Bangkok: Nike will pay USD 1 million in unpaid overtime to its Indonesian workers, a move which has made other multinational companies wary as it could also force them to follow the suit.
Under the terms of the settlement, the employees of Nike will be compensated by early February.
For close to 600,000 hours of overtime clocked up over the past two years, the sportswear group will compensate nearly 4,500 employees at one of its suppliers.
The national chairman of the trade union Serikat Pekerja National Bambang Wirahyoso said that, the out-of-court settlement, reached after nearly a year of negotiations, set a precedent.
He said that the move has all the potential to send shockwaves across all the firms who force their employees to do overtime without actually paying for it.
Workers allegedly said that they had been working overtime for the past 18 years without any find of financial compensation. However, the Indonesian law allowed redressal of such issues only for the past two years.
After Nike, other major MNCs operating in Indonesia are in the firing line because as per the standard practice for Indonesian factory employees should work seven days a week without any overtimes or proper benefits.
Defending its case, Nike said that it would create a task force to address future grievances and offer training programmes to employees.