supplier name: calçados ramarim ltda. site name: calçados...

Audit company: FLOCERT GmbH Report reference: FC-SEDEX-2015-002 Date: 27/11/2015 1

Supplier name: Calçados Ramarim Ltda.

Site country: Brazil

Site name: Calçados Ramarim Ltda. Filial (Sapiranga Site)

Parent Company name (of the site): Calçados Ramarim Ltda.

SMETA Audit Type: 2–Pillar 4–Pillar

Date of Audit November 27 and 28, 2015


Audit Company Name:

Report Owner (payee):

(If paid for by the customer of the site please remove for Sedex upload)

Sedex Company Reference: (only available on Sedex System) S: XX

Sedex Site Reference: (only available on Sedex System) P: XX

Audit Conducted By

Commercial Purchaser

NGO Retailer

Trade Union Brand Owner

Multi–stakeholder Combined Audit (select all that apply) Auditor Reference Number: (If applicable) Not applicable

SMETA Declaration I declare that the audit underpinning the following report was conducted in accordance with SMETA Best Practice Guidance and SMETA Measurement Criteria. Auditor Name(s) (please list all including all interviewers): Lead auditor: Eduardo Abraços Bluhm Team auditor: Not applicable Interviewers: Eduardo Abraços Bluhm Date: November 28, 2015


Non–Compliance Table

Issue (please click on the issue title to go direct to

the appropriate audit results by clause)

Area of Non–Conformity (Only check box when there is a non–conformity, and only in the box/es where the non–conformity

can be found)

Record the number of issues by line*:

ETI Base Code Local Law

Additional Elements

(i.e. not part of ETI code )

NC Obs GE

0 Management systems and code

implementation 1 1 1

1 Employment Freely Chosen

2 Freedom of Association

3 Safety and Hygienic Conditions 6 2 1

4 Child Labour 1 1

5 Wages and Benefits 1

6 Working Hours 2

7 Discrimination

8 Regular Employment

8A Sub–Contracting and Homeworking

1 1

9 Harsh or Inhumane Treatment 1

10A Entitlement to Work

10B2 Environment 2–Pillar 3 1

10B4 Environment 4–Pillar

10C Business Ethics *Please note the table above records the total number of Non compliances (NC), Observations (Obs) and Good Examples (GE). This gives the reviewer an indication of problem areas but does not detail severities of each issue – Reviewers need to check audit results by clause.


Summary of Findings Summary of main findings: (positive and negative) (Please give a short summary of the main findings per clause)

The products manufactured at this site are shoes made of different materials such as leather, cotton and synthetic materials. There are a total of 350 workers on site whereas approximately 320 are production workers. No migrant workers are active t the site. The youngest worker on site was 16 year old There is a union active at the region and at the factory; one union representative is a direct employee of the company. The site has been facing a low production season and they have agreed with the union and workers with a reduced work period. Site uses 5 sub-contractors, and has informed his client about this. The main issues found at this audit were the following: Issues Found Not all workers were aware of the code. Absence of ergonomic assessment. Absence of risk and emergency maps. Insufficient emergency exist. Not conducted emergency and fire drills. Absence of a plan of action on machine guarding. Improvement opportunities in chemical management, handling and storage. Young workers active in insalubrious environment. Work journey above 12 hours a day. Excessive overtime performed on weeks. No systemic and documented monitoring of subcontracted operations. No environmental operational permits issued. No sanitary permits issued. Temperature measurements.


Audit Details

Audit Details

A: Report #:

B: Time in and time out (SMETA Best Practice Guidance and Measurement Criteria recommends 9.00–17.00 hrs. if any different please state why in the SMETA declaration )

Day 1 Time in: 13:30 Day 1 Time out: 17:00

Day 2 Time in: 09:00 Day 2 Time out: 13:00

Day 3 Time in: - Day 3 Time out: -

C: Number of Auditor Days Used: (number of auditor x number of days)

One audit day divided in two days.

D: Audit type:

Full Initial Periodic Full Follow–up Partial Follow–Up Partial Other – Define

E: Was the audit announced? (AAG recommends a window of three weeks for semi–announced, this gives optimum results)

Announced Semi – announced: Window detail: weeks Unannounced

F: Was the Sedex SAQ available for review?

Yes No

If No, why not? (Examples would be, site has not completed SAQ, site has not been asked to complete the SAQ.)

The site has not been asked to complete the SAQ.

G: Any conflicting information SAQ/Pre-Audit Info to Audit findings?

Yes No

If Yes, please capture detail in appropriate audit by clause

H: Auditor name(s) and role(s): Eduardo Abraços Bluhm – Lead Auditor

I: Report written by: Eduardo Abraços Bluhm

J: Report reviewed by: Saravanakumar Kandasamy

K: Report issue date: November 28, 2015

L: Supplier name: Calçados Ramarim Ltda

M: Site name: Calçados Ramarim Ltda. Filial (Sapiranga Site)

N: Site country: Brazil


O: Site contact and job title: Marçal Müller (Director of Operations) / Viviane Wagner (Quality Manager) / Fabiano Haiztemberger (HR Manager)

P: Site address: (Please include full address)

Rua General Nascimento Vargas 154 - São Luiz Sapiranga-RS - CEP:93.800-000 - Brazil

Site phone: +55 51 3565 8100

Site fax: +55 51 3565 8100

Site e–mail: [email protected] / [email protected] / [email protected]

Q: Applicable business and other legally required licence numbers: for example, business license no, and liability insurance

• Federal Tax Registration: #88.104.328/0013-32 • Federal Registration for Potentially Pollutant Activities - #5416877

– issued by the Ministry of Environment on 01/12/2011. • Federal Police Operational Permit #201429088-6 valid until

November 12, 2015. The factory is currently applying for the necessary permits in order to receive the final operational permit from the municipality. The current permits under application are:

• Application for the Environment Operational Permit – Issued by FEPAM on November 14, 2014.

• Application of Fire Department Fire Prevention Certificate - #2482/1 from January 29, 2015 – issued by the Fire Department from the estate of Rio Grande do Sul.

R: Products/Activities at site, for example, garment manufacture, electricals, toys, grower

Design and Manufacturing of Shoes.

S: Audit results reviewed with site management?

Yes. All findings were presented and discussed with the management team in a closing meeting.

T: Who signed and agreed CAPR (Name and job title)

The report submitted on a later date, not yet signed by the site

U: Did the person who signed the CAPR have authority to implement changes?

The report submitted on a later date, not yet signed by the site

V: Present at closing meeting (Please state name and position, including any workers/union reps/worker reps):

Viviane Wagner (Quality Manager) Fabiano Haiztemberger (HR Manager) Clademir Dallarozza (Production Manager)

W: What form of worker representation / union is there on site?

Union (Sindicato de Sapateiros de Sapiranga e Região) Worker Committee Other (specify) None

X: Are any workers covered by Collective Bargaining Agreement (CBA)

Yes No


Y: Previous audit date: Not Applicable

Z: Previous audit type:

SMETA 2–pillar

SMETA 4–pillar

Other

Full Initial

Periodic

Full Follow–Up Audit

Partial Follow–Up

Partial Other*

*If other, please define:


Audit Scope/Actual Results

Criteria Local Law (Please state legal

requirement)

Actual at the Site

(Record site results against

the law)

Is this part of a Collective Bargaining

Agreement?

A: Standard/Contracted work hours: (Maximum legal and actual required working hours excluding overtime, please state if possible per day, week and month)

Legal maximum: 8 hours per day 44 hours per week 220 per month

44 hours per week from Monday to Friday. The work on Saturday is compensated throughout the week.

Yes No

B: Legal Overtime hours: (Maximum legal and actual overtime hours, please state if possible per day, week and month)

Legal maximum: 2 hours per day 12 per week

36 to 60 hors per week recorded in peak periods

Yes No

C: Legal age of employment: (Minimum legal and actual minimum age at site)

Legal minimum: 16 years old 18 years old for insalubrious activities

16 years old

D: Legal minimum wage for standard/contracted hours: (Minimum legal and actual minimum wage at site, please state if possible per hr, day, week and month)

Legal minimum: R$ 3.58 / hour

R$ 4.03 / hour for the probation period and R$ 4.68 / hour after the probation period.

Yes No

E: Legal minimum overtime wage: (Minimum legal and actual minimum overtime wage at site, please state if possible per hr ,day, week and month)

Legal minimum: 50% of normal wage rate for weekday overtime, 100% of normal wage rate for Sundays and holidays.

50% of normal wage rate for weekday overtime. 100% of normal wage rate for Sundays and holidays. 70% of normal wage rate for weekday overtime of extra hours over 42 total monthly worked hours.

Yes No


Audit Scope

(Please select the code and additional requirements that were audited against during this audit)

2–Pillar Audit

10B4: Environment 4–Pillar

10C: Business Ethics

All groups of workers are included in the scope of this audit such as; Direct employees, Casual and agency workers, Workers employed by service providers such as security and catering staff as well as workers supplied by other contractors.

Note: The main focus of this ethical audit is on the ETI Base Code and local law. The additional elements will not be audited in such depth or scope, but the audit process will still highlight any specific issues. This report provides a summary of the findings and other applicable information found/gathered during the social audit conducted on the above date only and does not officially confirm or certify compliance with any legal regulations or industry standards. The social audit process requires that information be gathered and considered from records review, worker interviews, management interviews and visual observation. More information is gathered during the social audit process than is provided here. The audit process is a sampling exercise only and does not guarantee that the audited site prior, during or post–audit, are in full compliance with the Code being audited against. The provisions of this Code constitute minimum and not maximum standards and this Code should not be used to prevent companies from exceeding these standards. Companies applying this Code are expected to comply with national and other applicable laws and where the provisions of law and this Code address the same subject, to apply that provision which affords the greater protection. The ownership of this report remains with the party who has paid for the audit. Release permission must be provided by the owner prior to release to any third parties.

Audit Overview

Audit Overview

Management Worker Representatives

Audit attendance Senior management Worker Committee representatives

Union representatives

A: Present at the opening meeting? Yes No Yes No Yes No

B: Present at the audit? Yes No Yes No Yes No

C: Present at the closing meeting? Yes No Yes No Yes No

D: If Worker Representatives were not present please explain reasons why (only complete if no worker reps present)

There is no system of worker representatives besides the role of union representatives at the factory.

E: If Union Representatives were not present please explain reasons why: (only complete if no union reps present)

One union representative was interviewed during the audit process. The interview was conducted in a reserved room and the auditor was able to talk with the union representative about the factory day to day activities, possible existing complains, improvement opportunities and how the negotiation process of the regional conventional takes place.


