Apple Puts Major Taiwanese Supplier Pegatron on Probation Over Labour Laws Violation

Pegatron mis-classified student workers and falsified paperwork to disguise the violations, Apple said.

By Reuters | Updated: 10 November 2020 14:56 IST

Apple Puts Major Taiwanese Supplier Pegatron on Probation Over Labour Laws Violation

Apple said that Pegatron had now fired the executive with direct oversight of the programme

Highlights

Apple did not declare the terms of the probation
Its own investigations had found no evidence of forced or underage labour
Pegatron's shares closed down 2.1 percent on Monday

Apple has put its Taiwanese supplier Pegatron on probation after finding that the company violated Apple's supplier code of conduct by asking student employees to work night shifts or overtime and also take up work unrelated to their majors. Pegatron had mis-classified student workers and falsified paperwork to disguise the violations, and, in some cases, also breached the code by allowing students to perform work unrelated to their majors, the US technology giant said.

"Several weeks ago, we discovered Pegatron, one of Apple's suppliers in China, violated Apple's Supplier Code of Conduct in its administration of a student work study programme," Apple said in a prepared statement. Pegatron is one of a handful of Taiwanese manufacturers on the island, alongside Foxconn, who dominate Apple's iPhone assembly chain.

"Apple has placed Pegatron on probation and Pegatron will not receive any new business from Apple until they complete all of the corrective actions required," the statement added.

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Apple did not declare the terms of the probation. Its own investigations had found no evidence of forced or underage labour, Apple said, adding that Pegatron had now fired the executive with direct oversight of the programme.

"The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms," Apple said. Pegatron's shares closed down 2.1 percent on Monday, underperforming a 1.2 percent rise in the broader Taipei market.

Pegatron said in a separate statement that student workers at its Shanghai and Kunshan campuses had been found working without complying with local rules and regulations. They had now been taken off the production lines and given "proper compensation", it said.

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The statement from Pegatron, however, did not address the question how being put on probation by Apple might impact the company. Pegatron reported a TWD 19.3 billion (roughly Rs. 5,000 crores) profit in 2019, up 74 percent on the previous year.

Apple last month launched its next-generation iPhone 12, with faster 5G connectivity. Apple and its suppliers have been accused of poor labour practices in the past, but the US company has been trying to get a grip over such issues by releasing annual reviews of the iPhone supply chain.

In 2017, Apple and Foxconn said a small number of students were discovered working overtime in one of the latter's Chinese factories, violating local labour laws.

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In July, the third major Taiwanese assembler of iPhones, Wistron, sold two smaller factories in China to Dongguan-based Luxshare, a fast-growing firm emblematic of China's rising home-grown suppliers which are gradually increasing rivalry with the Taiwanese giants.

© Thomson Reuters 2020

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