The workers who traveled from China to northeast Brazil to build a new factory for electric car maker BYD (002594.SZ), opens new tab earned roughly $70 per 10-hour shift, over twice the Chinese hourly minimum wage in many regions. For many, that made signing up an easy decision – but getting out would be much harder.
The Chinese workers hired by BYD contractor Jinjiang in Brazil had to hand over their passports to their new employer, let most of their wages be sent directly to China, and fork over an almost $900 deposit that they could only get back after six months’ work, according to a labor contract seen by Reuters.
The three-page document, signed by one of 163 workers who labor inspectors said were freed from “slavery-like conditions” last month, includes clauses that violate labor laws in both Brazil and China, according to Brazilian investigators and three Chinese labor law experts.
Other previously unreported clauses gave the firm the power to unilaterally extend the labor contract for six months and issue 200 yuan fines for conduct such as swearing, quarreling or walking around shirtless at the site or in their living quarters.
Many of the clauses “are textbook ‘red flags’ of forced labor,” said Aaron Halegua, a lawyer and fellow at New York University Law School, who won compensation for Chinese workers who sued their employers for forced labor in the Northern Mariana Islands, a U.S. territory.
He added that withholding workers’ passports or requiring any form of performance bond or security payment would not be permitted under Chinese laws and regulations.
Jinjiang, which works on BYD factory construction across China in cities such as Changzhou, Yangzhou and Hefei, has disputed the allegations, saying the findings by Brazilian labor inspectors are inconsistent with the facts and the result of confused translations.
“The claim that Jinjiang’s employees were ‘enslaved’ and ‘rescued’ is totally off base,” said Jinjiang in a statement last month.
Alexandre Baldy, senior vice president for BYD Brasil, told Reuters the carmaker had no knowledge of any violations until the first reports by Brazilian media in late November, when BYD contacted Jinjiang about the allegations.
Baldy and BYD Brasil President Tyler Li then met on Dec. 2 with Brazilian President Luiz Inacio Lula da Silva. They told Lula at the time that BYD was addressing the issue, according to two people familiar with the conversation.
Lula’s office did not immediately respond to a request for comment.
Two weeks later, a raid by labor inspectors found the laborers living crammed in lodgings without mattresses. Thirty-one workers were crammed in a single house with only one bathroom and food piled up on the ground alongside personal belongings, in what inspectors said were “degrading conditions.”
Baldy denied discussing the matter with Lula in their meeting and said the company had no knowledge of the Jinjiang labor contract. BYD is taking action to make sure “this situation never happens again,” he told Reuters. After the raid, BYD ended its contract with Jinjiang.
Inspectors have provided no evidence that BYD knew of the violations, but BYD is “directly responsible,” said Matheus Viana, acting chief of Brazil’s Division of Inspection for the Eradication of Slave Labor, because the carmaker is responsible for the actions of a third-party contractor on its site.