Supplier name: HASSAN INDUSTRIES Site country: PAKISTAN...

Audit company: SGS Pakistan Report reference: JKHC-140534 Date: 25-03-2014

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Supplier name: HASSAN INDUSTRIES

Site country: PAKISTAN

Site name: HASSAN INDUSTRIES

SMETA Audit Type: 2-Pillar 4-Pillar


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Audit Company Name:

SGS Pakistan Pvt. Ltd

Client: Hassan Industries.

Sedex Company Reference: (only available on Sedex System):

S 000000046444

Sedex Site Reference: (only available on Sedex System)

P 00000097527

Audit Conducted By

Commercial Purchaser

NGO Retailer

Trade Union Brand Owner

Multi-stakeholder Combined Audit (select all that apply)

Auditor Reference Number: (If applicable)

NIL

SMETA Declaration

I declare that the audit underpinning the following report was conducted in accordance with SMETA best practice guidance. Any exceptions to this must be recorded here (e.g. different sample size): Auditor Name(s) (please list all including all interviewers): Role: Ahmed Murtaza Lead- Auditor/ Zeeshan Aslam Co-Auditor Date: 25-03-2014


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Audit Details

Audit Details

A: Report #: JKHC-140534

B: Date of audit: 25-03-2014

C: Time in and time out:

Time in: 9:15 Time out:18:00

D: Number of Auditor Days Used: (number of auditor x number of days)

2 man days

E: Audit type:

Full Initial Periodic Full Follow-up Partial Follow-Up Partial Other – Define

F: Was the audit announced?

Announced Semi – announced Unannounced

G: Was the Sedex SAQ available for review?

Yes No

If no, why not? N/A

I: Auditor name(s) and role(s): Ahmed Murtaza Lead-Auditor / Zeeshan Aslam – Co Auditor

J: Report written by: Zeeshan Aslam

K: Report reviewed by: Sadaf Pyarali

L: Report issue date: 1st April 2014

M: Supplier name: HASSAN INDUSTRIES

N: Site name: HASSAN INDUSTRIES

O: Site country: Pakistan

P: Site contact and job title: Mr. Afzal Hussain, Admin Manager

Q: Site address: LA-8/19, Block-22, Federal B Area, Karachi- Pakistan

Site phone: +92-21-36341717

Site fax: +92-21-36378493

Site e-mail: [email protected]

mailto:[email protected]


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R: Applicable business and other legally required licence numbers: for example, business license no, and liability insurance

NTN # 1429355-2

S: Products/Activities at site, for example, garment manufacture, electricals, toys, grower

Knitted and Woven Garments

T: Audit results reviewed with site management?

Yes

U: Who signed and agreed CAPR (Name and job title)

Mr. Afzal Hussain, Admin Manager

V: Did the person who signed the CAPR have authority to implement changes?

Yes

W: Previous audit date: 5th July 2013

X: Previous audit type:

SMETA 2-pillar SMETA 4-pillar Other

Full Initial

Periodic

Full Follow-Up Audit

Partial Follow-Up

Partial Other*

*If other, please define:


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Audit Scope

Local Law (Please state legal requirement)

A: Standard work week: (total hours excluding overtime)

48 hours a week

B: Maximum allowed overtime hours: (please state per day, week, month)

2 hours, 12 hours per week and 48 hours per month

C: Minimum work age: 18 years

D: Minimum legal wage for standard hours: (please state per day, week, month)

PKR 10,000 per month PKR 385 per day for Unskilled workers.

E: Minimum legal overtime wage: (please state per day, week, month)

200% of normal wage rate

Audit Scope (Please select the code and additional requirements that were audited against during this audit)

2-Pillar Audit

10B4: Environment 4-Pillar

10C: Business Practices

Note: The main focus of this ethical audit is on the ETI Base Code and local law. The additional elements will not be audited in such depth or scope, but the audit process will still highlight any specific issues. This report provides a summary of the findings and other applicable information found/gathered during the social audit conducted on the above date only and does not officially confirm or certify compliance with any legal regulations or industry standards. The social audit process requires that information be gathered and considered from records review, worker interviews, management interviews and visual observation. More information is gathered during the social audit process than is provided here. The audit process is a sampling exercise only and does not guarantee that the audited site prior, during or post-audit, are in full compliance with the Code being audited against. The provisions of this Code constitute minimum and not maximum standards and this Code should not be used to prevent companies from exceeding these standards. Companies applying this Code are expected to comply with national and other applicable laws and where the provisions of law and this Code address the same subject, to apply that provision which affords the greater protection. The ownership of this report remains with the party who has paid for the audit. Release permission must be provided by the owner prior to release to any third parties.


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Non-Compliance Table

Issue

Area of Non-Conformity (Only check box when there is a non-conformity)

Record the number of issues by line*:

ETI Base Code

Local Law Additional Elements

NC Obs GE

0 Management systems and code implementation

01

1 Employment Freely Chosen

2 Freedom of Association 01

3 Safety and Hygienic Conditions 09

4 Child Labour

5 Wages and Benefits 04

6 Working Hours

7 Discrimination

8 Regular Employment

8A Sub-Contracting and Homeworking

9 Harsh or Inhumane Treatment

10A Entitlement to Work

10B2 Environment 2-Pillar

10B4 Environment 4-Pillar

10C Business Practices

*Please note the table above records the total number of Non compliances (NC), Observations (Obs) and Good Examples (GE). This gives the reviewer an indication of problem areas but does not detail severities of each issue – Reviewers need to check audit results by clause.


