This move follows the Guatemala factory’s alleged failure to pay approximately $1.5m in legally due severance to its 246 former employees upon closure in October 2023.
The contribution from Lucky Brand, a subsidiary of Catalyst Brands with principal owners including Authentic Brands Group and Shein, complements previous donations totalling $1m from American Eagle Outfitters (AEO) and Puma.
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These funds were secured by the Workers Rights Consortium (WRC) and distributed to the affected workers.
The WRC has confirmed that the funds from Lucky Brand will be disbursed to the Industrial Hana workers in October.
The workers plan to use these funds for essential expenses such as debt repayment, medical care, children’s school fees, and potentially starting small businesses.
One worker told the WRC: “The money we’re receiving that we were owed for our years working at Industrial Hana will help pay my son’s school fees. I also will be able to buy him a school uniform and supplies for his classes. And now I can also pay for medicine for my mother, for whom I’m the sole caregiver and source of support. I am so thankful that we will receive this money that we are owed.”
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By GlobalDataAccording to WRC, the situation at Industrial Hana underscores a growing awareness among major fashion brands of their responsibility towards workers’ rights, especially concerning severance pay when supplier factories shut down.
WRC explained that despite Industrial Hana mainly working as a subcontractor and having no direct business ties with Lucky Brand, Puma, or AEO, those companies have jointly ensured the workers will receive their full legally mandated severance.
The case is said to highlight the complexities of apparel supply chains where production can be subcontracted without direct brand oversight.
Nonetheless, the contributions from these three brands have set a precedent in addressing the financial fallout faced by garment workers in the sector when supplier factories cease operations.
