The owner of Edinburgh Woollen Mill (EWM) is claimed to have left workers at a supplier in Hungary in the lurch after it closed five months ago, leaving workers unpaid.
The garment plant in Vasarosnameny, Hungary, is understood to have closed in March after production was halted, with no indication to staff as to when it would reopen, according to a report published by The Sunday Times.
Employees at the ARJ factory were reportedly earning around GBP260 (US$328) per month but since its closure, many have received no salary.
According to The Sunday Times, until recently the factory was managed by owner Philip Day’s son-in-law and made suits for Austin Reed and Jaeger; brands of EWM, employing around 530 workers.
Contrary to reports, a spokesperson for the company told just-style Day does not own the factory.
“The shareholders and directors of EWM Group have categorically never owned nor controlled in any form whatsoever the factory in Hungary that supplies Austin Reed and Jaeger. Tom Day was a manager at the factory responsible for monitoring the quality of the garments it produced for Austin Reed and Jaeger.
“As a customer of the factory, we have been told it will officially close once it completes a consultation process required by Hungarian law and cannot do so before then.”
The publication says staff are reluctant to resign because they do not want to miss out on a possible severance payment, but some have had to quit in order to get the benefits money they need to cover their bills.
Like other high street stores, Peacocks and Bonmarche are all exposed to the challenges the coronavirus pandemic has wreaked on the sector, which has seen a number already fall victim to bankruptcy.
Just last month, EWM hit back at the Bangladesh Garment Manufacturing and Exporters Association (BGMEA) over its threats to blacklist the company over unpaid invoices, saying it had been unfairly targeted.
Bangladesh’s garment industry body threatened to halt production and any further orders with Edinburgh Woollen Mill over unpaid invoices and demands for “unreasonable” discounts, despite concluded contracts.