F: Site description: (Include size, location and age of site. Also include structure and number of buildings)

The Ramarim Group is one of the largest footwear companies in Brazil. Founded in 1962, currently has four units, 8000 employees and a production of more than 60,000 pairs every day. Owner of the trademarks Ramarim, Comfortflex and Whoop. The group is a reference in Brazil in research, fashion, technology, comfort and innovation. The sit audited is Ramarim Calçados Ltda filial Sapiranga is located in a mix residential-industrial zone. The total constructed area occupied was is approximately 5,000 sq. meters in a total area of approximately 20,000 sq. meters. The locating is a rented facility. A total of 350 workers are currently working in the facility, which includes 320 production employees and 30 administrative employees. The building is built in masonry form and it compromises of one administrative area, one large main production hall with a separated storage area. Next to the main building the factory boiler is found and next to it another production hall dedicated to the production of rubber used in all shoes of the factory. Residues is kept to a minimum and stored in a segregated area near the boiler. Another building is sued to store chemicals and old machinery. The factory makes no use of water in the production process.

G: Site function: Agent Factory Processing/Manufacturer Finished Product Supplier Grower Homeworker Labour Provider Pack House Primary Producer Service Provider Sub–Contractor

H: Month(s) of peak season: (if applicable)

January to April

I: Process overview: (Include products being produced, main operations, number of production lines, main equipment used)

The products manufactured in this unit are shoes.The main production processes include rubber preparation, molding, rubber cutting, textile preparation, cutting, sewing, assembling, vulcanization, finishing, inspection and packing.


J: Attitude of workers: (Include their attitude to management, workplace and the interview process. Both positive and negative information should be included) Note: Do not document any information that could put workers at risk

25 workers were selected for interview including 13 male and 12 female employees. All workers said they were satisfied with their employment at the factory and that they were satisfied with the fact the company always honoured the payment of wages. Workers had good relationships with their supervisors and managers who treated them with respect, nevertheless in 2014 some worker complained about abuse of power and harsh verbal treatment. Workers were able to make suggestions and offer few ideas on how things can improve at the site. This led to the issue that the factory did not have a grievance procedure and workers would appreciate if one existed at the site.

K: Attitude of workers committee/union reps: (Include their attitude to management, workplace and the interview process. Both positive and negative information should be included) Note: Do not document any information that could put workers at risk

The union representative act positive towards the company and expressed that the company has been a good player in the region and negotiation with the union have always been constructive and collaborative.

L: Attitude of managers: (Include attitude to audit, and audit process. Both positive and negative information should be included)

FLOCERT GmbH conducted this initial annual audit. One auditors in two half days assessed / verified the facility’s operations against the ETI Base Code and local legislations on a sampling basis. Management participated in a collaborative way with the auditor and the documentation presented is perceive to be original. The following managers participated in the audit: Viviane Wagner (Quality Manager) Fabiano Haiztemberger (HR Manager) Clademir Dallarozza (Production Manager)


Key Information

Key Information (click on the key information title to go to appropriate section of the report)

A: Do all workers (including migrant workers) have contracts of employment/employment agreements? (Go to clause 8 – Regular Employment)

Yes No

B: Are maximum standard/contracted working hours clearly defined in contract/employment agreements? (Go to clause 8 – Regular Employment)

Yes No

C: Were appropriate records available to verify hours of work and wages? (Go to clause 5 – Living Wage)

Yes No

D: Were any inconsistencies found? (if yes describe nature) (Go to Wages Table)

Yes Poor record keeping No Isolated incident

Repeated occurrence

E: For the lowest paid production workers, are wages paid for standard/contracted hours (excluding overtime) below or above the legal minimum? (Go to clause 5 – Living Wage)

Wages found: Please indicate the breakdown of workforce according to earnings:

Below legal min

Meet Above

__00__% of workforce earning under min wage __90__% of workforce earning min wage __10__% of workforce earning above min wage

F: % of piece rate workers: (if applicable)

No piece rate for workers are active at the factory.

G: Do the standard/contracted hours stated in a contract/employment agreement exceed the law or 48 hours per week? (Go to clause 6 – Working hours)

Yes No

H: If yes, what are the standard/contracted hours per week as stated in the contract/employment agreement? (Go to clause 6 – Working hours)

_____ hrs/week Approx. ____% of ALL workers on these contracted hours

I: Combined hours (standard/contracted plus overtime = total hours) over 60 per week found? (Go to Working Hours Analysis)

Yes No

J: Are workers provided with 1 day off in every 7-day-period, or 2 in 14-day-period (where the law allows)?

Yes No

If ‘No’, please explain:


K: Are the correct legal overtime premiums paid? (Go to Wages Table)

Yes No N/A – there is no legal requirement to OT premium

L: Please state what actual OT is paid. (As a percentage of the workers standard rate) (Go to Working Hours Analysis)

Please give details of overtime premium as a % of standard wages: 0% 1% – 115% 116% – 124% 125% – 149% 150% – 199% 200%+

Please give details:

M: Is there any night production work at the site?

Yes No

N: % of workers living in site provided accommodation (if applicable):

There are no dormitories at the site and the company does not allow workers to sleep at the premises.

O: Age of youngest worker found: (Go to clause 4 – Child labour)

16

P: Workers under 18 subject to hazardous work assignments? (Go to clause 3 – Health and Safety)

Yes No

% of under 18’s at this site (of total workers) >1 %

Q: What form of worker representation/union is there on site? (Go to clause 2 – Freedom of Association)

Union (Sindicato de Sapateiros de Sapiranga e Região) Worker Committee Other (specify) None

R: Is it a legal requirement to have a union? (Go to clause 2 – Freedom of Association)

Yes No

S: Is it a legal requirement to have a workers committee? (Go to clause 2 – Freedom of Association)

Yes No

T: Is there any other form of effective worker/management communication channel? (Other than union/worker committee) (Go to clause 2 – Freedom of Association)

Yes No

Describe:

U: Are there any External Processes? (Go to clause 8A – Sub–contracting and Home working)

Sub–Contracting Homeworking Other External Process No external processes


Management Systems

Management Systems:

A: Nationality of Management Brazilian

B: Gender breakdown of Management + Supervisors (Include as one combined group)

Male: __41___ % Female__59___ %

C: Majority nationality of workers Brazilian

D: Number of workers leaving in last 12 months as a % of average total number of workers on site over the year (annual worker turnover)

Approximately 1 %

E: Were accurate records shown at the first request?

Yes No

F: If No, why not?

G: In the last 12 months, has the site been subject to any fines/prosecutions for non–compliance to any regulations?

Yes No

Please describe: the Ministry of Labour has issued two notices of violations in one single occasion. The first notice of number 20.459.374-3 issued on September 15, 2014 is related to the absence of rest seats for workers who are working on a standing position. The auditors issued the notice after a qualitative assessment and interview with workers. This analysis is required according to the article 17.3.5 from NR 17 and it is aimed to prevent occupational accidents and diseases. The second notice of number 20.459.373-5 issued on September 15, 2014 is related the absence of an ergonomic assessment analysis. This analysis is required according to the article 17.6.1 from NR 17 and it is aimed to prevent occupational accidents and diseases.

H: Do policies and/or procedures exist that reduce the risk of forced labour, child labour, discrimination, harassment & abuse?

Yes No

Please describe:

I: If Yes, is there evidence (an indication) of effective implementation? Please give details.

J: Have managers and workers received training in the standards for forced labour, child labour, discrimination, harassment & abuse?

Yes No

Please describe:


K: If Yes, is there evidence (an indication) that training has been effective e.g. training records etc.? Please give details

L: Are there published, anonymous and/or open channels available for reporting any violations of Labour standards and H&S or any other grievances to a 3rd party?

Yes No

Please describe:

M: If Yes, are workers aware of these channels? Please give details.

N: Have health and safety risks been identified e.g. through internal audits, formal risk analysis process, worker involvement etc.?

Yes No

Please describe: The factory has developed the legally required documents Accident Risk Prevention Program (PPRA) and the Program for the Control Occupational Health (PCMSO). Specialized contracted companies perform the quantitative analysis of occupational working conditions and the medical exams. In addition the company has establishes, as required by law, an internal commission for accident prevention (CIPA) with elected workers representatives.

O: If Yes, has effective action been taken to reduce or eliminate these risks?

P: Are accidents recorded? Yes No

Please describe: According to the Brazilian legislation each accident is recorded in a report (CAR) where the accident and consequences have to be described so as the main root cause.

Q: Has the auditor made a simple calculation to compare capacity with workers’ work load in order to identify possible unrecorded work hours?

Yes No

Please describe: The factory is currently under a reduced production capacity and has through a collective bargaining agreement implemented a half work journey on Fridays. During the peak production period, which is generally at the beginning of the year, work is performed as overtime during Saturdays and recorded according to the actual worked time.

R: Does the site have all required land rights licenses and permissions (see SMETA Measurement Criteria)?

Yes

S; Does the site have any internationally recognised system certifications e.g. ISO 9000, 14000, OHSAS 18000, SA8000 (or other social audits). Please detail (Number and date).

No


T: Is there a Human Resources manager/department? If Yes, please detail.

Yes No

Please describe: The HR management is performed centrally at the main office of Ramarim Calçados Ltda at Rua Angra dos Reis, 171 – Nova Harz, RS – Brazil. The HR manager is Mr. Fabiano Haiztemberger and at the filial (audited site) the HR officer Rodrigo Weber and one additional assistant perform the day-to-day HR activities.


Worker Analysis

Worker Analysis

Local Migrant Total

Permanent Temporary Agency Permanent Temporary Agency Home

workers

Worker numbers – male 159 0 0 0 0 0 0 159

Worker numbers –female 191 0 0 0 0 0 0 191

Total 350 0 0 0 0 0 0 350

Number of Workers interviewed 25 0 0 0 0 0 0 0

Contractors: (Individuals supplying workers to site with the workers paid by contractors, not by site)

A: Any contractors on site? Yes No

B: If Yes, how many workers supplied by contractors No contractors on site.

C: Are all contractor workers paid according to law?

Yes No

No contractors on site.

If Yes, Please give evidence for contractor workers being paid according to law: No contractors on site.

Migrant Workers: (Please see SMETA Best Practice Guidance and Measurement Criteria for definitions of migrant workers)

D: Originating Locations/Countries:

No migrant workers on site.

E: Type of work undertaken by migrant workers :


F: Were migrant workers Yes


recruited through an agency? If yes, please give details.

No Please describe: No migrant workers on site.

If Yes, is there a contract with the agency? Provide details of agencies and contractual arrangements including any fees lodged during the recruitment process.


G: Does the site have a system for checking labour standards of agencies? If yes, please give details.

Yes No

Please describe: No migrant workers on site.

H: Percentage of migrant workers in company provided accommodation:



Audit Results by Clause

0: Management systems and Code Implementation 0: Managements system and Code Implementation

(click here to return to NC Table)

0.1 Suppliers are expected to implement and maintain systems for delivering compliance to this Code. 0.2 Suppliers shall appoint a senior member of management who shall be responsible for compliance with the Code. 0.3 Suppliers are expected to communicate this Code to all employees. 0.4 Suppliers should communicate this code to their own suppliers and, where reasonably practicable, extend the principles of this Ethical Code through their supply chain.

Current Systems and Evidence Examined

To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant

procedures are carried out, who is/are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to support the systems.

