In January 2011, the owner of PT Kizone in Indonesia fled, resulting in the closure of the factory in April the same year, and leaving 2,800 workers without work and the severance pay they were entitled to. Sportswear brand adidas had been sourcing from PT Kizone for many years, where workers were paid as little as US$ 0.60 an hour.

In July 2011, other buyers at the factory announced that they would contribute US$ 1.6 million to a fund to compensate workers, roughly half of the US$ 3.4 million that was owed to them. To date adidas has refused to contribute to the fund. Now, a year after the factory shut down, the workers are still legally owed the remaining US$ 1.8 million in severance plus interest, which means former workers are incurring debts to survive and may be unable to keep sending their children to school.

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adidas claim that they have no responsibility to these workers as the last adidas product was completed in November 2010, prior to the closure of the factory. Yet severance pay is accrued over the whole period of employment. Therefore the workers are entitled to receive money earned over the several years of adidas’ production.

adidas also say they cannot assume responsibility for breaches of law committed by their supplier. Yet adidas do have responsibility for ensuring that all of the standards enshrined in local law, international conventions and their own codes are met. This is the principle behind corporate responsibility.

Therefore adidas need to take steps to ensure all labour rights violations, including the failure to pay monies owed to workers following illegal closure, are rectified. This means directly paying severance pay if it is not possible to get payments from the owner or the courts. So why do adidas continue to refuse to take action?

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