Dyson Appliances Terminates Contract with ATA over Forced Labor Conditions: Who is Accountable to the Contract Workers?
Case Code: CLHR094
Case Length: 7 Pages
Pub Date: 2022
Teaching Note: Available
Organization: Dyson Limited
Industry: Home Appliances & Consumer Products
Themes: Crisis Management & Conflict, HR Policy, Human Capital, Human Resource Planning
The case focuses on the risks of forced labor when Dyson Limited, the UK-based technology company, serving notices of termination to ATA IMS Bhd (ATA), its overseas Electronics Manufacturing Service (EMS) provider based in Malaysia in 2021.
The case first touches upon the partnership agreement between Dyson and ATA to manufacture a host of components for Dyson's vacuum cleaners, and parts for Dyson's cold and hot air purifiers. The case focuses on the various allegations related to workplace benefits and conditions (allegations related to workers’ overtime, work permits, coaching of factory employees, whistle blowing policy. and channels) that were raised by multiple parties including labor rights activist Andy Hall (Hall), international news agency Reuters, and Dyson.
The case then describes ATA’s approach to the allegations and how the company responded with various measures to address and improve its labor and social compliance standards and practices, and ensure positive business continuity.
The case ends with details on the effects of the allegations that resulted in ATA losing its share value and its contract with Dyson getting terminated. The termination of the contract also had an impact on ATA’s reputation and reduced the engagement levels of the workforce at ATA.
- Evaluate the need for various terms and conditions between partner companies with regard to employees rights.
- Identify the challenges faced by contract employees and migrant workers.
- Examine the role of various labor legislations in upholding employee rights.
- Recognize the intricacies of global manufacturer-supplier relationships.
On November 24, 2021 ATA IMS Bhd (ATA), an Electronics Manufacturing Service (EMS) provider based in Malaysia, received a notice from Dyson Limited (Dyson), a UK-based technology company, terminating its manufacturing contract with the Malaysian firm. The decision to terminate the contract 6 months before it was to end (in June 2022) was based on various allegations from a whistleblower and complaints from workers. These had been confirmed by a series of six audits by Dyson between 2019 and 2021, ending with a comprehensive audit of 2000 members of the ATA staff in October 2021 that led to the decision to cancel the manufacturing contract...
Risk management in global supply chains; Need for contract employees; Benefits accrued and challenges faced by HR with contract employees; Importance of managing company and contract employees; Managing employee grievances; Contract employment practices;
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