Current systems: • Responsibility for meeting the legal requirements is shared between the HR Manager, Quality Manager and

Production Manager. Together they are responsible for ensuring the legal requirements are met. � • Overall responsibility for meeting the standards is taken by the Factory Director, Mr Marçal Müller. � • There is an internal, newly formed and legally required Internal Commission for Accident Prevention which is

responsible perform regular controls and assist on keeping safe working conditions at the premises. • The factory is also required to keep an Specialized Service for Health and Safety Engineering and

Occupational Medicine. This service is currently composed of an externally hired health and safety engineer (part-time), a nurse (part-time) and a technician for health and safety (full time).

• There are no certifications at the site, such as ISO 14000, ISO 9000 etc. � Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate):

• Internal Health and Safety documentation and internal minutes of election and meetings of the Internal Commission for Accident Prevention

Non–compliance:


1. Description of non–compliance: NC against ETI/Additional Elements NC against Local Law

During the audit process and worker interview all participants were not aware of the ETI code. The factory did not know about this requirement. Local law and/or ETI requirement: ETI code 0.3 Suppliers are expected to communicate this Code to all employees. Recommended corrective action: It is recommended that all workers are made aware of the content of the ETI code and that it is additionally displayed in the workers common area, for increased visibility.

Objective evidence observed: 1. Site tour, Worker and Management Interviews.

Observation:

Description of observation: Before the audit, it was noted that the factory was not aware about the necessity in completing in SAQ. The factory explained that they had not been instructed to do so by their client, which requested the SMETA audit. Local law or ETI requirement: Not Applicable. Comments: The factory explained that they were not made aware about this necessity. Nevertheless, the factory was able to supply the auditor with general information about its operation in a separate custom form.

Objective evidence observed: 1. Management Interview.

Good Examples observed:

Description of Good Example (GE): During the audit process it became noticeable that the work environment at the factory is perceived as positive and relaxed. This information was confirmed during the interview process where workers informed that they feel satisfied working at the factory.

Objective evidence observed: 1. Site tour, Worker and Management Interviews.


1: Employment is Freely Chosen 1: Employment is Freely Chosen

(Click here to return to NC–table)

ETI 1.1 There is no forced, bonded or involuntary prison labour. 1.2 Workers are not required to lodge “deposits” or their identity papers with their employer and are free to leave their employer after reasonable notice.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is/are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to

support the systems.

Current systems: The factory does not have a set of policies stating the freedom of employment and the prohibition of any practice of forced labor. Nevertheless, there is a formal application procedure which states that workers must present their ID’s for proof of age but that only copies must be kept in the personnel files and the original given back to the workers. �In addition, the workers’ work card (carteira de trabalho) is given to the factory for registration and returned to the worker within two days. No worker’s card is kept at the factory during the employment period. According to the Brazilian legislation, workers are free to quit or leave the employment contract at anytime. Security guards do not prevent workers from leaving the premises outside of working hours and no personal searches takes place. The above was confirmed in management and worker interviews. Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): - Personnel files - Employment contracts - Factory rules - Employee Guide Handbook - Management and worker interview

Non–compliance:

1. Description of non–compliance: NC against ETI NC against Local Law:

No non-conformities have been identified in this subject. Local law and/or ETI requirement Recommended corrective action:

Objective evidence observed: (where relevant please add photo numbers)

Observation:


Description of observation: No observations have been made in this subject. Local law or ETI requirement: Comments:

Objective evidence observed:


Description of Good Example (GE): No good examples have been made in this subject.



2: Freedom of Association and Right to Collective Bargaining are Respected 2: Freedom of Association and Right to Collective Bargaining are Respected

(Click here to return to NC–table) (Click here to return to Key Information)

ETI 2.1 Workers, without distinction, have the right to join or form trade unions of their own choosing and to bargain collectively. 2.2 The employer adopts an open attitude towards the activities of trade unions and their organisational activities. 2.3 Workers’ representatives are not discriminated against and have access to carry out their representative functions in the workplace. 2.4 Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent and free association and bargaining.



Current systems: • There is an active workers union in the region called Sindicato de Sapateiros de Sapiranga e Região. • The union is active in the region and has established a regional convention with the employers union called Sindicato da Industria de Calçadas de Sapiranga. • The local union represents, according to the Brazilian legislation, every worker active in the regional shoe industry. • The union convention is currently valid from August 1st, 2015 until Julhy 31st, 2016 and it gets updated every year after wage negotiations. • The workers union has one representative active at the site, Mr. Antonio Derli. Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Valid regional convention • Interview with workers � • Interview with union representative • Interview with managers �

Non–compliance:

1. Description of non–compliance: NC against ETI NC against Local Law:

No non-conformities have been identified in this subject. Local law and/or ETI requirement Recommended corrective action:


Observation:


Description of observation: No observations have been made in this subject. Local law or ETI requirement: Comments:



Description of Good Example (GE): No good examples have been made in this subject.


A: Name of union and union representative, if applicable:

Sindicato de Sapateiros de Sapiranga e Região

Is there evidence of free elections? Yes No N/A

The election process at the union was not verified, but the union representative at the factory confirmed that elections at the local union are free and open to any worker in the region.

B: If no union what is parallel means of consultation with workers e.g. worker committees?

Not applicable. Is there evidence of free elections? Yes No N/A

C: Were worker representatives/union representatives interviewed

Yes No If Yes, please state how many: one worker Mr. Antonio Derli

D: State any evidence that union/workers committee is effective? Specify date of last meeting; topics covered; how minutes were communicated etc.

The union representative stated that he possess the autonomy and freedom to meet and invite the union directors at any time. Monthly meetings take place at the central office at the union representative is free to participate on these meetings during work time.

E: Are any workers covered by Collective Bargaining Agreement (CBA)

Yes No

F: If Yes what percentage by trade Union/worker representation

100% workers covered by Union CBA

____% workers covered by worker rep CBA

G: If Yes, does the Collective Bargaining Agreement (CBA) include rates of pay

Yes No



Description of Good Example (GE): The factory shows a constructive and dynamic engagement with the union and involves the union in significant decisions such as a recent joint decision with workers to reduce the weekly journey due to a decrease of production of shoes.

Objective evidence observed: 1 – collective agreement on the reduction of the weekly journey, and interview with management and union representative.


3: Working Conditions are Safe and Hygienic 3: Working Conditions are Safe and Hygienic


ETI 3.1 A safe and hygienic working environment shall be provided, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Adequate steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the course of work, by minimising, so far as is reasonably practicable, the causes of hazards inherent in the working environment. 3.2 Workers shall receive regular and recorded Health & Safety training, and such training shall be repeated for new or reassigned workers. 3.3 Access to clean toilet facilities and to potable water, and, if appropriate, sanitary facilities for food storage shall be provided. 3.4 Accommodation, where provided, shall be clean, safe, and meet the basic needs of the workers. 3.5 The company observing the code shall assign responsibility for Health & Safety to a senior management representative.


To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is/are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to


Current systems: 1.General Health and Safety management: • Ms Viviane Wagner, quality manager is the appointed responsible person as Health & Safety Manager for

the site. � • Factory’s general housekeeping is well maintained at the site and production floor. • Potable water was freely available in all areas and test certificates were up-to-date. • Sufficient clean toilets segregated by gender were available at all times to workers. � • Lighting was adequate for the production processes. � • Improvement opportunities are noticed in ventilation and temperature. • The factory posses a boiler and two compressor machines. The operation of theses machineries are

controlled in a logbook and independently inspected every six months for the boiler and every year for the compressor machines.

• Ergonomic assessment and preventive action has not been implemented at the site. 2. Fire Safety � • Fire fighting equipment was well distributed and maintained throughout the premises and the health and

safety team performs monthly monitoring of this equipment. • The factory has recently trained a fire brigade team and is continuously maintaining the team emergency

preparedness with trainings. • Emergency exists and escape routes require significant attention, as they are currently not in conformity with

the local legislation. • Fire and emergency drills have not been conducted in this location. • The emergency plan and risk maps have not been developed and they


3. Electrical safety � • All electrical equipment was maintained in good condition such as sockets, plugs, switches and main fuse

boards. • Electric panels were found partially signalised and with accessible paths.

4 - Chemical safety � • Most chemicals were found labelled and Material Safety Data Sheets (SDS) were available at the IT system

but not at the location where chemicals are stored. • The heath and safety team supports the overall housekeeping of chemicals, and at the product manager

monitors the use of chemicals in the production area. • Opportunities of improvement were found in the storage of chemicals and how chemicals are allocated in the

production hall.

5. Medical services • A small nursery is installed at the factory where a part-time nurse supports the staff on medical claims. • There were first aid kits available in the production area and these were well stocked.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • PPRA and PCMSO Document • CIPA committee minutes • Training records and certificates • Fire equipment maintenance records • Machinery inspection and maintenance logbook. • Records checks on noise level • Building structure • Accident reports • Chemical list and SDS for chemicals • Potable water testing certificates • Interviews with H&S manager • Interviews with workers and H&S team members

Non–compliance:

1. Description of non–compliance: NC against ETI NC against Local Law

The factory has not yet conducted an ergonomic assessment of the workstations and tasks performed by the workers. Important to note that the workers work in a standing position the entire day without alternative tasks or short breaks. Important also to mention, that in 2014 the company received a administrative fine by the Ministry of Labour due to these two issues mentioned above but up to this moment has not implement corrective actions.

Objective evidence observed: (where relevant please add photo numbers) 1 - Factory tour and the H&S documentation.


Local law and/or ETI requirement The Regulatory Norm - NR 17 - Ergonomics establishes the obligation to all companies, which admit employees who are exposed to ergonomic risks, to design and implement an ergonomic assessment report. Recommended corrective action: The company should design and elaborate an ergonomic assessment report based on all tasks performed at the company. The company should also implement measures to reduce the ergonomic stress on the workstations including the provision of seats or any applicable alternative measure. 2. Description of non–compliance:

NC against ETI/Additional Elements NC against Local Law It has been noted during the factory tour that risk maps required by the national legislation have not been elaborated and posted in the different areas of the premises. Local law and/or ETI/Additional Elements requirement: Brazilian Norm NR-5 article 5.16 defines that in internal commission for accident prevention (CIPA) is responsible together with the H&S team to elaborate a risk map to all areas of the premises. Recommended corrective action: It is recommended that the company elaborates the map of risks with the CIPA and the H&S team and these maps of risks are displayed in an accessible way in all areas of the premises. 3. Description of non–compliance:

NC against ETI NC against Local Law It has been observed during the factory tour that the factory defined five emergency exist for the entire building. A series of non-conformities have been observed related to the emergency exits and routes and they are described as the following: The factory had not elaborated an emergency plan, which defines the escape routes, designated exists, capacity of the escape routes and exists, layout of the premises and meeting point. The designated emergency exists, two are found in the east wing of the factory, one in the west wing, one in the storage (separated by fences from the production hall), and one single exist from the rubber preparation hall. One emergency exit on the east wing is also used as the shipping dock for finished products. This exist is often blocked by materials and shipping trucks. In addition the exit is about 40 cm above the asphalt and does represent a risk for accidents. The second exist in the east wing is located at the sector that manufactures pilots and

