indicated that they are willing to encourage their other suppliers in the area to consider former Hermosa workers for positions on a non-discriminatory basis. Other brands haven't responded on this. However, no action on this issue has been taken to date and the brands have indicated that they presently have limited production in El Salvador and that this may restrict their ability to assist workers in finding employment. CCC urges all the brands to actively investigate the possibilities of re-employing the Hermosa workers at their other suppliers.

None of the brands appear to have meaningfully investigated the allegations of intimidation and threats against workers, nor taken any action to address this problem.

1) The brands, which sourced at some point over the past years at the factory to:

• contribute to a fund to cover their legally outstanding wages, overtime payments and severance pay;

• to take the necessary action to get the workers reinstated at other suppliers they use in El Salvador (several of those were in fact the ones contracting out the work to Hermosa);

• to prevent further retaliation against these workers, in the form of intimidation and hiring discrimination .

• to pressure the Salvadorian government to fulfill the laws, ensure payment of the outstanding wages, overtime payments and severance pay; and respect the right to organize in a union.

2) the government of El Salvador to fulfill the laws, ensure payment of the outstanding wages, overtime payments and severance pay; and respect the right to organize in a union.

3) the owner, Mr. Montalvo, to pay them what they are legally due, offer them re-instatement and respect their right to organize a union.

Please support them in this request and take some time today to send a protest message. Sample letters to the buyers and the relevant government offices are given below.

Please read the January 3rd, 2007 update Hermosa: emergency fund set up and new action request