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Audit Overview

Audit Overview

Management Worker Representatives

Audit attendance Senior management Worker Committee representatives

Union representatives

A: Present at the opening meeting? Yes No Yes No

Yes No

B: Present at the audit? Yes No Yes No

Yes No

C: Present at the closing meeting? Yes No Yes No

Yes No

D: If Worker Representatives not present please explain reasons why

NIL

E: If Union Representatives not present please explain reasons why:

NO Registered labour union in the factory

F: Site description: (Include size, location and age of site. Also include structure and number of buildings)

Hassan Industries is manufacturer and exporter of Knitted and Woven Garments, established in 1974. Factory has two building blocks,

Building# 1 consist of ground plus three floors, at ground floor there

was warehouse, Finishing for woven, Generator room and accessory store, while at mezzanine floor there was checking and cropping, at

first floor there was stitching and offices, there were stitching units at

second and third floor of the building #1.

Building #2, consist of Ground plus five floors, at Ground floor there was warehouse, at first floor there was cutting, at 2nd floor there was

finishing and packing, there was stitching at third floor, while grey

fabric storage at fourth floor, canteen is situated at fifth floor of the building.

Factory has total cover area of the factory is 115,000 sq.ft.

G: Site function: Agent Factory Processing/Manufacturer Finished Product Supplier Grower Homeworker Labour Provider Pack House Primary Producer Service Provider Sub-Contractor


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H: Month(s) of peak season: (if applicable)

Consistent business

I: Typical production level as a % of the total capacity by month (record below): Site declaration only – this has not been verified by auditor.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

80% 75% 85% 75% 88% 85% 85% 80% 85% 70% 70% 85%

J: Process overview: (Include products being produced, main operations, number of production lines, main equipment used)

Products: Cardigan & Jackets, T –Shirts, Polo, Ladies Tops and Bottoms, Kids Garments.

Main Operation: Main operations being carried out in the factory are Cutting, stitching, Trimming, General

Checking, Pressing, packing and dispatch.

Main Equipment: Factory has 50 single needles, 14 double needle 19 flat clock, 205 over-lock 02 straight knives cutting machine, all the machines were found in good working condition. In addition, facility uses machine oil, diesel for generator.

Factory has production capacity of 400,000 pieces of knitted and 50,000 pieces woven garments per month.

K: Attitude of workers: (Include their attitude to management, workplace and the interview process. Both positive and negative information should be included) Note: Do not document any information that could put workers at risk

During audit confidential interview was conducted with 26 workers randomly selected from different departments. Out of 26 workers, 6 workers were interviewed individually and 20 workers were interviewed in 4 groups of 5

workers each. The overall attitude of workers toward management was positive; workers were happy with on time payment and conducive working environment, factory provides subsidized meal in the factory.

1. For child labour issue, all interviewees confirmed that the factory checks their National ID cards to verify their ages during recruitment and only retain their ID cards’ copies and the person below 18 years of age were not

allowed to work in the factory. All workers interviewed were above 18 years old.

2. For forced labour issue, the workers confirmed that no “deposit” or logging of original documents is required for

the employment in the factory.

3. For safety and health issues, the workers were satisfied with the working condition and the factory provided

orientation training for new workers and regular safety training to all workers. Fire drills were conducted, which included the evacuation exercise and the use of the fire extinguishing facilities.

4. For working hour issue, all interviewees said their normal working hours were 8 hours per day and 48 hours per

week. Workers confirmed that they were recording their working hours through swipe card system.

5. For wages issue, the interviewed workers said their wages were paid by 10th of each calendar month in the

factory. All interviewed workers confirmed that factory double the rate of normal wage for overtime working and


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Bonus were paid to the workers.

6. For treatment issue, the workers confirmed no harsh or inhumane treatment occurred and the management was kind to all employees.

7. There is a procedure where worker can lodge complaint to the management staff directly or through worker representatives or use of complaint / suggestion box.

L: Attitude of managers: (Include attitude to audit, and audit process. Both positive and negative information should be included)

During audit, departmental heads of Processing, Stitching, HR & Compliance, representatives of the workers

committee were present in audit process. Attitude of the management was positive and cooperative during audit. Management accepted all the findings and assured to take appropriate corrective action.

M: Summary of main findings: (positive and negative) (This is a summary not a repeat of the section detail)

Finding # 1

During facility visit it was noted that factory has not displayed ETI code in native language for the awareness of workers.

Finding # 2

During facility visit it was noted that work council minutes on meeting were not displayed on notice board moreover workers do not know who their worker’s welfare committee representatives are.

Finding # 3

During facility visit it was noted that pulley guards and needle guards were missing from stitching machine on second floor.

Finding # 4

Drinking water vessels were not provided at drinking water point in canteen area of the factory.

Finding # 5

Illuminated Emergency Exit sign was not installed at ground floor warehouse emergency exit door.

Finding # 6

During facility visit it was noted that soap & towel were not provided in workers canteen and workers toilet.

Finding # 7

During documents review it was noted that building stability certificate did not covered second building.

Finding # 8

During documents review it was noted that emergency response procedure of the factory does not cover evacuation


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of disabled persons and pregnant women. Finding # 9 During facility visit it was noted that there is no medical room with adequate medical aid and equipments in the facility. Finding # 10 During documents review it was noted that factory was not conducting drinking water chemical analysis.

Finding # 11

During documents review it was noted that noise level and air emission test was not conducted in the factory.