2 - Factory tour and the H&S documentation. 3 - Factory tour and the H&S documentation.


sample products and the escape routs is narrow when taking into consideration the number of workers active at the east wing. Additionally, during the audit it has been observed that the emergency door was damaged and it could only remain open with an adapted pole, which prevented the door from shutting down. Also, the location is also used to deliveries and pickups and there is frequently cars parked at that location. On the west wing, only one exit is designated for that portion of the factory and this exit is not able to absorb the total number of workers active in that area. Important to note that two wide windows in that area used to be the designated emergency exists, but these exists became not adequate as the factory planted a decorative garden in that location and the path to the outside is partially blocked by rocks, decoration and trees. At the rubber preparation area, only one emergency exit exists in that area. The exit is sufficiently large to accommodate and evacuate all workers active in the area. Nevertheless, the area has not defined sufficient escape routes and the existing ones are either blocked by materials and machinery. Important to note that the area is below capacity according to the number of workers, operations and activities there conducted. The escape routes in the entire factory have not received signs, floor markings and escape plans. Only at the exits doors the emergency exist signs was displayed. Local law and/or ETI requirement: The Brazilian norm NR23 outlines the requirements that facilitates should have sufficient emergency exists in place according to the nature of the operations and number of workers and ensure that these exists are accessible. Recommended corrective action: It is recommended that the factory, designs together with a qualified health and safety engineer and professional fire fighter, the emergency plan of the premises. On the plan the factory should ensure that emergency exist are unobstructed, in sufficient number and capacity according to the number of workers and are visual through signs and floor markings. The emergency plan should include all areas of the factory, including the rubber preparation area where insufficient escape routs have been observed. And finally, the emergency plan should be presented to the fire department in order the company to obtain the Fire Department Inspection Certificate. 4. Description of non–compliance:

NC against ETI/Additional Elements NC against Local Law It has been noticed that the factory has not conducted fire and emergency drills at the premises since the start of the activities. In addition, the factory has not performed the Internal Week of Occupational Accident Prevention (SIPAT). Local law and/or ETI/Additional Elements requirement: On the Brazilian norm NR 5, item 5:16 "O", the factory’s CIPA should promote

4 - Factory tour, the H&S documentation and management interviews.


annually in conjunction with the Specialized Safety and Occupational Medicine (SESMT), the Internal Week of Occupational Accident Prevention (SIPAT). According to the Brazilian Norm NR 23 – item 23.8.1 – the company should perform fire drills and these should be done periodically Recommended corrective action: It is recommended that the company establishes a plan for conducting fire and emergency drills at least once a year involving all workers, all work shifts and the entire premise. In addition, the company should elaborate a report documenting the fire drill indicating the time, day, duration of the fire drill and a qualitative report indicating any issues or improvement opportunities. In addition, the company should conduct once a year the SIPAT involving all workers active at the premises. 5. Description of non–compliance:

NC against ETI/Additional Elements NC against Local Law It has been noted that the factory, despite having implemented significant efforts in machine guarding, during the factory tour the auditor was able to verify that not all machines in the production were protected and in conformity with the Brazilian nor NR12. The following issues has been observed and they are to be visualized at the Photo Form at the end of this report: - The forklift was presented without safety seat beat. - Sewing machines were of an antique model and were not provided with safety

guard. - Certain machines had they pulley and moving parts without guarding. - Hot surfaces were found without signs and one oven was found with an

unprotected surface. Local law and/or ETI/Additional Elements requirement: On the Brazilian norm NR 5, item 5:16 "O", the factory’s CIPA should promote annually in conjunction with the Specialized Safety and Occupational Medicine (SESMT), the Internal Week of Occupational Accident Prevention (SIPAT). According to the Brazilian Norm NR 23 – item 23.8.1 – the company should perform fire drills and these should be done periodically Recommended corrective action: It is recommended that the company should create an action plan for adapting all machinery according to the requirements of the Brazilian norm NR12. The action plan should include the list of all machinery present at the factory and define priorities according to risk. Machines that cannot be protected should be replaced by new machinery. The adaptation plan should also include the forklift, sewing machines without safety guard, machines without pulley guard, and ovens without warming signs and unprotected hot surfaces.




During the visit at the chemical storage room, it has been noticed that the room is not constructed with ventilation. The auditor noticed strong odour from the chemicals there stored and visual identification of significant mould contamination. In addition the storage room possessed no impermeable floor, secondary containment (under construction), alert signs, Material Safety Data Sheets (SDS), emergency containment and fire fighting equipment and signs at the door indicating the presence of chemicals, including flammable ones. Additionally, drums of oil and fuel, were stored in a nearby room together with combustible materials and, similar to the chemical storage room with no impermeable floor, secondary containment (under construction), alert signs, Material Safety Data Sheets (SDS), emergency containment and fire fighting equipment and signs at the door indicating the presence of chemicals, including flammable ones. At an adapted location nearby the storage room, it has been observed that chemicals and fuels were placed nearby machine parts and materials. These chemicals were accessible to all personnel, and were unprotected against the elements of nature. In addition, it has been noticed that a bottle of Roundup (Glifosato), a spraying pump and a bottle of soda containing fuel were also present at this location. At the production hall, the auditor observed bottles of chemicals and gules without labels and placed near the workstation without containment measures. In addition, workers often bring their own snacks and water bottles to the workstations and this behaviour represents a risk of contamination and possible poisoning. Also at the production hall, a bottle of flammable chemical was found stored among materials and nearby a machine. The chemical was stored in a carton and near ignition sources. Local law and/or ETI/Additional Elements requirement: On the Brazilian norm NR 5, states the edification requirements for buildings. Further technical specifications are defined in the chemicals’ individual Material Safety Data Sheets. Recommended corrective action: It is recommended that the company should adapt the storage room of chemicals so it has ventilation, impermeable floor, secondary containment (under construction), alert signs, Material Safety Data Sheets (SDS), emergency containment equipment and fire fighting equipment and signs at the door indicating the presence of chemicals, including flammable ones. The flammable chemicals and the fuels identified in the three different locations at the premises should be placed at the storage room. The chemicals and glues present at the production hall should be identified with labels, indicating its content, active ingredient, pictograms and emergency procedure in case of accidents. These chemicals should be placed in containment boxes I order to prevent accidents and spills. In addition, food items should be kept outside from the production hall and water bottles should be identified as such.



Observation:

Description of observation: 1 - It has been observed that workers are allowed to use sandals at the production hall while operating machines, where palletizers circulate and where boxes of products are staked. Only at the rubber preparation area and the storage area workers are required to use closed shoes. Important to note that at the workers convention, the union and the factories in the region have agreed that sandals are allowed in the production hall whenever no significant risk is identified. 2 – It has been noted that the wash basis at the toilets are not provided with the following items: liquid soap, paper towels and trash with lid. Local law or ETI requirement: 1 - The Brazilian norm NR6 outlines the requirement for usage of PPE whenever an occupational risk exists at the work environment. The regional convention on item 42 allows worker to use pen shoes whenever no risk is identified. 2 – The Brazilian norm NR24 states the requirements for toilets at companies. Recommended corrective action: 1 - It is recommended that the factory should review the areas and functions where open shoes are not suitable and would represent an occupational risk. The factory should define the zones until where the palletizer is able to move without representing a risk to the workers. 2 - It is recommended that the factory equips the wash basis in all toilets with liquid soap, paper towels and trash with lid.

Objective evidence observed: Factory tour, the H&S documentation and management interviews.


Description of Good Example (GE): It has been noticed that the factory has implemented significant efforts in protecting and implementing machine guarding against the Brazilian health and safety norm NR12. All the heavy and most dangerous machines are guarded and have emergency devices. There is still adaption of some machines in the production line, which offers the opportunity for the company to create and follow with an action plan for machine guarding and become fully compliant with the Brazilian norm NR12.

Objective Evidence Observed: Visual inspection of the machinery and interviews with the H&S team and workers.


4: Child Labour Shall Not Be Used 4: Child Labour Shall Not Be Used


ETI 4.1 There shall be no new recruitment of child labour. 4.2 Companies shall develop or participate in and contribute to policies and programmes which provide for the transition of any child found to be performing child labour to enable her or him to attend and remain in quality education until no longer a child. 4.3 Children and young persons under 18 shall not be employed at night or in hazardous conditions. 4.4 These policies and procedures shall conform to the provisions of the relevant ILO Standards.




Current systems: • There is a formal procedure for checking ages of workers at application stage, and this includes checking

ID’s and workers cards. The copies of these documents are kept in each personal worker file.

• Analysis of all workers files showed that the youngest worker present was age 16 yrs.�

• There were a total of ten young workers (two male and eight female) enrolled and maintained in an apprentice program with the local organization SESI (Serviço Social da Industria – service maintained by the industry sector in each sate in Brazil and offers different services to the local industry to develop and train employees). These apprentices are spending half of their time at school and the other half at SESI learning their own individual professions. These apprentices are not active on the factory; the factory only supports their apprentice program.

• Three your workers (one male and two females) are found as active employees at the production line, which is considered an insalubrious work environment. Details of NC’s below.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Personnel files of all workers • Latest list of employees • Young workers details and interviews • Statement of SESI informing about the young apprentices

Non–compliance:



It has been noticed that three young workers on the ages of 16 and 17 were actively working at the production lines under the assembly, sewing and preparation area. These three production areas are considered insalubrious environment due mainly to the facts that the area possess the occupational hazards of noise, chemicals, ergonomic (working on standing position), temperature and moving parts due to the presence of machinery with moving parts. Important to note that the factory stated that the young workers are not working in contact with chemicals and machines. Local law and/or ETI requirement:

• 4.3 Children and young persons under 18 shall not be employed at night or in hazardous conditions.

• National Constitution article XXXIII states “prohibition of night work, dangerous or insalubrious work for persons under eighteen (18) years and of any work for minors under sixteen (16) years, except as apprentices from fourteen (14) years;”

Recommended corrective action: It is recommended that the factory designate work positions for the three young workers in locations where the work environment is not insalubrious and does not present as a risk for their development.

Objective evidence observed: (where relevant please add photo numbers) 1 - Site tour and worker interview, workers personal files.

Observation:

Description of observation: No observations noted in this subject. Local law or ETI requirement: Comments:



Description of Good Example (GE): The company maintains ten young workers (two male and eight female) enrolled in an apprentice program with the local organization SESI (Serviço Social da Industria – service maintained by the industry sector in each sate in Brazil and offers different services to the local industry to develop and train employees). These apprentices are spending half of their time at school and the other half at SESI learning their own individual professions. These apprentices are not active on the factory; the factory only supports their apprentice program.

Objective Evidence Observed: Management interviews and statement of SESI informing about the young apprentices


5: Living Wages are paid 5: Living Wages are Paid

(Click here to return to NC–table) (Click here to return to Key information)

ETI 5.1 Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income. 5.2 All workers shall be provided with written and understandable information about their employment conditions in respect to wages before they enter employment and about the particulars of their wages for the pay period concerned each time that they are paid. 5.3 Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages not provided for by national law be permitted without the expressed permission of the worker concerned. All disciplinary measures should be recorded.




