—Gucci faces the allegations of sweatshop
Highlights: Gucci is claimed to maltreat its employees in China, which even leads to miscarriage of pregnant workers, thus not only impedes Italian luxury brand the expansion in China, but also brings the arbitration and demands for huge compensation.
Gucci, the luxury giant, recently becomes the subject of criticism for it being claimed by former employees of Shenzhen flag-store to be a sweatshop, and the maltreating includes overtime work without fair compensation, unethical treatment for pregnant workers, double compensation for stolen goods, etc. (News related)
If such alleged inhumane business practices are established, in addition to taking the claimed compensation for overtime work and health damage, Gucci may also face administrative punishment. Unfortunately, such misconduct appears to be a common custom for a few transnational giants in China rather than an isolated incident. Bridge IP Commentary also focuses on the case, and the followings are our analysis on it:
I. No fair compensation has been paid for overtime work.
As stated in the letter by former employees to Gucci’s senior management, it’s quite common for them to be requested working overtime when serving in Gucci store, even the inventory checks after work could be lasted to late night. In fact such misconduct is explicitly prohibited by China laws and local regulations in Guangdong Province.
It’s regulated in Article 41 of China labor law that the overtime work due to production and operation needs shall be limited to one hour per working day upon the consent of employee and labor union after negotiation. And such overtime work may extend to three hours per working day in certain cases with the guarantee of employees’ health. As to the compensation, by the Labor Law, it shall be 150% of the agreed salary payment per working day. The Regulation on the Guarantees of Employees Health in Guangdong Province also contains such rules.
Therefore, once such maltreat is established after investigation, the employees are entitled to demand the 50%-100% more compensation in addition to the payable remuneration.
II. Unethical treatment for pregnant saleswoman
A saleswoman suffered miscarriage after being pregnant for 7 months as the result of late midnight shift and 12 hours standing is also mentioned in the addressed letter.
Actually, woman in China may enjoy special labor protection as provided in China Labor Law, Law on the Protection of Rights and Interests of Women and local regulations, by which no heavy physical work shall be arranged for the pregnant or nightshift for those have been pregnant for more than 7 months. Furthermore, the pregnant workers may also have two breaks respectively on morning and afternoon for each working day.
For the current situation, the saleswoman may claim the compensation for her physical and mental damages since compelled by Gucci’s to work overtime with the reference to the Article 88 of Labor Contract Law.
III. Could the approval of comprehensive working system in Shanghai be carried out in Shenzhen?
Unlike normal working system of 8 hours per working day and 5 working days for week, the comprehensive working system is adopted in Gucci, under which the working time of salesman are 10 hours each working day with 4 days per week. The implementation of comprehensive working system, as demanded by law, shall first get the approval from administration.
By the news report, Gucci’s application for the system is approved by Shanghai administration, where it’s registered. Though the regulation in regards to the system application issued by the State Council contains no regulation concerning the territory limitation, it’s explicitly provided in the Trial Measures on the Approval and Management of Irregular Working System and Comprehensive Working System in Shenzhen City that all entities including branches shall apply for the approval in Shenzhen before the implementation of comprehensive working system.
From this aspect, Gucci is not legally qualified to carry out the comprehensive working system in Shenzhen, therefore, the employees in Shenzhen may claim compensation hereby.
IV. Gucci gets profit from store thieving
The other complaint voiced by the staff members is that more than 70,000 yuan ($11,111) was cut from their salaries when 16 items in the store were found disappeared, even the missing products was insured. That means Gucci bears no risk of store thieving or unexpected losses, while such risk has been transferred to store salesman, who should have taken no responsibility for security or guarding. It no doubt excludes the legal rights of employees with more unreasonable burden, which is prohibited by Labor Contract Law.
Though Gucci’s incident is under scrutiny by local administration, the public image of this well known luxury brand has been impacted more or less. And with the further progress and development of economy in China, more appeals of interest guarantee will surely voiced from local staff members, no matter they are migrant workers or senior management. This shall take the attention of those companies operating or tend to run in China.
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Editor-in-Chief of Bridge IP Commentary
Partner & Attorney-at-law of Shanghai DeBund Law Offices
Email: Bridge@chinaiplawyer.com, Tel: 8621-5213-4900,
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Bridge IP Commentary is a website focus on the introduction of commercial laws in China, especially the intellectual property laws. All the posts here are our original works. All news or cases referred here are from public reports, and our comments or analysis are of due diligence, neutrality and impartiality, representing our own opinions only. You may contact us shall you have any opinions or suggestions.
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