Finding # 12 During documents review and workers interview it was noted that 7 out of 26 sampled workers were not registered on EOBI. Finding # 13 Through workers interview and facility visit it was noted that factory has not provided child care facility for the children’s of female workers working in the factory. Finding # 14 Through workers interview 5 out of 26 it was noted that factory was not providing payslips to piece rate workers. Finding # 15 Through workers interview and facility visit it was noted that piece rate workers do not know their piece rate moreover it was not displayed on production floors.

Key Information

Key Information

A: Do all workers (including migrant workers) have contracts of employment?

Yes No

B: Were appropriate records available to verify hours of work and wages?

Yes No

C: Were any inconsistencies found? (if yes describe nature)

Yes Poor record keeping No Isolated incident

Repeated occurrence

D: For the lowest paid production worker, are wages paid for standard hours (excluding overtime) below or above the legal minimum?

Wages found: Please indicate the breakdown of workforce according to earnings:

Below legal min Meet Above

__0__% of workforce earning under min wage __100_% of workforce earning min wage __0_% of workforce earning above min wage

E: % of piece rate workers: (if applicable)

32%


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F: Combined hours (standard and overtime) over 60 per week found?

Yes No

G: Are the correct overtime premiums paid? Yes No

H: Is there any night production work at the site?

Yes No

I: % of workers living in site provided accommodation (if applicable):

NIL

J: Age of youngest worker found: 18 years

K: Workers under 18 subject to hazardous work assignments?

Yes __0___% of under 18’s at this site (out of total workers) No

L: What form of worker representation / union is there on site?

Union (name) Worker Committee Other (specify) None

M: Is it a legal requirement to have a union? Yes No

N: Is It a legal requirement to have a workers committee?

Yes In absence of union. No

O: Is there any other form of effective worker/management communication channel? (Other than union/worker committee)

Yes No

Describe: Factory has defined grievance handling policy and procedure, for which suggestion and compliant boxes were installed in the factory, as per policy workers can compliant through these boxes and also workers directly approach to top management.

P: Are there any External Processes? Sub-Contracting Home working Other External Process (detail) No external processes

Management Systems:

Q: Nationality of Management Pakistani

R: Majority nationality of workers Pakistani

S: Number of workers leaving in last 12 months as a % of average total number of workers on site over the year (annual worker

50 % (around 50% workers left last year)


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turnover)

T: Were accurate records shown at the first request?

Yes No

If not, why not? NA

In the last 12 months, has the site been subject to any fines/prosecutions for non-compliance to any regulations?

Yes No

Please describe: NIL

Worker Analysis

Worker Analysis

Local Migrant Total

Permanent Temporary Agency Permanent Temporary Agency

Home workers

Worker numbers – male

110 130 00 00 00 00 00 240

Worker numbers –female

40 20 00 00 00 00 00 60

Total 150 150 00 00 00 00 00 300

Number of Workers interviewed

10 16 00 00 00 00 00 26


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Contractors: (Individuals supplying workers to site with the workers paid by contractors, not by site)

A: Any contractors on site? Yes No

B: If yes, how many workers supplied by contractors

NA

C: Are all contractor workers paid according to law: (please record evidence)

NA

Migrant Workers: Please see SMETA Best Practice Guidance - Page 37

D: Originating Locations/Countries: NIL

E: Work undertaken by migrant workers: NIL

F: Were migrant workers recruited through an agency?

NIL

If yes, is there a contract with the agency? Provide details of agencies and contractual arrangements

NIL

G: Percentage of migrant workers in company provided accommodation:

NIL


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Audit Results by Clause

0: Management systems and code implementation:

0.1 Suppliers are expected to implement and maintain systems for delivering compliance to this Code. 0.2 Suppliers shall appoint a senior member of management who shall be responsible for compliance with the Code. 0.3 Suppliers are expected to communicate this Code to all employees. 0.4 Suppliers should communicate this code to their own suppliers and, where reasonably practicable, extend the principles of this Ethical Code through their supply chain.

Evidence of Compliance and Current Status

Please Note: include evidence examined & description of current status.

Documents checked & comments: 1. Social Compliance Management system Manual 2. Job Description of Manager HR/Compliance of the factory 3. Facility visit and check notices boards for communication of code with workers 4. Suppliers commitment form

Description of Current Status:

1. Mr. Afzal Hussain, Admin Manager is responsible for implementation of social compliance code of conduct in the factory.

2. Factory has established social compliance policy and Management system in the factory, 3. The factory has taken written commitment from all its suppliers and contractors to comply with social

compliance.

Non-compliance:

1. Description of non-compliance: NC against ETI/Additional Elements NC against Local Law

During facility visit it was noted that factory has not displayed ETI code in native language for the awareness of workers. Local law or ETI requirement; 0.3 Suppliers are expected to communicate this Code to all employees. Recommended corrective action: Factory shall display ETI code in native language on main notice board for the awareness of workers.

Objective evidence observed: Facility Visit


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Observation

Description of observation: NIL Local law or ETI requirement: NIL Comments: NIL

Objective evidence observed: NIL

Good Examples observed:

Description of Good Example (GE): NIL



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1: Employment is Freely Chosen

ETI

1.1 There is no forced, bonded or involuntary prison labour. 1.2 Workers are not required to lodge “deposits” or their identity papers with their employer and are free to leave their employer after reasonable notice.

Evidence of Compliance and Current Status Please Note: include evidence examined & description of current status.

Documents checked & comments:

Factory policy and procedures were found against use of forced labour

Facility walk through visit checked any confined area, isolated activity

Workers interview individually and in groups

Checked personal files of the workers, contract letters, appointment letters

Terms and condition of employment Description of current status:

Factory has defined forced labour policy and control procedure in the factory.

