Barely a week goes by without Wal-Mart making the headlines with allegations of bad working practices.
The world’s largest retailer is one of a select group of multinational brands that provokes strong reaction from people because of the way it treats its employees.
Many share the concerns of US senator Ted Kennedy, who said: “Wal-Mart violates American family values every single day by mistreating its workers”.
The list of allegations against Wal-Mart, which has 1.7 million employees worldwide, including 140,000 Asda staff in the UK, is growing.
Wal-Mart faces dozens of lawsuits, including a class action discrimination case involving 1.6 million current and former female workers. A recent verdict ordered the company to pay $172m (£99m) to employees in California for lost breaks, while government agents last year arrested hundreds of illegal immigrants working at Wal-Mart facilities.
The retailer’s approach to health benefits in the US has come in for particular criticism. Despite chief executive Lee Scott acknowledging that health insurance – which is not free in the US – is unaffordable for many staff, due to eligibility requirements, cost and waiting times, Wal-Mart provides little help for its workers.
Price of benefits
In 20 states, Wal-Mart is the leading employer-user of state-funded medical care and the ‘Wake-up Wal-Mart’ campaign, organised by the North American unions, estimates that each store that employs 200 staff can cost taxpayers $420,750 (£241,000) annually.
But rather than investing more itself, the company is investigating other ways to cut costs.
The vice-president of benefits, Susan Chambers, recently ignited national fury for suggesting that costs should be reduced by discouraging unhealthy, overweight and older people from working at Wal-Mart.
The spotlight on its employment practices isn’t just focused on the US. In the UK, Asda is facing mounting criticism from unions over its employment practices, with three high-profile tribunal defeats in the past month (see box).
The unions say the company has been allowed to get away with such practices because of its no-union policy, as outlined on the Wal-Mart website: “We are not against unions. They may be right for some companies, but there is simply no need for a third party to come between our associates and their managers.”
The retailer instead promotes its Open Door policy, allowing grievances to be addressed anywhere up the corporate ladder.
But Shane Dawson, chief Canadian organiser for the United Food and Commercial Workers union (UFCW), said the policy merely helped the company to “identify troublemakers”.
In Canada, the company’s claim not to be “against unions” was called into question by the Quebec Labour Board recently, when ruling over the closure of a Wal-Mart store in Jonquire last year.
The board heard that, after staff joined the UFCW, contract negotiations stalled and the only unionised Wal-Mart store in North America closed. It called the move a “reprisal against unionised employees”.
Wal-Mart insists the store was struggling economically and that meeting union demands would completely change its business model.
Company spokesman Kevin Groh says union votes in several other Canadian Wal-Mart stores have been clearly defeated. But UFCW spokesman Louis Bolduc said: “They sent a message. Unions are not welcome.”
The union alleged that management in Jonquire used store cameras and security guards to spy on workers, and engaged in psychological harassment, even sending inspectors and engineers to stores and hinting the building might need to be demolished.
But despite all this scrutiny and criticism – which is likely to intensify with Wal-Mart’s intention to enter the banking business – Americans continue to flock to the company for jobs. About 25,000 people applied for 325 jobs at a recent Illinois store opening.
Groh said half of Wal-Mart managers started as hourly workers, and turnover is 15% lower than the national average. About 10 people apply for every job at new stores, he said, and people keep applying “because we draw applicants from all walks of life: teens working part-time, people starting retail careers, and seniors wanting to remain active”.
Wal-Mart also points to its high score on a prominent Canadian Best Employers list last year. Mario Pilozzi, chief executive officer at Wal-Mart Canada, attributed the rating to “strong corporate culture and a great team of associates”.
The company is clearly a strong believer in its business model and, with global sales of about £150bn, many would find it hard to argue.
Whether its employment practices can work at Asda in the UK and at other foreign operations is harder to judge. Seasoned Wal-Mart observers will be watching closely to find out.
Asda in the dock
Last week, an Asda worker sacked for leaving the shopfloor to take an epilepsy pill won more than £7,000 in compensation for unfair dismissal.
Paul Turner told an employment tribunal he was away for just seven minutes to take his medication because he was feeling unwell. But the tribunal heard managers at the Asda warehouse in Greater Manchester accused him of taking a break to watch last year’s European cup final.
Turner, who had worked for the supermarket giant for 10 years, made his claim under the Disability Discrimination Act.
Last month, a tribunal in Newcastle-upon-Tyne ruled that Asda had breached the Trade Union and Labour Relations Consolidation Act (1992) by offering staff at its Washington depot a 10% pay rise if they gave up membership of the GMB union.
The tribunal directed the retailer to pay £2,500 to each of the 340 GMB members, amounting to £850,000. Asda is to appeal.
Also in February, Asda was forced to pay £27,750 in compensation to 37 Asian workers for racial discrimination. A manager at the supermarket’s branch in Lutterworth, Leicestershire, ordered the employees to produce documents to prove they had the right to work in the UK to ensure Asda was not employing illegal immigrants.