Current systems: • Then national legal minimum wage is R$ 788,00 month, R$ 26,27 per day and R$ 3,58 per hour. �

• All workers’ wages were calculated by hourly rate and monthly. Workers are paid monthly. The minimum standard wage paid by the factory was R$ 4.68 / hour according to the wage records and regional convention. The wages will increase automatically to R$ 4.82 per hour after February 2016.

• Every new contracted worker is hired under a probation period of 90 days and during that period the minimum wage is R$ 4.03 per hour. This possibility is addressed at the union convention.

• The wages office was well organized with a good controlled set of processes, which are understood by all �employees. �The HR department is centrally managed in the main office of the factory in the municipality of Nova Harzt and the local office at the premises.

• All workers are provided with written and understandable information about their employment conditions in �respect to wages before they enter employment and about the particulars of their wages for the pay period �concerned each time that they are paid. �

• Document review of payroll and employee wage records showed that all workers receive the same legally required benefits. All benefits required by law such as social security, unemployment insurance, maternity leave, childcare support, insalubrity bonus, annual leave and Christmas bonus, and Life insurance is provided. All social insurance payments were passed on to the relevant authorities in a timely manner. � �

• Benefits of paid, annual leave, was given to all workers and child-bearing leave to appropriate workers. �

• All workers were paid on 5th of each month by bank account transfer and each worker was given a pay slip and signed for �their wages. �Wages advance are also provided upon the individual request of each worker.


Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Document review • Worker interview • Local and national laws • Wages and benefits policy • Union convention • Payroll records from January 2014 to September 2015 • Vacation records • Social insurance and payment receipts from the corresponding authorities • Labor contracts for all employees • Resignation records • Payslips of all workers interviewed • Hours records to check hourly rates and any overtime premiums

Non–compliance:


No Non-Conformities have been observed on this subject. Local law and/or ETI requirement: Recommended corrective action:


Observation:

Description of observation: No observations have been noted on this subject. Local law or ETI requirement: Comments:



Description of Good Example (GE): The company has developed a very positive reputation in being a very punctual wage payer to all its workers. This effort is well recognize by all workers. Important to mention that in several companies in the region payment punctuality is an issue, which requires the involvement of union representatives and administrative fines.

Objective Evidence Observed: Interview with workers, management and union representative. Paylsips and payment confirmations records.


Wages analysis: Wages analysis:

(Click here to return to Key Information)

A: Sample Size Checked (State number of worker records checked and from which weeks/months – should be current, peak and random/low. Please see SMETA Best Practice Guidance and Measurement Criteria)

40 samples from January 2014 50 samples from September 2014 40 Samples from April 2015 50 Samples from September 2015

B: Are there different legal minimum wage grades? If Yes, please specify all.

Yes No

If Yes, please give details:

C: If there are different legal minimum grades, are all workers graded correctly?

Yes No N/A

If No, please give details:

D: What deductions are required by law e.g. social insurance? Please state all types:

Social Security (INSS) Income Tax (IRPF) Union Contribution

E: Have all of these deductions been made? Please list all deductions that have/have not been made.

Yes No

If Yes, Please list all deductions that have been made:

If No, please give details on any deductions which have not been made:

F: Industry norm for this region: (please include time period e.g. hour/week/month)

There are no specific industry norms related to discounts or benefits.

Wages table Wages table

(Click here to return to Key information)

Worker Type Process Operator (Lowest paid)

Process Operator (Average paid)

Process Operator (Highest paid)

Select from individual worker records one worker from, lowest, average and highest wages and populate the boxes. Ensure comparison is made for same pay period and only uses full–time workers. See SMETA Best

Practice Guidance and Measurement Criteria for completing this:

A: Pay period: (State month selected)

September 2014 April 2015 September 2014

B: Anonymous Employee Reference/Dept.

Worker A / Rubber Mixer Worker B / Fork-lift driver Worker B / Chemestry

C: Employee Gender Male Male Male

D: Contracted/Standard working hours: (excluding OT – please include

220 hrs month (salary contract reference – Mensalista).




time period e.g. hour/week/month)

E: Contracted /Standard work pay rate: (excluding OT – please include time period e.g. hour/week/month)

R$ 4.50 / per hour. R$ 5.08 / per hour. R$ 6.02 / per hour.

F: Standard day overtime – hours: (please include time period e.g. hour/week/month)

20.13 hours this month. 16.13 hours this month. 5.35 hours this month.

G: Standard day overtime – wage: (please include time period e.g. hour/week/month)

R$ 135.90 of overtime payment this month.



H: Rest day overtime – hours: (please include time period e.g. hour/week/month)

0 hours worked.

12.05 hours worked. 0 hours worked.

I: Rest day overtime – wage: (please include time period e.g. hour/week/month)

0 hours worked.


0 hours worked.

J: Statutory Holiday overtime – hours: (please include time period e.g. hour/week/month)

0 hours worked.

0 hours worked.

0 hours worked.

K: Statutory holiday OT – wages: (please include time period e.g. hour/week/month)

0 hours worked.

0 hours worked.

0 hours worked.

L: Total overtime hours: (please include time period e.g. hour/week/month)

20.13 hours this month 28.18 hours this month. 5.35 hours this month.

M: Incentives/Bonus/ Allowances etc.: (please include time period e.g. hour/week/month)

No bonus payments. No bonus payments. No bonus payments.

N: Gross wages: (please include time period e.g. hour/week/month)

R$ 4.50 / per hour or R$ 1,103.84.

R$ 5.08 / per hour or R$ 1,334.82.

R$ 6.02 / per hour or R$ 1,903.32.

O: Social insurance and other deductions; please list which and amount.

Salary Advance – R$ 376.20 INSS – R$ 88.30 Absence Discounts – R$ 63.30

Salary Advance – R$ 424.69 Agreement Discount – R$22.35 Union subscription –

Salary Advance – R$ 503.27 INSS – R$ 171.29 Absence Discounts – R$ 43.60


Meals Deduction – R$ 21.60 Diverse Discounts – R$ 2.10

R$10.00 INSS – R$ 106.78 Absence Discounts – R$ 43.60 Meals Deduction – R$ 3.10 Diverse Discounts – R$ 25.00 Loan – R$ 223.81

Meals Deduction – R$ 4.05 Diverse Discounts – R$ 132.00 Transport – R$ 2,00 Pharmacy – R$ 42.34 Loan – R$ 390.03

P: Actual wage paid after deduction: (please include time period e.g. hour/week/month)

R$ 615.64 R$ 516.64 R$ 658.34

Comments: (Please state here any specific reasons/circumstances that explain the lowest and highest gross wages)

Q: Is there a defined living wage: This is not normally minimum legal wage. If answered Yes please state amount and source of info: Please see SMETA Best Practice Guidance and Measurement Criteria.

Yes No

Please specify amount/time period: The living wage is defined by the organisation called Dieese (Inter-Union Department of Statistics and Socioeconomic Studies, is a creation of the Brazilian trade union movement). The applicable living wage in brazil is defined today as R$ 3,210.28 (October 2015). http://www.dieese.org.br/analisecestabasica/salarioMinimo.html

R: Are workers paid in a timely manner in line with local law?

Yes No

S: Is there evidence that equal rates are being paid for equal work:

Yes No

Details:

T: How are workers paid: Cash Cheque Bank Transfer Other

If other explain:


6: Working Hours are not Excessive 6: Working Hours are not Excessive


ETI 6.1 Working hours must comply with national laws, collective agreements, and the provisions of 6.2 to 6.6 below, whichever affords the greater protection for workers. Sub–clauses 6.2 to 6.6 are based on international labour standards. 6.2 Working hours, excluding overtime, shall be defined by contract, and shall not exceed 48 hours per week. 6.3 All overtime shall be voluntary. Overtime shall be used responsibly, taking into account all the following: the extent, frequency and hours worked by individual workers and the workforce as a whole. It shall not be used to replace regular employment. Overtime shall always be compensated at a premium rate, which is recommended to be not less than 125% of the regular rate of pay. 6.4 The total hours worked in any 7 day period shall not exceed 60 hours, except where covered by clause 6.5 below. 6.5 Working hours may exceed 60 hours in any 7 day period only in exceptional circumstances where all of the following are met:

– this is allowed by national law; – this is allowed by a collective agreement freely negotiated with a workers’ organisation representing a significant portion of the workforce; – appropriate safeguards are taken to protect the workers’ health and safety; and – The employer can demonstrate that exceptional circumstances apply such as unexpected production peaks, accidents or emergencies.

6.6 Workers shall be provided with at least one day off in every 7 day period or, where allowed by national law, 2 days off in every 14 day period.




Current systems: • Overtime is voluntary and appreciated by workers as it represents an increase on the payment.

• The factory provided hours and wages records from January 2014 to September 2015. �

• Time cards are completed electronic and registered by an electronic card. The calculation of worked time is performed automatically by the IT system.

• According to time records and worker interviews, production working hours was 8:48 hours per day from Monday to Friday from 07:00 to 17:48.

• The company operates with the system of Saturday compensation, where the work journey from Saturday is divided and distributed through the workdays from Monday to Friday. This compensation has been agreed in


writing with all workers and with the participation of the union.

• Due to the compensation of the work day of Saturday, the faces then limitations related to the amount of overtime per day as the maximum work day for an employee cannot exceed twelve hours and an extra work day on Saturday cannot occur without the an approval from the Ministry of Labor.

• Certain group of workers had an alternative work time from 06:00 to 12:00 and another group from 12:00 to 18:00 from Monday to Saturday.

• In 2014 the company had a system of “bank of hours” where any excessive or reduced work time was accounted in this system. This model was phased out in 2015.

• In general, the factory is operating with low capacity, and just recently they establish a CBA with the union and workers and established days were the factory would not operate. On these days the works will not work but will only receive 50% of their corresponding day wage.