Policy was communicated to the workers through notices, workers booklet and orientation.

All workers working in the factory were provided appointment and contract letters, terms and condition defined and per local law regulation.

Through workers interview it was confirmed that workers are free to leave the factory at the end of their work shift, also workers can resign with reasonable notices.

Factory has provided training to all supervisors and managers on the policy.

No sign of force labour was found in the factory during workers interview, documents review and facility visit.

Factory has also communicated the policy to all its suppliers and contractors.

Non-compliance:

1. Description of non-compliance: NC against ETI NC against Local Law:

Local law or ETI requirement ; NIL Recommended corrective action: NIL



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Observation

Description of observation: Local law or ETI requirement: NIL Comments: NIL






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2: Freedom of Association and Right to Collective Bargaining are Respected

ETI 2.1 Workers, without distinction, have the right to join or form trade unions of their own choosing and to bargain collectively. 2.2 The employer adopts an open attitude towards the activities of trade unions and their organisational activities. 2.3 Workers’ representatives are not discriminated against and have access to carry out their representative functions in the workplace. 2.4 Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.

Evidence of Compliance and Current Status: Please Note: include evidence examined & description of current status.

Documents checked & comments: 1. Freedom of Association policy and procedure 2. Joint work council election records 3. Joint work council meeting minutes 4. Interviews and discussion with workers and council representatives

Description of current status:

Factory has defined Freedom of association policy and procedure.

The same was communicated to all employees, contractors, suppliers through notices, manual and workers booklets.

Factory has constituted a 17 member joint workers council, comprising of workers and management representative, 10 members were from workers side and 7 from management

Workers representatives were elected by the workers through confidential voting, while management representatives were nominated by the management. Last election of the committee was held on 20-12-2013.

The council meets quarterly and discusses the workers issues and complaints and gives its recommendations to the managements for the rectification of the issues. Last meeting of the council was conducted on 07-02-2014; record of the same was verified during audit.

Non-compliance:

1. Description of non-compliance: NC against ETI NC against Local Law:

During facility visit it was noted that work council minutes on meeting were not displayed on notice board moreover workers do not know who their worker’s welfare committee representatives are.

Local law or ETI requirement: 2.4 Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.

Recommended corrective action: Factory shall provide training sessions for workers for the awareness of worker’s welfare functions and their representative awareness and also display minutes of meeting on main notice board in native language.

Objective evidence observed: Through workers interview


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Observation



A: Name of union and union representative, if applicable:

No Registered union found in the factory

If no union what is parallel means of consultation with workers e.g. worker committees?

Worker’s welfare committee

B: Is there any evidence that this is effective? Specify date of last meeting; topics covered; how minutes were communicated etc.

The council conducts quarterly meeting

Last meeting of the council was conducted on 07-02-2014

Record of the meeting minutes were kept with details of issues discussed and action plan with responsible person defined.

C: Are any workers covered by Collective Bargaining Agreement (CBA)

Yes No

If yes what percentage by trade Union/worker representation

_0___% workers covered by Union CBA

__0__% workers covered by worker rep CBA

D: Does the Collective Bargaining Agreement (CBA) include rates of pay

Yes No No CBA





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3: Working Conditions are Safe and Hygienic

ETI 3.1 A safe and hygienic working environment shall be provided, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Adequate steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the course of work, by minimising, so far as is reasonably practicable, the causes of hazards inherent in the working environment. 3.2 Workers shall receive regular and recorded Health & Safety training, and such training shall be repeated for new or reassigned workers. 3.3 Access to clean toilet facilities and to potable water, and, if appropriate, sanitary facilities for food storage shall be provided. 3.4 Accommodation, where provided, shall be clean, safe, and meet the basic needs of the workers. 3.5 The company observing the code shall assign responsibility for Health & Safety to a senior management representative.



1. Health and safety policy and procedure 2. Health and safety inspection reports

3. Machineries and equipments inspection reports 4. Fire safety training records, list of equipments

5. First Aid log sheets and accidents and injuries records 6. Machine maintenance record

7. Test reports of drinking water, noise level

8. Workers hygiene cards and vaccination reports

Description of current status: 1. Factory has defined EHS policy and procedure.

2. Mr. Afzal Hussain, Manager Admin is responsible for compliance with health and safety standards in the

factory.

3. The facility was inspected by local labour inspector on 7th. November 2013, as per his remarks on Form ‘ c’ register working condition in the factory is satisfactory.

4. Building stability certificate was available in the factory reviewed during audit. 5. Factory was inspected by Civil Defence department in February 2014 for 1 year validity.

6. The factory conducts Evacuation drill bi-annually in the factory; latest drill was conducted on 6th January

2014 evacuation time was noted less than 3 minutes. 7. Factory has permanent certified Electrician, Mr. Waqar Azeem in the factory. Certificate No. KW 19251.

8. All necessary fire safety equipments like fire extinguishers, fire Hydrants and smoke detectors were installed in the factory, found in good working condition.

9. There were 19 first aiders and 16 First Aid boxes installed in different departments of the factory. Last first aid training was conducted on 6th January 2014.

10. Factory conduct quarterly training for fire fighting in the factory, there were 45 workers trained for fire

fighting in the factory; last training was on 6th. January 2014. 11. There are 100 fire extinguishers, 22 fire alarm switches, 90 fire buckets in the factory.

12. EHS trainings were provided to all employees on regular basis as part of orientation. 13. Two fire exits were available for each factory department.

