According to the Clean Clothes Campaign, more than a hundred garment workers at Royal Knitting factory were dismissed without notice when the factory shut down in April 2020 amidst the first wave of the COVID-19 pandemic and did not receive the total amount of severance owed to them. While operational, the factory, located in Mae Sot, allegedly paid workers below the minimum wage and failed to pay maternity pay. According to public reports, Royal Knitting is a supplier for the German retailers Otto Group and Peter Hahn. In June 2020, 195 workers filed a complaint with the Department of Labor Protection and Walfare, which found that Royal knitting owes the workers over one million USD. Royal Knitting is allegedly yet to comply.

In March 2021, Business & Human Rights Resource Centre invited Peter Hahn and Otto Group to respond. Their responses are included below. Both companies stated that they ended their relationships with Royal Knitting in 2017.

In 2024, Otto sued the Clean Clothes Campaign for defamation after the civil society organisation said the company should use its leverage to ensure Royal Knitting Factory pays USD 1 million owed to the Myanmar workers.

Otto says it has not sourced from the factory since 2017 and that it has "fully met" its obligations, and that it took the Clean Clothes Campaign's claims "very seriously" and had investigated them.

In 2025, Ecotextile reported that the Clean Clothes Campaign is preparing its own complaint against Otto to the die diligence mechanism of Germany's Federal Office of Economics and Export Control.