• Total overtime was not significant and overall lower than 10 hours a month for most of the employees. Nevertheless the existing overtime occasionally exceeded the limit of 12 working hours a day or it took place as a complete extra workday on Saturday. Both practices without an approval from the ministry of labor are considered a non-conformity. See the description of the NC below.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate):

• Employee interview � • Management interview � • Local and national laws � • Time cards � • Computerized time logging system � • Sample pay slips with recorded hours all workers interviewed � • Workers contracts � • 12 months hours records to establish highest and lowest hours over all employees �

Non–compliance:


It has been noticed that occasionally, and not in constant basis, that overtime is performed during the week and it exceeds a daily work journey of over 12 hours. In the sample reviewed, it has been noticed that workers perform over three hours of overtime, exceeding the maximum of overtime allowed by law. In addition, it has been noticed that workers are perform occasionally a extra work shift on Saturdays. According to the CBA with the workers and union, the work shift from Saturday has been distributed throughout the workweek, resulting that the daily work journey is extended to 8:48 minutes, instead of 8:00. Due to this agreement, and according to the legislation, the additional work shift on Saturdays is not allowed. The only situation for working during the weekend or Saturday, is when the company is able to receive an exception from the local Ministry of Labour allowing them to

Objective evidence observed: (where relevant please add photo numbers) 1 - Interview with management and workers, analysis of the payslips and time cards.


conduct extra work journeys during the weekend with workers consent Local law and/or ETI requirement: 6.1 Working hours must comply with national laws, collective agreements, and the provisions of 6.2 to 6.6 below, whichever affords the greater protection for workers. Sub–clauses 6.2 to 6.6 are based on international labour standards. Article 59 of the Brazilian Labour Law (CLT) Recommended corrective action: It is recommended that the factory implements and internal control system to prevent that excessive overtime takes place during the week exceeding the 12 hour daily journey or the work taking place on an already compensated Saturday. Areas supervisors and production responsible personnel should trained on the requirements of labour legislation related to overtime. __________________________ 2. Description of non–compliance:

NC against ETI NC against Local Law It has been noted that three workers employed and active in the production area production perform in a scheme of rotation during the weekend an “extra function” of security and “watch guard” at the factory gate. These three workers perform this activity against payment. This activity is voluntarily and it represents for these workers an extra income. Due to this extra activity, these workers continuously have excessive worked overtime above the limits of the legislation of 12 hours a week and do perform work on Sunday or Saturdays, where the day of Saturday is already compensated throughout the week. Local law and/or ETI requirement: 6.1 Working hours must comply with national laws, collective agreements, and the provisions of 6.2 to 6.6 below, whichever affords the greater protection for workers. Sub–clauses 6.2 to 6.6 are based on international labour standards. Article 59 of the Brazilian Labour Law (CLT) Recommended corrective action: It is recommended to management to review the options of security or “watch guard” during the weekend and adjust together with the three workers their work week respecting the limits of overtime.

2 - Interview with management and workers, analysis of the payslips and time cards.

Observation:

Description of observation: Objective evidence


No observations noted in this subject Local law or ETI requirement: Comments:

observed:


Description of Good Example (GE): No particular good examples noted in this subject

Objective Evidence Observed:

Working hours analysis

Working hours analysis Please include time period e.g. hour/week/month

(Go back to Key information)

Systems & Processes

A. What timekeeping systems are used: time card etc.

Describe: Electronic time card system. Workers sweep their individual electronic cards and the information of time is entered automatically in the HR system.

B: Sample Size Checked (State number of worker records checked and from which weeks/months and type – should be current, peak and random/low: See SMETA Best Practice Guidance and Measurement Criteria)

40 samples from January 2014 50 samples from September 2014 40 Samples from April 2015 50 Samples from September 2015

C: Do ALL workers have contracts/employment agreements?

Yes No

If NO, state which type of workers do NOT have contracts/employment agreements:

D: Are standard/contracted working hours defined in all contracts/employment agreements?

Yes No

If NO, please state which type of workers do NOT have standard hours defined in contracts/employment agreements.

Working hours are defined in the worker’s file and HR system. In all cases workers are aware of their working time and any changes have to be agreed in writing with the worker.

E: Are there any other types of contracts/employment agreements used?

Yes No

If YES, Please complete as appropriate:

0 hrs Part time Variable hrs Other

If “Other”, Please define:


Standard/Contracted Hours worked

F: Do standard/contracted standard hours ever exceed the law or 48 hours per week?

Yes No

If YES give details and comparison (local law/48 hrs week)

With selected employees who perform an besides being active at the production, they have an extra activity as security personnel at the site during the weekends. Their worktime during the week exceeds 48 hours.

G: What are the actual standard/contracted hours worked in sample (State per week/month)

Highest hours: 44

Lowest hours: 36

H: Any local waivers/local law or permissions which allow averaging/annualised hours for this site?

Yes No

If YES, Please give details

Overtime Hours

I: Actual overtime hours worked in sample (State per day/week/month)

Highest OT hours:

50 hours of OT per month in September 2014 for one worker.

Lowest OT hours:

0 hours per month from January 2014 to September 2015

J: Range of overtime hours over all workers/or as large a sample as possible. (State per week/month and details)

0 - 23 OT Hrs in January 2014 0 - 50 OT Hrs in September 2014 0 - 18 OT Hrs in April 2015 0 - 23 OT Hrs in September 2015

K: Approximate percentage of workers on highest overtime hours

>1 %

L: Is overtime voluntary? Yes No Conflicting

Information

Please detail evidence e.g. Wording of contract/employment agreement/handbook/worker interviews/refusal arrangements:

Overtime Premiums

M: Is overtime paid at a premium? Yes No

Please give details of normal day overtime premium as a % of standard wages:


0%

1 – 115%

116 – 124%

125 – 149%

150 –199%

200%+

Any other comments:

N: ETI Code requires a prevailing standard to give greatest worker protection. If a site pays less than 125% OT premium and this is allowed under local law, are there other considerations? Please complete the boxes where relevant. Multi select is possible.

No Consolidated pay (May be standard wages above minimum legal wage, with

no/low overtime premium) Collective Bargaining agreements Other

Please explain any checked boxes in N above e.g. detail of consolidated pay CBA or Other.

Rest Days

O: Are workers provided with 1 day off in every 7–day–period, or 2 in 14–day–period (where the law allows)?

Yes No

Maximum number of days worked without a day off (in sample):

6 Days

Total Hours

P: Range of total hours: (Quote highest and lowest please include time period e.g. hour/week/month)

Highest total hours

220 + 23 OT Hrs in January 2014 220 + 50 OT Hrs in September 2014 220 + 18 OT Hrs in April 2015 220 + 23 OT Hrs in September 2015 Important to mention that the Brazilian legislation uses the month reference of 220 hours per month as the wages include a reference of 30 days.

Lowest total hours

144 Hrs in January 2014 144 Hrs in September 2014 155 Hrs in April 2015 144 Hrs in September 2015

R: If more than 60 total hours per week and this is legally allowed, are there other considerations? Please complete the boxes where relevant. Multi select is possible.

Overtime is voluntary Onsite Collective bargaining allows 60+ hours/week Safeguards are in place to protect worker’s health and safety Site can demonstrate exceptional circumstances Other reasons

Please explain any checked boxes in R above

Please see the description of the exceptional circumstance below.


Comments: (please state here any specific reasons/circumstances that explain the highest working hours)

Please add details of examples where the site has demonstrated “exceptional circumstances”. Three workers active in production perform in a scheme of rotation during the weekend as an “extra function” of security and “watch guard” at the factory gate. These three workers perform this activity against payment. This activity is voluntarily and it represents for these workers an extra income. This situation accounts for the highest overtime recorded during the samples analysed during the audit. It does not reflect the actual regular overtime at the production. Workers who are just working at the production preform few overtime and only in specific circumstances. Such overtime does not account for over 60 hours of work during the week. Please give details of any appropriate safeguards in place at the time of the 60+ hours working. Any other comments:


7: No Discrimination is practiced 7: No Discrimination is Practiced


ETI 7.1 There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation.




Current systems: • As informed by interviewed workers, most employees were very satisfied working at the company and the

relationship with management was very positive. • Gender divisions did not exist in the factory; both female and male workers were distributed in all types of

work. • Wages are equal depending on the function perform at the company. • There was no evidence of sexual or verbal harassment. • There was no evidence of discrimination.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate):

• The hiring and termination procedure, • Employment records • Employee handbook. • Payrolls and Payslips • Attendance records • Termination records • Training records • Interviews with management and workers

Non–compliance:


No Non-compliance noted in this subject. Local law and/or ETI requirement: Recommended corrective action:

Objective evidence observed: (where relevant please add photo numbers) Not Applicable


Observation:


Objective evidence observed: Not Applicable


Description of Good Example (GE): No remarkable good examples noticed in this subject.

Objective Evidence Observed: Not Applicable


8: Regular Employnt Is Provided

8: Regular Employment Is Provided (Click here to return to NC–table)

(Click here to return to Key Information)

ETI 8.1 To every extent possible work performed must be on the basis of recognised employment relationship established through national law and practice. 8.2 Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour–only contracting, sub–contracting, or home–working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed–term contracts of employment.




Current systems: • The factory recruited all employees directly. • No labor agency was used to hire workers. • The auditor identified no temporary worker, apprenticeship schemes or home workers.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • The hiring and termination procedures • Workers’�personal files • Payroll records • Worker Handbook • Interview with workers and management.

Non–compliance:




Observation:


8A: Sub–Contracting and Homeworking: 8A: Sub–Contracting and Homeworking


8A.1. There should be no sub–contracting unless previously agreed with the main client. 8A.2. Systems and processes should be in place to manage sub–contracting, homeworking and external

processing. Note to auditor on homeworking:

Report on whether it is direct or via agents. How many workers, relationship with site and what control systems are in place.




Current systems: • Four subcontractors companies were used for the production process. During the interview process the

management declared that the client is informed about these companies. The subcontracted companies are outlined below.

• The company also subcontracts the transport offered to the workers. The subcontracted company for the transport is described below.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Site tour � • Management interview � • Worker interview �

If any processes are sub–contracted – please populate below boxes:

Process Subcontracted Process 1 Process 2 Name of factory Fabiana Pires Silveira M.E. –

CNPJ: 16.783.378/0001-49 Helena Teresinha do Amaral – CNPJ: 12.900.807/0001-60

Address

Rua Carlos Nobre, 318 Sala 01 – Vila Nova – Nova Harzt, RS – CEP 93890-000 – Contact Person: Chupim (AKA) - +55-51-99595908.

Rua Santo Antonio, 650 – Pitangueiras – Santo Antonio da Patrulha, RS – CEP 95500-000 – Contact: Helena - +55-51-36622643.

Process Subcontracted Process 3 Process 4 Name of factory João Ferreira – CNPJ: 04-

988624/0001-0 Korel Ind e Com de Calçados Ltda – CNPJ: 13.478.338/0001-03

Address Rua Felipe Diefenbach, 1190 – zcentro – Arárica, RS – CEP 93880-000 – Contact: João

Rua Buarque de Macedo, 5790 – Centro – Barão, RS – CEP 95730-000 – Contact Valmir Becker +55-51-


Ferreira. 36962302.

Process Subcontracted Process 5 Process 6

Name of factory Kauã Trasnporte de Passageiros – CNPJ: 10.892.709/0001-00

Address Rua Musa, 304 – Amaral Ribeiro – Sapiranga, RS – CEP 93800-000 – Contact: Sandra +55-51-96138944.

Non–compliance:


According to the interview with management, there is no documented and systemic process in place to monitor the working conditions at the sub-contractors. Since the company was not well informed about the requirements of this audit, the management was also not informed from their client if any monitoring process of the subcontracted companies was required. There is no communication to the sub- contract units concerning the ethical code of the main client or of the sites’ own code and policies. Important to note that despite the fact that that no systemic and documented monitoring processes of the subcontractors takes place the company has dynamic and close relationships with these companies and is aware of the working conditions on these paces. Local law and/or ETI /Additional Elements requirement: 8A.2. Systems and processes should be in place to manage sub contracting, homeworking and external processing.