14. Accident and injury records were kept, and the factory analyzed the accidents/injuries and took some

corrective actions.


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15. Factory has installed chillers plant for the supply of drinking water in the factory. 16. The general EHS conditions such as hygiene, lighting and ventilation etc. were all acceptable.

17. Vaccination of all employees in the factory has been carried out on 30-12-2013 by Dr. Syed Mubasher Ali.

Non-compliance:

1. Description of non-compliance: NC against ETI NC against Local Law

During facility visit it was noted that pulley guards and needle guards were missing from stitching machine on second floor.

Local law or ETI requirement Rule 55 of The Sind Factories Rules, 1978: The following parts of transmission machinery shall be securely fenced if in motion and within reach of workers

Recommended corrective action: Factory shall install pulley guards and needle guards on all stitching machines.

2. Description of non-compliance:

NC against ETI NC against Local Law Drinking water vessels were not provided at drinking water point in canteen area of the factory.

Local law or ETI requirement: Section 20(1) of The Factories Act, 1934: In every factory effective arrangements shall be made to provide and maintain at suitable points conveniently situated for all workers employed therein a sufficient supply of whole-some drinking water. Section 20(3)b of the factories Act 1934; a sufficient number of cups or other drinking vessels shall be provided unless the water is being delivered in an upward jet.

Recommended corrective action: Factory shall provide drinking water vessels at all drinking water points in the facility. 3. Description of non-compliance:

NC against ETI NC against Local Law Illuminated Emergency Exit sign was not installed at ground floor warehouse emergency exit door.

Local law or ETI requirement: 3.1 A safe and hygienic working environment shall be provided, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Adequate steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the course of work, by minimising, so far as is reasonably practicable, the causes of hazards inherent in the working environment.

Recommended corrective action: Factory shall install illuminated emergency exit sign at emergency exit door of ground floor warehouse.

4. Description of non-compliance:

NC against ETI NC against Local Law During facility visit it was noted that soap & towel were not provided in workers canteen and workers toilet. Local law or ETI requirement: Rule 4 (5) of The West Pakistan Factories Canteen Rules, 1959: A sufficient supply of soap and clean towels shall be provided at the washing places in the canteen for the use of workers. Rule 42(c) of Sind Factories Rules, 1975: Soap and towels shall be provided and kept available for workers free of cost at every wash basin and regular arrangements shall be made for replacement of used towels with clean towels daily.

Recommended corrective action: Factory shall provide soap & towel in workers canteen and workers toilet for the use of workers.

Objective evidence observed: During factory visit and documents review.


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During documents review it was noted that building stability certificate did not covered second building.

Local law or ETI requirement: Rule 93 of The Sind Factories Rules, 1975: 93. (1) In any building or part of a building which is erected or made use of as a factory after the commencement of the Act, no work on any manufacturing process with the aid of power shall be commenced until a certificate of stability of the building or part of the building, as the case may be, in Form 'K' signed by a person possessing the qualifications specified in sub-rule (4) has been approved by the Chief Inspector.

Recommended corrective action: Factory shall include second building block in the building stability certificate of the facility.


During documents review it was noted that emergency response procedure of the factory does not cover evacuation of disabled persons and pregnant women.


Recommended corrective action: Factory shall include disabled person and pregnant women safe evacuation in emergency procedure and also communicate this to emergency response team.


During facility visit it was noted that there is no medical room with adequate medical aid and equipments in the facility.


Recommended corrective action: Factory shall provide medical room with adequate medical aid and equipments in the factory.


During documents review it was noted that factory was not conducting drinking water chemical analysis.

Local law or ETI requirement: Rule 41 (1) of The Sindh Factories Rules, 1975; In every factory there shall be provided free of charge for the use of the employees of the factory a supply of water fit for drinking. (7) The Inspector may, by order in writing, require the Manager to obtain reports, at such times or at each intervals as may be specified in the order, regarding the fitness or otherwise for the purposes of drinking of the water supplied to workmen from the Director of Health Services. Sind or from a Health Officer of a local authority provided with the necessary facilities to carry out such tests, and the Manager shall comply with such order and send to the Inspector by registered post copies of such reports within seven days of their receipt by him.

Recommended corrective action:


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Factory should test drinking water chemical analysis as per NEQS guidelines from third party approved laboratory.


During documents review it was noted that noise level and air emission test was not conducted in the factory.

Local law or ETI requirement: Section 11 of the Pakistan Environmental Protection Act, 1997: No person shall discharge or emit or allow the discharge or emission of any effluent or waste or air pollutant or noise in an amount, concentration or level which is in excess of the National Environmental Quality Standards.

Recommended corrective action: Factory shall conduct noise level and air emission tests on regular basis.

Observation

Description of observation: NIL Local law or ETI requirement: NIL Recommended corrective action: NIL




Objective Evidence Observed: NIL


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4: Child Labour Shall Not Be Used

ETI 4.1 There shall be no new recruitment of child labour. 4.2 Companies shall develop or participate in and contribute to policies and programmes which provide for the transition of any child found to be performing child labour to enable her or him to attend and remain in quality education until no longer a child. 4.3 Children and young persons under 18 shall not be employed at night or in hazardous conditions. 4.4 These policies and procedures shall conform to the provisions of the relevant ILO Standards.



Policy and procedure

Personal file for age proof documents like CNIC, Birth certificates and educational certificates

Facility visit, interview with suspected workers Description of current status:

Factory has defined child labour policy and procedure in the factory.

Factory has communicated the policy through notices and signs at main gate of the factory.

