The University of Wisconsin-Madison will enter into a period of mediation with sportswear firm Adidas as part of efforts to resolve a dispute over its obligations to former workers at a factory in Indonesia.

Interim chancellor David Ward said he was "committed to seeing redress for the impacted workers" and that "I believe mediation is the most efficient and practical method to reach this goal."

In December, the university called on Adidas to make severance payments to workers at an Indonesian factory after its owner fled.

At the time, the university's Labor Licensing Policy Committee said that unless Adidas made the payments it would take steps to terminate sponsorship and licensing agreements with the company, which has an exclusive contract to provide uniforms and athletic equipment.

The dispute relates to Adidas Group subcontractor PT Kizone in Curug, Indonesia, whose owner fled without paying more than 2,800 workers around $3.2m in severance. The amount equals nearly one year's salary per worker, at minimum wage - that the workers were legally owed according to Indonesian law.
The factory allegedly produced products for several major brands including Nike, Adidas, and the Dallas Cowboys.

Nike and the Dallas Cowboys have already contributed financially to relief for the workers, said the university. Workers are still owed $1.8m.

In December, Adidas argued that the owner of the factory is responsible for severance pay. It also said it supports efforts to find new employment for the Kizone workers, as well as the elimination of illegal factory closures and the flight of foreign owners.

The university said its current deal with Adidas runs until June 2016 and is worth approximately US$2.5m annually, in both royalties and equipment.