Case study

Introduction

Peter Johns & Company is a multinational company with over 300 directly-operated stores

worldwide, serving customers of exclusive goods, and generating millions of dollars in revenue

per year. It has an iconic, noble and luxury brand image, due to which the revenue increased by

32.5% in the first half of the year 2015. Peter Johns & Company has expressed its intention to

accelerate the process of opening stores in other parts of the Asian market. Recently, however,

seven former employees from Peter Johns & Company revealed information online about

inhumane working conditions and labor mistreatment in the company.

Case description

The employees' complaints in an open letter was spread on the Internet. Seven former

employees wrote this letter from the Peter Johns & Company Store. In the letter, they alleged that

employees caught an occupational disease, that there was one miscarriage attributable to excessive

working hours, and that there was no compensation for these hardships. Moreover, they stated that

there were extreme restrictions on employees' behavior, including the need to obtain permission

before getting a drink or a snack, and strict limitations on toilet time. They stated that, while the

restrictions were applied strictly to all frontline employees, including one who was pregnant, they

did not apply to the managers.

The letter also claimed that the employees had to pay compensation for any product that was stolen

or went missing, even though these luxury products had already been insured. They also criticized

Peter Johns & Company's goods exchange policies, which appeared to be illogical and dependent

on the manager's mood. In short, they accused Peter Johns & Company of lacking systematic and

humane management and complained that their rights and dignity were violated.

Moreover, the case also involved falsification of records about working hours, and the imposition

of forced, unpaid overtime work. Peter Johns & Company implemented a system of working one

full day, followed by a day off. Officially, one day's work was about ten hours. But the workers

complained that, on their working days, they were required to clock off at a certain time to establish

a false electronic record, and then continue their work, counting goods until two or three o'clock

in the morning without compensation.

Peter Johns & Company was labeled as a sweatshop. Many opined that the labor-management

practices of some multinational companies and brand owners failed to match their international

status. Several days later, the Peter Johns & Company headquarters issued a statement, saying that

"Peter Johns & Company does not and will not endorse or tolerate the alleged malpractices." Peter

Johns & Company also stated that the company had conducted investigations and had implemented

a series of measures, including the replacement of the store manager and assistant store manager.

Meanwhile, the Human Resources Department said they would further investigate the case. On 15October 2015, Peter Johns & Company and the former employees eventually arrived at a

settlement with Federation of Trade Unions.

How Peter Johns & Company used the labor dispatch system

Dispatch is a labor-management model that separates recruitment from employment. The

employee leasing companies have labor contracts with the workers, and they send workers to other

companies in which these workers actually work. The labor contract relationship exists between

the employee leasing companies and the dispatched workers, but the actual working relationship

is between the workers and the companies in which they work.

In this form of employment, the company which actually uses these workers is only responsible

for paying wages. At the same time, other aspects, including social security and dismissal

compensation, are passed on to the employee leasing company. The labor dispatch arrangement

serves to reduce the user companies' costs and contractual responsibilities for the employee. They

can incur lower training costs and are not required to make social security arrangements.

Questions

1. Discuss at least three critical issues identified in the case study? [5 marks]

2. Assume this company is based in Fiji. Identify and discuss at least two labor laws that

have been violated as per the situation discussed in the above case study. [10 marks]

3. You are the Director of Human Resource, and the issues raised in the case study have been

brought to your attention. Now you have the responsibility to resolve this situation.

Prepare the action plan of how you will resolve this issue.