No workers below 18 years are employed in the factory.

As per hiring procedure prospective workers with authentic age verification documents will be considered.

HR department ascertains workers age during appointment through documents and interview, workers age verification documents were kept in their personal files for verification.

Non-compliance:


Local law or ETI requirement: NIL Recommended corrective action: NIL


Observation




Description of Good Example (GE): NIL Objective Evidence Observed: NIL


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5: Living Wages are Paid

ETI 5.1 Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income. 5.2 All workers shall be provided with written and understandable information about their employment conditions in respect to wages before they enter employment and about the particulars of their wages for the pay period concerned each time that they are paid. 5.3 Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages not provided for by national law be permitted without the expressed permission of the worker concerned. All disciplinary measures should be recorded.



Payroll and payment record of 26 workers for the month of February 2014, August 2013 & March 2013.

Production records for the month of February 2014, August 2013 & March 2013 were also verified.

Wage slips of the workers

Record of social security and EOBI

Record of group insurance

Record of full and final settlement of leaving workers Description of current status:

During documents review and workers interview it was noted that factory was paying minimum wages PKR 10,000 per month and PKR 385 per day as minimum wage to workers.

Factory was keeping record of the workers wage and also wage slips were provided to the workers. Record for the sampled three months were checked and verified.

Factory provides Social security benefit to all workers.

Yearly bonus is provided to all workers.

All permanent employees are covered through group Insurance in the factory.

Non-compliance:


During documents review and workers interview it was noted that 7 out of 26 sampled workers were not registered on EOBI. Local law or ETI requirement: Employees Old age Benefits Act,1976, Section 3; All employees in an industry or establishment shall be insured in the manner prescribed by this act. Section 9; Contribution shall be payable every month by the employer to the institution in respect of every person in his insurable employment. Recommended corrective action: Factory shall ensure that all workers are registered on EOBI.

Objective evidence observed: Documents review and facility visit


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Through workers interview and facility visit it was noted that factory has not provided child care facility for the children’s of female workers working in the factory. Local law or ETI requirement: Rule 92 of The Sind Factories Rules, 1975: The occupier of every factory other than a seasonal factory wherein more than fifty women workers are ordinarily employed shall provide a suitable room or rooms for the use of children under the age of six years belonging to such women and the room or rooms so provided Recommended corrective action: Factory shall provide child care room facility for women workers children’s in the factory.


Through workers interview 5 out of 26 it was noted that factory was not providing payslips to piece rate workers. Local law or ETI requirement: Rule 19 (3) of The West Pakistan Minimum Wages Rules, 1962: Every employer shall issue to the employees employed in any industry in respect of which minimum rates of wages have been fixed under the provisions of the ordinance, Wage Slips in Form II. Recommended corrective action: Factory shall provide payslips to all piece rate workers in native language on every salary distribution.


Through workers interview and facility visit it was noted that piece rate workers do not know their piece rate moreover it was not displayed on production floors. Local law or ETI requirement: Section 5 of The West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968: Notices specifying the rates of wages payable to all classes of workmen and for all classes of work shall be displayed on the said notice boards. Recommended corrective action: Factory shall display piece rate of current style and update it on regular basis for the awareness of rate of work in production hall.

Observation




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Wages analysis:

A: Sample size: (number of wages checked and which weeks or months – please see BPG)

26 workers wage record for the month of February 2014, August 2013 & March 2013

B: Legal minimum wage for standard time: (excluding OT - please include time period e.g. hour/week/month)

PKR 10,000 per month and PKR 385 per day for Unskilled workers

C: Are there different legal minimum wage grades? If yes, please specify all.

Yes No

If yes, please give details:

Unskilled ( Helpers/loaders) : PKR 10,000 per month

Semi Skilled (checkers/ packers): 10,500 per Month

Skilled ( Machine operators): PKR 11,000 per month

D: Where there are different legal minimum wage grades are all workers graded correctly?

Yes No

If no, please give details: NA

E: What deductions are required by law:

EOBI/ Income Tax

F: Have all of these deductions been made?

Yes

G: Industry norm for this region: (please include time period e.g. hour/week/month)

NIL

H: Legal overtime premium for weekdays: (please include time period e.g. hour/week/month)

200 % of normal wage rate per hour

I: Legal overtime premium for rest days: (please include time period e.g. hour/week/month)

200% of normal wage rate per day with alternate rest

J: Legal overtime premium for holidays: (please include time period e.g. hour/week/month)

300% of normal wage rate per day


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Worker Type Process Operator (Highest paid)

Process Operator (Average paid)

Process Operator (Lowest paid)

Select one worker’s records from each “Worker Type” and populate the boxes. Ensure comparison is made for same pay period (peak) and only uses full-time workers. See SMETA Best Practice Guidance for completing this:

A: Pay period (please include time period e.g.

hour/week/month):

February 2014 February 2014 February 2014

B: Anonymous Employee Reference/Dept.

