Lesotho Precious Garments Pty Ltd has begun handing retrenchment letters to its workers due to the lack of business.
According to United Textile Employees (UNITE), which represents some of the workers at the factory, up to 3500 workers are losing their jobs permanently, while 900 are being temporarily laid off.
The firm employs about 4,400 workers.
Lesotho Precious Garments was not available for comment, but according to the retrenchment letters given to the workers, the company is struggling financially due to the lack of demand for its products.
The letters are dated March 20, 2023.
â€œWith this letter management of Lesotho Precious garments informs you that following consultations that took place recently with trade unions and non-trade unions of which you are a member, the company formally gives you notice of retrenchment on account of economic reasons confronting the company due to lack and/or shortage of orders,â€ read the retrenchment letters.
They added: â€œâ€¦Part of the agreement the employer has with the unions is that you are at liberty to enter into a special reemployment contract of six months with terms and conditions summarized in the collective agreement the employer has with the unions.â€
In an interview with Newsday, Deputy General Secretary of UNITE, Potloane Monare, said the layoffs were just an attempt by the firm to influence the outcome of the ongoing minimum wage negotiations.
Workers and employers are currently locked in a stalemate after employers wanted a 20 percent wage hike while employers were only prepared to offer four percent.
The Ministry of Labour and Employment has since attempted to strike a balance between the two sides by proposing a compromised 6.6 percent wage hike, for the public to comment on.
â€œThis is just a tactic that these employers are using to fight the minimum wage review. We have been in several meetings with them for the past two years, to discuss the issue,â€ Monare said.
He added: â€œThe company says it has run out of funds to pay salaries as it hasn’t received orders. This is done so that workers don’t push for the minimum wage review they demand, as they might feel it is better to continue earning current salaries than to get retrenched after the minimum is reviewedâ€.
Monare further indicated the company had not backed up its allegation of cash flow challenges with evidence, and therefore they were not convinced of these problems.
He said they were considering dragging the factory to court over the matter.
â€œWhen we request the company to show us statements that prove that there are financial woes, it fails to. This is because it has got to bear statements that are between it and its suppliers where there is an agreement of failure to supply.
â€œWe have not been presented with anything that proves what they are saying and we will drag them to the courts of law, and we are at the urge of writing salary referrals in preparation for such,â€ Monare said.