Recommended corrective action: The site should make sub-contractors aware of the Ethical code and implement a system to monitor the activity of subcontractor companies. The company should also define a process on how to engage with the subcontracted companies in case non-conformities are identified and establish a basic criteria to reject subcontracted companies in case necessary.

Objective evidence observed: (where relevant please add photo numbers) Management system documentation review and interviews.


Observation:







Summary of sub–contracting – if applicable Summary of sub–contracting – if applicable

A: If sub–contractors are used, is there evidence this has been agreed with the main client?

Yes No

If Yes, summarise details:

B: Number of sub–contractors/agents used

Five companies in total. Four companies involved in the production process and one company providing the transport service.

C: Is there a site policy on sub–contracting?

Yes No

If Yes, summarise details:

D: What checks are in place to ensure no child labour is being used and work is safe?

Currently the factory is not systemically monitoring the activity of the subcontracted companies. Nevertheless, management has informed that the relationship between the factories is very close and frequently visits takes place. Up to this moment no activities related to child labor have been reported.

E: What processes are sub–contracted?

Assembly line, sewing and custom services application to the shoes.

Summary of homeworking – if applicable

F: If homeworking is being used, is there evidence this has been agreed with the main client?

Yes No

If Yes, summarise details: Not Applicable

G: Number of homeworkers Male: Not Applicable Female: Not Applicable Total: Not Applicable

H: Are homeworkers employed direct or through agents?

Directly Through Agents

Not Applicable

I: If through agents, number of agents

Not Applicable

J: Is there a site policy on homeworking?

Yes No

K: How does site ensure worker hours and pay meet local laws for homeworkers?

Not Applicable

L: What processes are carried out by homeworkers?

Not Applicable

M: Are written agreements in place Yes Not Applicable


for homeworkers that include regular employment?

No

N: Are full records available at the site?

Yes No


9: No Harsh or Inhumane Treatment is allowed 9: No Harsh or Inhumane Treatment is Allowed


ETI 9.1 Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation shall be prohibited.


To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is

/are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to support the systems.

Current systems: • Every worker joining the factory participates in a half-day integration session where all house-rules and

instructions on heath and safety and provided. Also guidance and disciplinary procedures are explained in detail.

• According to the interviews, the factory management had established an informal disciplinary procedure for workers’ misbehavior, which is mainly focused in oral warning. In case a serious case is identified a written warning might take place and it follows the national legislations.

• The dismissal of a worker due to misconduct can take place at anytime according to the Brazilian legislation. The difference is referred to a justified or unjustified dismissal. In each dismissal form the worker is compensated differently.

• As per management and workers interviews, no strong indication of verbal abuse or harsh treatment has been identified. Some workers mentioned that in 2014 there was a case of a specific supervisor that exceeded sometimes while providing feedback to workers. This supervisor is no longer at the company and no further comments exist at the site related to this matter.

• There is no internal process for grievance, which is an anonymous, confidential and away from the chain of command. See observation below.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Worker interviews • Interview with union representative • Management interview • HR documentation • Worker handbook

Non–compliance:


No Non-compliance noted in this subject. Local law and/or ETI requirement:



Recommended corrective action:

Observation:

Description of observation: It has been noticed that the factory does not posses a grievance procedure in pace which ensures free speech, confidentiality and outside the chain of command. Local law or ETI requirement: 10C.7. Suppliers should have a transparent system in place for confidentially reporting, and dealing with grievances without fear of reprisals towards the reporter. Comments: It is recommended that the factory implement a grievance procedure, which is confidential, ensures free speech and is away from the chain of command. It is also recommended that a gender sensitive channel exists in the factory in order to collect gender relevant information. Grievances, suggestions, complaints and allegations should be documented and records of actions and decisions taken should also be maintained and communicated when it doesn’t breach confidentiality. The grievance procedure and communication channels should be communicated to all workers and included in the integration period of any new worker in the factory.

Objective evidence observed: Management and worker interview, HR procedures.


Description of Good Example (GE): The factory has an open door policy with the workers and during the interview, workers felt confortable expressing their issues to their supervisors and HR staff.

Objective Evidence Observed: Management and worker interview, HR procedures.


10 A: Entitlement to Work and Immigration

10. Other Issue areas: 10 A: Entitlement to Work and Immigration (Click here to return to NC–table)

Additional Elements 10A1 Only workers with a legal right to work shall be employed or used by the supplier. 10A2 All workers, including employment agency staff, must be validated by the supplier for their legal right to work by reviewing original documentation. 10A3 Employment agencies must only supply workers registered with them. 10A4 The supplier shall implement processes to enable adequate control over agencies with regards the above points and related legislation.



Current systems: • Currently the factory does not have any immigrant workers active at the site. • The factory uses no agency staff or individual informal job agents for the employment. • The factory also does not perform proactive hiring of worker in other regions. The factory hires available

workforce and the posting of new positions are usually promoted at the factory door or word to mouth. Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • Hiring procedure� • Personnel files • Worker and management interviews

Non–compliance:




Observation:

Description of observation: No observations noted in this subject. Local law or ETI requirement:



Comments:





10 B 2: Environment 2–pillar

10. Other issue areas 10 B 2: Environment 2–pillar (Click here to return to NC–table)

To be completed for a 2–Pillar SMETA Audit, and remove the following page which is 10B4 environment 4 pillar

10B2. 1 Suppliers must comply with the requirements of local and international laws and regulations including having necessary permits. 10B2. 2 The supplier should be aware of and comply with their end clients’ environmental requirements. Note for auditors and readers, This is not a full environmental assessment but a check on basic systems and management approach.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and

record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is /are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to


Current systems: • The factory management seeks all legally required environmental permits. • The factory moved to its current location in 2013 and since then it has been seeking the necessary

environment operational permit with the local authorities. • The factory has up to date the necessary Federal Registration for Potentially Pollutant Activities - #5416877

– issued by the Ministry of Environment on 01/12/2011, and the Federal Police Operational Permit #201429088-6 valid until November 12, 2015.

• The factory stores the hazardous residues and they are collected for a safe environmental disposal by a company, which has the necessary environmental permit to perform that operation.

• The factory produces no water discharges from the production process. Used water is only from the sanitary facilities. And these waters are discharged in the municipality sewage system.

• The factory does not produce gases from the production process. Smoke is produce only from the boiler and the boiler functionality and an independent professional checks compliancy regularly.

• Regarding chemicals, the company presents opportunities of improvement in the storage and safeguarding of chemicals and oils. See the corresponding non-conformity related to this subject.

• During the interview with workers, it was noted that a common complain was about the heat levels at the production hall, especially at the rubber preparation room. The company was not yet able to produce a result of temperature analysis at the production halls. See the corresponding NC below.

Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): • All legally required environmental documents were provided for review.� • Residue collection reports • Environmental policy • Factory tour • Worker and management interview. Site tour • Air emission analysis

Non–compliance:



It has been noted that the company does not yet have the Environmental Operational permit issued by the local authority. It is important to mention that the company has already filed an application with the local authority Application for the Environment Operational Permit, which has been filed by FEPAM on November 14, 2014. Local law and/or ETI/Additional Elements requirement: 10B2. 1 Suppliers must comply with the requirements of local and international laws and regulations including having necessary permits. Law 6,938 of 31 August 1981, which in Article 10 states: The construction, installation, expansion and operation of facilities and activities that use environmental resources considered effective or potentially polluting, as well as able, in any form, of causing environmental degradation, will depend on prior authorization by the competent state agency, part of Sisnama, notwithstanding other required licenses. " Recommended corrective action: It is recommended that the company continue to follow up with the local environmental agency in order to obtain the necessary environmental operational license. ___________________ 2. Description of non–compliance:

NC against ETI/Additional Elements NC against Local Law It has been noted that the company does not yet have the Sanitary License issues for operating the cafeteria and the nursery room. Local law and/or ETI/Additional Elements requirement: 10B2. 1 Suppliers must comply with the requirements of local and international laws and regulations including having necessary permit. According to the law No. 6,360 of 23 September 1976 and Law No. 9,782, of January 26, 1999, operations that handle, prepare and store food and medicine are required to obtain a sanitary license to conduct its operations. Recommended corrective action: It is recommended that the company files an application with the local sanitary authority (Anvisa) in order to obtain the necessary sanitary licenses. _____________________ 3. Description of non–compliance:

NC against ETI/Additional Elements NC against Local Law It has been noted during the interview with workers and factory tour that room temperature can exceed the working comfort threshold defined by law, specially at the rubber preparation room.

Objective evidence observed: (where relevant please add photo numbers) 1 - Management interview and environmental license application. 2 - Management interview and environmental license application. 3 - Management and worker interviews, PPRA document and environmental assessments.


Due to the lack of quantitative data, it is not possible to understand if the company is able to comply with the local legislation, nevertheless it is noticed that the company has to implement measures to reduce the heat and improve the ventilation in the area. The company claimed that they have conducted temperature analysis at the production room, but unfortunately the company hired for this measurement failed to provide the results. Local law and/or ETI/Additional Elements requirement: Brazilian Norm NR-15 annex 3 defines the threshold for activities exposed to heat. Recommended corrective action: It is recommended that the company perform the temperature measurement of the different areas of the production halls during different times of the year. After obtaining the results of temperature measurements, the factory should implement necessary actions in case applicable.

Observation:

Description of observation: It has been observed that evacuation routes are not elaborated and di Local law or ETI/additional elements requirement: Comments:

Objective evidence observed: Not applicable.

Good examples observed:

Description of Good Example (GE): It has been noted that the factory implements efforts to introduce chemicals in the production line that are either of water base or with reduced hazard factor. Solvent based gules have been phased out by the factory and such change is positively noticeable at the workstations.

Objective Evidence Observed: Factory tour, worker interviews and list of chemicals.


10B4: Environment 4–Pillar

10. Other issue areas 10B4: Environment 4–Pillar (Click here to return to NC–table)

To be completed for a 4–Pillar SMETA Audit and remove the previous page which is 10B2 environment 2 pillar

B.4. Compliance Requirements 10B4.1 Suppliers as a minimum must meet the requirements of local and national laws related to environmental standards. 10B4.2.Where it is a legal requirement, suppliers must be able to demonstrate that they have the relevant valid permits including for use and disposal of resources e.g. water, waste etc. 10B4.3. The supplier shall be aware of their end client’s environmental standards/code requirements and have a system in place to monitor their performance against these. B4. Guidance for Observations 10B4.4. Suppliers should have completed the appropriate section of the SAQ and made it available to the auditor. 10B4.5. Suppliers should have an environmental policy, covering their environmental impact, which is communicated to all appropriate parties, including its own suppliers. 10B4.6. Suppliers shall be aware of the significant environmental impact of their site and its processes. 10B4.7. The site should measure its impacts, including continuous recording and regular reviews of use and discharge of natural resources e.g. energy use, water use (see 4–pillar audit report and audit checks for details). 10B4.8. Suppliers shall seek to make continuous improvements in their environmental performance. 10B4.9. Suppliers shall have available for review any environmental certifications or any environmental management systems documentation 10B4.10. Suppliers should have a nominated individual responsible for co–ordinating the site’s efforts to improve environmental performance. 10B.4.11. Has the site recently been subject to (or pending) any fines/prosecutions for noncompliance to environmental regulations. Note for auditors and readers. This environment section is intended to take not more than 0.25 auditor days. It is an assessment only and the main requirement is to establish whether a site is meeting applicable environmental laws and/or has any certifications or environmental management systems in place. Following this assessment the client/supplier may decide a full environmental audit is required (see also best practice guidance/environment and guidance for auditor)




Current systems: Not Applicable. 2-Pillar audit. Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate): Not Applicable. 2-Pillar audit.