Stitching Checking Checking

C: Employee Gender Male Male Female

D: Contracted wage ( please include time period e.g.

hour/week/month):

Salary/month Salary/month Salary/month

E: Standard working hours (excluding OT - please include time period e.g.

hour/week/month):

8 hours a day 8 hours a day 8 hours a day

F: Standard work pay rate (excluding OT - please include time period e.g. hour/week/month):

PKR 11,000 /month PKR 10,500/month PKR 10,000 /month

G: Standard day overtime – hours (please include time

period e.g. hour/week/month):

00 00 00

H: Standard day overtime – wage (please include time


00 00 00

I: Rest day overtime – hours (please include time


00 00 00

J: Rest day overtime – wage

(please include time period e.g. hour/week/month):

00 00 00

K: Statutory Holiday overtime – hours (please

include time period e.g. hour/week/month):

00 00 00

L: Statutory holiday OT - wages (please include time


00 00 00

M: Total overtime hours 00 00 00


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(please include time period e.g. hour/week/month):

N: Incentives/Bonus/ Allowances etc. (please include time period e.g. hour/week/month):

00 00 00

O: Gross wages (please

include time period e.g. hour/week/month):

PKR 11,000 /month PKR 10,500 /month PKR 10,000 /month

P: Social insurance and other deductions

0 0 0

Q: Actual wage paid after deduction (please include time period e.g. hour/week/month):

PKR 11,000 /month PKR 10,500 /month PKR 10,000 /month

Comments: (Please state here any specific reasons/circumstances that explain the lowest and highest gross wages)

Workers are paid as per their skills and grades

R: Is there a defined living wage: This is not normally legal wage. If answered Y please state amount and source of info: Please see BPG)

Yes No

Please specify amount/time period:

S: Are workers paid in a timely manner in line with local law?

Yes No

T: Is there evidence that equal rates are being paid for equal work:

Yes No

Details: Through review of wage record and workers interview it was confirmed that equal wages are paid for equal work, no discrimination found in wages

U: How are workers paid: Cash Cheque Bank Transfer

If not explain: NIL

Actual overtime premium paid in sample for…

V: Weekdays: 200% of normal wage per hour

W: Rest days: 200% of normal wage per day with substitute rest

X: Holidays: 300% of normal wage rate


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6: Working Hours are not Excessive

ETI 6.1 Working hours comply with national laws and benchmark industry standards, whichever affords greater protection. 6.2 In any event, workers shall not on a regular basis be required to work in excess of 48 hours per week and shall be provided with at least one day off for every 7 day period on average. Overtime shall be voluntary, shall not exceed 12 hours per week, shall not be demanded on a regular basis and shall always be compensated at a premium rate.


Documents checked & comments: Factory policy and procedure for working hours in the factory

26 workers time record for the month of February 2014, August 2013 & March 2013

Production records were also verified.

Description of current status:

During audit it was noted that factory works in single shift from 09:00 am to 06:00 pm Monday to Saturday.

Factory has installed swipe card system for recording the workers working hours in the factory. All workers have at least one day off in a week.

Working hours in the factory is 8 hours per day, 48 hours per week, Sunday is rest day.

Maximum 2 hours a day and 12 hours week overtime is allowed in the factory.

Non-compliance:




Observation

Description of observation: NIL Local law or ETI requirement: NIL Comments:

Objective evidence observed:


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Working hours analysis Please include time period e.g. hour/week/month

A: What timekeeping systems are used: time card etc.

Swipe card computerized recording system

B: Sample size checked (number of workers): Please see BPG

26 workers

C: Legal standard work week (hours): (Excluding OT - please include time period e.g. hour/week/month).

48 hours per week

D: Contracted standard work week this site (hours) (excluding OT - please include time period e.g. hour/week/month)::

48 hours a week

E: Actual standard work week averaged over sample for full time workers: (excluding OT - please include time period e.g. hour/week/month)

48 hours a week found

F: Lowest standard hours worked (excluding OT - please include time period e.g. hour/week/month)

48 hours a week.

G: Highest standard hours worked (excluding OT - please include time period e.g. hour/week/month)

48 hours a week.

H: Percentage workers on part-time contracts

_0_ % age

I: Legal permitted overtime hours (please include time period e.g. hour/week/month)

2 hours a day, 12 hours week and 48 hours a month

J: Any local waivers or permission for annualised hours for this site:

No waivers

K: Actual overtime hours: (averaged over sample) (please include time period

e.g. hour/week/month)

4 hour a month


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L: Range of overtime hours over all workers: (quote highest and lowest please

include time period e.g. hour/week/month)

2 to 8 hours a month

M: approx % of workers on highest overtime hours:

2%

N: Peak season(s): Months

Consistent business

Comments: (Please state here any specific reasons/circumstances that explain the highest working hours)

NIL


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7: No Discrimination is practiced

ETI 7.1 There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation.



Policy and procedure for non discrimination

Wage records of male and female workers

Terms and condition of employment Description of current status:

During audit, through workers interview and documents review, no sign of discrimination was observed in the factory.

Factory has equal employment opportunity policy.

Workers are hired, compensated & promoted on the basis of capability and merit without any distinction, different social and ethnic background workers were found working in the factory.

Non-compliance:

1. Description of non-compliance: NIL NC against ETI NC against Local Law



Observation







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8: Regular Employment Is Provided

ETI 8.1 To every extent possible work performed must be on the basis of recognised employment relationship established through national law and practice. 8.2 Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting, sub-contracting, or home-working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment.



Employment policy and procedure

Terms and condition of Employments

Personal files of the workers Description of current status:

During audit it was noted that all employment in the factory are based on recognised employment relationship established through national labour law regulation in the factory.

Factory has procedure to give copy of employment letters and contract letters to all workers.

Non-compliance:




Observation







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8A: Sub-Contracting and Homeworking:

8A.1. There should be no sub-contracting unless previously agreed with the main client. 8A.2. Systems and processes should be in place to manage sub-contracting, homeworking and external

processing. Note to auditor on homeworking:

Report on whether it is direct or via agents. How many workers, relationship with site and what control systems are in place.



