Dyson Cuts Ties with ATA IMS Following Audit of Labor Practices

[KUALA LUMPUR] High-tech home appliance maker Dyson has cut ties with supplier ATA IMS following an audit of the Malaysian company’s labor practices and allegations by a whistleblower, sending ATA shares plunging.

ATA, which is already being investigated by the United States over forced labour allegations, confirmed that Dyson has terminated its contracts and that it has been in talks with its customer over the audit findings. It had previously denied allegations of labour abuse.

Shares in ATA, which makes parts for Dyson’s vacuum cleaners and air purifiers, tumbled 30 per cent to their lowest since April 2020 after the Reuters report. According to ATA, Dyson accounts for almost 80 per cent of its revenue.

The termination is also a significant blow for Malaysia, a major electronics manufacturing hub that has faced scrutiny this year over claims migrant workers are being subjected to abusive working and living conditions.

Dyson, privately owned by British billionaire James Dyson, said it received the results of an audit of working conditions at ATA in early October. It said it had also learned in September about allegations from a whistleblower about “unacceptable actions” by ATA staff and had commissioned a law firm to investigate those claims.

“Despite intense engagement over the past 6 weeks, we have not seen sufficient progress and have already removed some production lines,” Singapore-headquartered Dyson said in response to questions from Reuters.

“We have now terminated our relationship with 6 months’ of contractual notice. We hope this gives ATA the impetus to improve, and enables an orderly withdrawal in the interests of the workers that they employ.”

Dyson’s comments came after being contacted by Reuters about claims by workers, including a whistleblower, about working conditions at ATA.

In interviews with Reuters, 7 current and former ATA employees said they had worked overtime hours in excess of limits under Malaysian law and paid recruitment fees in their home countries to labour brokers, a practice activists have criticised as a form of debt bondage.

Employees also worked public holidays at the ATA plant and on what were supposed to be rest days, according to the workers and payslips reviewed by Reuters.

Malaysian law allows for up to 104 hours of overtime in a month. A payslip reviewed by Reuters showed one worker had worked 126 hours in May.

Dhan Kumar Limbu, a former ATA worker, told Reuters that ATA officials took him to a police station in June where he was questioned about sharing information about conditions at the factory with activists and then beaten by police.

Limbu, a Nepali citizen, fled Malaysia after the incident, fearing further reprisals, he said. He told Reuters he had recounted his experience about being taken to the police station in an interview with Dyson’s lawyers.

ATA denied all allegations by the workers and declined to comment. Malaysian police did not respond to questions from Reuters.

ATA, in a statement to the national stock exchange on Thursday (Nov 25), said it had taken steps to engage Dyson and advisers after it was notified of the summary of the labor audit. It said it would look into the findings.

The company also said it will continue to manufacture and supply for Dyson until June 1, 2022, and that its board was looking into the validity of Dyson’s termination notice.


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