Non–compliance:

1. Description of non–compliance: NC against ETI/Additional Elements NC against Local

Not Applicable. 2-Pillar audit. Local law and/or ETI/Additional Elements requirement: Not Applicable. 2-Pillar audit. Recommended corrective action: Not Applicable. 2-Pillar audit.

Objective evidence observed: (where relevant please add photo numbers) Not Applicable. 2-Pillar audit.

Observation:

Description of observation: Not Applicable. 2-Pillar audit. Local law or ETI/Additional elements requirements: Not Applicable. 2-Pillar audit. Comments: Not Applicable. 2-Pillar audit.



Description of Good Example (GE): Not Applicable. 2-Pillar audit.

Objective Evidence Observed:


Environmental Analysis Environmental Analysis

(Site declaration only – this has not been verified by auditor. Please state units in all cases below.)

A; Responsible for Environmental issues (Name and Position):

Not Applicable

B: Does the site have a recognised environmental system certification such as ISO 14000 or equivalent? Please detail.

Yes No Details: Not Applicable

C: Does the site have an Environmental policy? (For guidance, please see Measurement criteria )

Yes No Not Applicable

Does the site have a Biodiversity policy? (For guidance, please see Measurement criteria )

Yes No Not Applicable

E: Is there any other sustainability systems present such as Chain of Custody, Forest Stewardship Council (FSC), Marine Stewardship Council (MSC) etc.? Please detail. (For guidance, please see Measurement criteria )

Yes No Not Applicable Details:

F: Have all legally required permits been shown? Please detail.

Yes No Not Applicable Details:

G: Is there a documentation process to record hazardous chemicals used in the manufacturing process?

Yes No N/A Details: Not Applicable

H: Is there a system for managing client’s requirements and legislation in the destination countries regarding environmental and chemical issues?

Yes No Details: Not Applicable

Usage/Discharge analysis

Criteria Current year: Please state period: ______________ Not Applicable

Previous Year: Please state period: ___________ Not Applicable

Electricity Usage: Kw/hrs

Not Applicable Not Applicable

Renewable Energy Usage: Kw/hrs


Gas Usage: Kw/hrs


Has site completed any carbon Footprint Analysis?

Yes No Yes No

If Yes, please state result Not Applicable Not Applicable


Water Sources: Please list all sources e.g. lake, river, and local water authority.


Water Volume Used: (m³)


Water Discharged: Please list all receiving waters/recipients.


Water Volume Discharged: (m³)


Water Volume Recycled: (m³)


Total waste Produced (please state units)


Total hazardous waste Produced: (please state units)


Waste to Recycling: (please state units)


Waste to Landfill: (please state units)


Total Product Produced (please state units)



10C: Business Ethics – 4–Pillar Audit 10C: Business Ethics – 4-Pillar Audit

(Click here to return to NC–table) To be completed for a 4–Pillar SMETA Audit

10C. Guidance for “Observations” 10C.1. Suppliers should have completed the appropriate section of the SAQ and have made it available to the auditor. 10C.2. The supplier should have received and acknowledged– preferably in writing – the Business Ethics policy of the auditor/audit company. 10C.3. Suppliers shall seek to conduct their business ethically without bribery, corruption, or any type of fraudulent Business Practice. 10C.4. Suppliers shall be aware of any applicable laws, their end client’s Business Ethics standards/code requirements and have a system in place to monitor their performance against these. 10C.5. Supplier should have a Business Ethics policy concerning bribery, corruption, or unethical Business Practice. This should be clearly communicated to all relevant parties. 10C.6. Suppliers should have a designated person responsible for implementing standards concerning Business Ethics 10C.7. Suppliers should have a transparent system in place for confidentially reporting, and dealing with unethical Business Ethics without fear of reprisals towards the reporter 10C.8. Suppliers should ensure that the staff whose job roles carry a higher level of risk in the area of ethical Business Practice e.g. sales, purchasing, logistics are trained on what action to take in the event of an issue arising in their area. Note for auditors and readers. This Business Ethics section is intended to take not more than 0.25 auditor days. It is an assessment not an audit and the main requirement is to gather information on the relevant Business Ethics issues in a supply chain. All findings will be recorded as observations not Non– Compliances and the data collected will allow the membership to define appropriate standards over time as part of a continuous review process.

Current Systems and Evidence Examined To complete ‘current systems’ Auditors examine policies and written procedures in conjunction with relevant managers, to understand, and

record what controls and processes are currently in place e.g. record what policies are in place, what relevant procedures are carried out, who is /are responsible for the management of this item of the code. Evidence checked should detail any documentary or verbal evidence shown to


Current systems: Not Applicable. 2-Pillar audit. Evidence examined – to support system description (Documents examined & relevant comments. Include renewal/expiry date where appropriate):

Not Applicable. 2-Pillar audit.

Observation

Description of observation: Not Applicable. 2-Pillar audit.



Local law or ETI/Additional elements requirement: Not Applicable. 2-Pillar audit. Comments: Not Applicable. 2-Pillar audit.

Not Applicable


Description of Good Example (GE): Not Applicable. 2-Pillar audit.



Worker Interview Summary Worker Interview Summary

Worker Interview Summary

A: Were workers aware of the audit? Yes No

B: Were workers aware of the code? Yes No

C: Number of group interviews: (Please specify number and size of groups. Please see SMETA Best Practice Guidance and Measurement Criteria)

Five group interviews took place. Three groups of five and two groups of three.

D: Number of individual interviews (Please see SMETA Best Practice Guidance and Measurement Criteria)

Male: 2 Female: 2

E: Total number of interviewed workers (Please see SMETA Best Practice Guidance and Measurement Criteria)

Male: 13 Female: 12

F: Interviews were done in private and the confidentiality of the interview process was communicated to the workers?

Yes No

G: In general, what was the attitude of the workers towards their workplace?

Favourable Non–favourable Indifferent

H: What was the most common worker complaint?

All workers interviewed had a positive feedback about the management and the working condition at the factory. The only two general complaints were about the working temperatures, which is often uncomfortable for workers during hot days and at the production area that processes rubber. The second most common issue was related to the absence of a grievance procedure where workers could communicate and receive response about day to day’s issues.

I: What did the workers like the most about working at this site?

The workers praised the honesty and commitment of the company by honouring all wage payments and providing a relaxed and organized workplace.

J: Any additional comment(s) regarding interviews:

Most workers enjoyed working at this factory, they felt they had sufficient work and had a good relationship with management in general.

K: Attitude of workers to hours worked:

Workers expressed that overtime does not take place as often as in 2014 and they are confortable of doing overtime and this overtime is voluntary.


Agency Workers Agency Workers (if applicable)

(workers sourced from a local agent who are not directly paid by the site)

A: Number of agencies used (average):

Not Applicable And names if available:

B: Were agency workers’ age/pay/hours included within scope of this audit

Yes No

C: Were sufficient documents for agency workers available for review?

Yes No


Other findings

Other Findings Outside the Scope of the Code

Community Benefits

(Please list below any specific community benefits that the site management stated that they were involved in, for example, HIV programme, education, sports facilities)


Photo Form

Factory Building Overview of Production Floor Example of Workstation

Best Practice in Machine Guarding Boiler Room View of Products on the Assembly Line

Workstations without Seats Overview of the Sewing Area Ovens for Shoe “Rubbering” (vulcanização)


Some machines are still unprotected and represent a risk of accidents

Despite overall good housekeeping, chemicals are found in the factory floor without containment.

Flammable chemicals were found in the factory floor in a carton next to ignition sources.

Some machines are still unprotected and represent a risk of accidents

Aisles are generally unobstructed and palletizers assist the transport of boxes.

Risk of accidents exists for the workers using sandals at the production floor (Sandals are allowed at the production floor according to the unions convention).

Some machines are still unprotected and represent a risk of accidents. Fresh food and snacks are allowed at the production and represent a risk due to the constant presence of chemicals and glues.

Chemicals and substances are found frequently unlabelled and placed together with cups and water bottles.

Chemicals and substances are found frequently unlabelled and placed together with cups and water bottles.


Certain machines still require adaption. In this example, a hot surface is not protected and no precautionary signs are placed.

Escape routes are not signalized and no floor markings exist indicating the nearest exit. Escape routs are found partially blocked by materials. No visual emergency plan end risk maps are made visible.

One of the designated emergency exist functions as the expedition of finished products and it is often found blocked by materials or trucks.

One of the designated emergency exists is found blocked by vehicles and the escape aisle to the door is partially blocked by workstations.

The designated emergency exist picture was found damaged and its blocking system represented a risk of shutting down.

The west side of the factory posses only one single emergency exit and this exit is perceived as not being sufficient to evacuate the workers placed on the workstations.

The rubber sector at the factory was presented with reduced and undefined space at the workstation. Aisles were found blocked by materials and products.

At the rubber station, only one large emergency door is available. At this area no escape roots have been defined to evacuate workers in case of an emergency.

One of the designated emergency exist functions as the shipping port of finished products and it is often found blocked by materials or trucks. Additionally, this exist represent a


risk of falling due to its height from the asphalt (no escape ramp).

View of the chemical storage building, which is located, separated from the main factory building.

Adjacent to the chemical storage building, oil tanks and diesel were found stored together with combustible materials and old machinery. These containers were found unlabelled, without secondary containment and with unrestricted access.

At the storage building, the room was found without ventilation, absent of emergency equipment and without secondary containment and impermeable floor layer.

Due to the lack of ventilation signal and odour of mould were identified.

Toilets were presented well maintained, functioning and in sufficient numbers.

The washbasin was well maintained but it lack liquid soap, paper towels and trash bin with a cover.


The only forklift present at the site was a old model and it lack a safety seatbelt.

At the area outside the production hall, chemicals and potentially hazardous equipment were found without secondary containment and with unrestricted access.

At the area outside the production hall, combustible materials were found in a soda PET bottle and without containment and security measures.

At the area outside the production hall, herbicides (Roundup) was found together with a manual application spray without secondary containment, unrestricted access and signs.

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Your feedback on your experience of the SMETA audit you have observed is extremely valuable.

It will help to make improvements to future versions.

You can leave feedback by following the appropriate link to our questionnaire:

Click here for A & AB members: http://www.surveymonkey.com/s.aspx?sm=riPsbE0PQ52ehCo3lnq5Iw_3d_3d

Click here for B members:

http://www.surveymonkey.com/s.aspx?sm=d3vYsCe48fre69DRgIY_2brg_3d_3d