In September 2023, it was reported that investors and labour rights advocates had called on Nike to pay more than 4,0000 garment workers, who had worked at the Violet Apparel factory in Cambodia, and the Hong Seng Knitting factory in Thailand, $2.2 million in unpaid wages and benefits, that had not been paid when the two factories closed down due to COVID-19.

Violet Apparel

In July 2020, Violet Apparel suddenly closed, leaving 1,284 workers without jobs and legally owed compensation.

Nike had previously stated to the Business & Human Rights Resource Centre (BHRRC) that it “has no evidence of having sourced from Violet Apparel after 2006”. However, according to reports, Nike’s own published supply chain disclosures from 2007 and 2008 list Violet Apparel as a licensed supplier. Furthermore, Worker Rights Consortium (WRC) reports that, according to testimony from factory workers, corroborated by photographs and other documentary evidence, Violet Apparel had manufactured clothes for Nike until 2020.

Also in its response to BHRRC, Nike stated that Ramatex Group had “addressed the situation independently and engaged in an arbitration process which resulted in a binding decision, which they have acted upon.” In November 2020, the Arbitration Council claimed a “lack of jurisdiction” and declined to rule on workers’ demand for compensation in lieu of prior notice when factory management informed them of their dismissal with less than 24 hours’ notice. However, according to a legal analysis by WRC, the decision made by Cambodia’s Arbitration Council in the case of Violet Apparel was “legally invalid”, with Human Rights Watch labelling the arbitration council as “politically compromised”, and therefore citing and abiding by such a decision does not constitute reasonable human rights due diligence.

The legal analysis also states that Nike met and communicated with the Cambodian government regarding concerns about the independence of the Arbitration Council as a genuine arbiter of Cambodian labour law, indicating an awareness of the declined independence of the Arbitration Council.

Hong Seng Knitting, Thailand

WRC reported that Nike’s supplier, Hong Seng Knitting, illegally withheld wages from more than 3000 garment workers in 2020.

According to WRC, Nike’s investigation and third-party findings by Elevate state that the factory’s non-payment of wages was lawful because workers actively chose not to be paid what they were legally entitled to receive from their employer. However, WRC state that workers were forced to sign a form falsely stating that they wished to take “voluntary” unpaid leave and faced intimidation and threats, including through the factory’s Facebook page.

Nike investors have said, “The UNGPs and the OECD Guidelines include an expectation that companies that are linked or contributing to adverse human rights impacts have a responsibility to support access to remedy. We believe access to remedy in this case requires that workers are compensated for lost pay and that the workers are satisfied with the process of compensation”, a position that applies to social auditing companies that may have had adverse human rights impacts as a result of their business

In a letter, investors called for Nike to "fulfil its human rights responsibilities, show leadership and apply the access to remedy principle under the UN GPs and ensure that workers are adequately compensated for their lost pay.

1. We would like to see full repayment of the USD 1.4 million terminal wages for workers at Violet Apparel and correction of underpayments at Hong Seng Knitting to the total of USD 800,000. Full repayment of the wages would be seen by investors as a very encouraging sign of Nike taking its human rights leadership commitments seriously. In addition, we also highly encourage Nike to show:
2. A commitment to provide Access to Remedy for rightsholders in similar cases in the future.
3. A commitment to responsible purchasing practices through fair collaboration with suppliers. "

Investors also accused Elevate of failing due diligence processes, on the basis that its investigation stating that the factory's non-payment of wages was lawful, contradicting evidence in the WRC report, and that it had not published its report nor indicated how Hong Seng Knitting had acted lawfully.

In September 2023, Business & Human Rights Resource Centre invited Nike to respond to both cases. The response can be found below.

In March 2024, ex-workers from the Violet Apparel factory shared a rejoinder to Nike's response re. the Violet Apparel case, and Worker Rights Consortium shared a rejoinder to Nike's response re. the Hong Seng Knitting case. Nike provided an additional comment in response to the rejoinders.

In April 2024, Business & Human Rights Resource Centre invited Elevate to respond. It did not.

The full responses and rejoinders can be found below.