Ninety-eight garment workers fighting a legal battle for wages owed to them after their employer fled the country appealed a judge’s decision to award the vast majority of proceeds from an auction of the company’s equipment to the factory’s landlord on Wednesday.
The appeal is just the latest development in the nearly two-year saga of Chinese-owned Co-Seek Garment Co, Ltd, whose former workers say they are each still owed between $200 to $300 in unpaid salary as well as roughly $800 in severance.
Under the decision of Phnom Penh Municipal Court Judge Seng Leang earlier this month, workers will receive $7,000 of the $35,000 proceeds from the equipment’s sale, with the rest going to landlord Sour Sarith, despite articles 121 through 125 of the Labour Law saying workers’ claims must be settled ahead of creditors in the event a factory must be liquidated.
Former Co-Seek worker Horn Seng Horn said the lengthy court case has caused financial struggles for the workers, who came to work one day in August 2016 to find the factory shuttered.
“They have not paid it to workers yet because they say the landlord asked to split the money,” she said. “The court still has not made a final decision.”
Leang, the judge, declined to comment on his decision or why the case has taken so long to resolve. Ministry of Labour spokesman Heng Sour did not respond to requests for comment.
However, Chea Pheara, the lawyer for Sarith, defended the judge’s decision, maintaining Sarith had spent more than $50,000 paying compensation to roughly 300 other former Co-Seek workers with the understanding that the money was a loan to the factory that would be reimbursed later.
“It is not a form of oppression against workers,” Pheara said.
“The landlord only asked to get back money that he paid for 331 workers because he was afraid that workers would demonstrate and protest when their employer fled and it could result in property damage.”
Sarith’s offer of $140 to $160 in compensation was rejected by the 98 workers still embroiled in the court case. They now face the possibility of receiving less than $70 each under the court’s decision.
The $35,000 in question is now deposited with the National Bank as the court case continues.
Bent Gehrt, the Southeast Asia field director of Workers Right Consortium, said the landlord’s claim “makes no sense”, pointing out that the law states that workers are to be paid before any other entities.
“I fail to see any argument that he should not stay back in the queue,” Gehrt said in an email. “The workers’ claim still comes first.”
In addition to the clothing brand Zara, Co-Seek workers also produced clothes for GU, a brand owned by Japanese retail giant Fast Retailing.
Inditex, which owns Zara and is the largest fashion group in the world, did not respond to multiple requests for comment.
Gary Conway, a spokesman for Fast Retailing, said the company sourced from Co-Seek for less than a year from 2014 to 2015.
“Since then we have had no business relationship with Co-seek Garment,” he said in an email. “Because the issue is from August 2016, it’s long after we stopped working with Co-seek.”
Gehrt called on the brands sourcing from the factory to step in. “Many other brands, including Nike, Adidas, Fruit of the Loom and Gap have in recent years paid workers the severance they were owed at their suppliers,” he said.