Factory is not sub-contracting any process. Description of current status:

Factory is not sub-contracting any process.

Process Subcontracted → Process 1 Process 2

Name of factory →

Address →

Process Subcontracted → Process 3 Process 4

Name of factory →

Address →

Process Subcontracted → Process 5

Name of factory →

Address →


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Non-compliance:

1. Description of non-compliance: NIL NC against ETI/Additional Elements NC against Local Law

Local law or ETI /Additional Elements requirement: NIL Recommended corrective action: NIL


Observation

Description of observation: NIL Local law or ETI/Additonal elements requirement: NIL Comments: NIL






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Summary of sub-contracting – if applicable

A: Number of sub-contractors/agents used

NA

B: Is there a site policy on sub-contracting?

Yes No

If yes, summarise details:

C: What checks are in place to ensure no child labour is being used and work is safe?

NA

D: What processes are sub-contracted?

NA

Summary of homeworking – if applicable

E: Number of homeworkers Male: NA Female: NA Total: NA

F: Are homeworkers employed direct or through agents?

Directly Through Agents

G: If through agents, number of agents

NA

H: Is there a site policy on home working?

Yes No

I: How does site ensure worker hours and pay meet local laws for home workers?

NA

J: What processes are carried out by home workers?

NA

K: Are written agreements in place for home workers that include regular employment?

Yes No

L: Are full records available at the site?

Yes No


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9: No Harsh or Inhumane Treatment is Allowed

ETI 9.1 Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation be prohibited.



Factory policy and procedure

Observation during walk though the facility

Workers interview and discussion

Management interview and discussion

Records of factory disciplinary actions Description of current status:

During audit, no sign of harsh and inhumane treatment was observed in the factory through site visit, workers interview and documents review.

Factory has policy of progressive disciplinary action, no physical and mental abuse is used as disciplinary measure in the factory.

Non-compliance:


Local law or ETI requirement: NIL Recommended corrective action:

NIL


Observation







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10. Other Issue areas: 10 A: Entitlement to Work and Immigration

Additional Elements 10A1 Only workers with a legal right to work shall be employed or used by the supplier. 10A2 All workers, including employment agency staff, must be validated by the supplier for their legal right to work by reviewing original documentation. 10A3 employment agencies must only supply workers registered with them. 10A4 the supplier shall implement processes to enable adequate control over agencies with regards the above points and related legislation.



Policy and procedure for employment in the factory

List of workers

Facility visit observed workers actually working on the floor Description of current status:

During audit No migrant worker was found working in the factory

Non-compliance:

1. Description of non-compliance: NIL NC against ETI/Additional Elements NC against Local Law



Observation

Description of observation: NIL Local law or ETI/Additional Elements requirement: NIL Comments: NIL


Good examples observed:




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10. Other issue areas 10 B 2: Environment 2-pillar To be completed for a 2-Pillar SMETA Audit, and remove the following page which is 10B4 environment 4 pillar

10B2. 1 Suppliers must comply with the requirements of local and international laws and regulations including having necessary permits. 10B2. 2 The supplier should be aware of and comply with their end clients’ environmental requirements. Note for auditors and readers , This is not a full environmental assessment but a check on basic systems and management approach.



Environmental policy and procedure

Facility visit and review of the production process

Review of the lab test reports for environmental compliance Description of current status:

Factory has established environmental policy and procedure in the factory.

Solid waste generated from the factory was re sell to different buyers for further by products.

Non-compliance:

1. Description of non-compliance: NC against ETI /Additional Elements NC against Local Law



Observation

Description of observation: NIL Local law or ETI /additional elements requirement: NIL Comments: NIL


Good examples observed:




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Worker Interview Summary

Worker Interview Summary

A: Were workers aware of the audit? Yes No

B: Were workers aware of the code? Yes No

C: Number of group interviews: Please specify number and size of groups. Please see BPG

4 groups of 5 workers each 4X5=20 workers

D: Number of individual interviews Please see BPG

Male: 4 Female: 2

E: Number of interviewed workers Please see BPG

Male: 20 Female: 6

F: Interviews were done in private and the confidentiality of the interview process was communicated to the workers?

Yes No

G: In general, what was the attitude of the workers towards their workplace?

Favourable Non-favourable Indifferent

H: What was the most common worker complaint?

No specific compliant

I: What did the workers like the most about working at this site?

Continuous work, on time payment and work environment

J: Any additional comment(s) regarding interviews:

NIL

Agency Workers (workers sourced from a local agent who are not directly paid by the site)

A: Number of agencies used (average):

And names if available: NIL

B: Were agency workers’ age/pay/hours included within scope of this audit

Yes No


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Other findings

Other Findings Outside the Scope of the Code

NIL

Community Benefits (Please list below any specific community benefits that the site management stated that they were involved in, for example, HIV programme, education, sports facilities)

NIL


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Photo Form

Factory main entrance Factory Building Company Policies

Fire Exit Labour laws Attendance System

First Aid kit Assembly Area Suggestion Box


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Hose reel Fire Extinguishers Cargo Lift

Evacuation Map Exit door Fire Alarm Point

Fabric Store Canteen Workers toilet


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Stitching Department Cutting Department Emergency exit door

Drinking cups not provided Soap & Towel not provided Pulley cover not installed

Needle Guard not installed

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It will help to make improvements to future versions.

You can leave feedback by following the appropriate link to our questionnaire:

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Supplier name: HASSAN INDUSTRIES Site country: PAKISTAN...

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Transcript of Supplier name: HASSAN INDUSTRIES Site country: PAKISTAN...