ICP Continuous Improvement Process: FAQs
Would you please summarize the policy changes you are making.
Establishes the opportunity for Chinese toy factories to enter into the ICTI CARE Process even though they are non-compliant in terms of wages and working hours. So long as they are completely transparent about their actual practice, they will be allowed to enter a Continuous Improvement Plan (CIP) that will lead to full compliance.
What is the purpose of this policy change?
To improve factory compliance with wages and working hours requirements and to foster improved transparency in this area.
Why did you feel the need to take this action?
Because we realized that many factories were not being completely open in reporting their wages and working hours practices to ICP auditors when their facilities were audited. We feel this new policy will encourage them to become open and compliant.
Many factories have been certified as compliant in the past. Does this mean that they were not actually compliant?
Many were compliant but a number of factories faced significant challenges to meet the wages and working hour requirements continuously throughout the year and, according to our Quality Control audit system, this resulted in a lack of transparency.
What did your QC audits show?
That our auditors were not able to obtain accurate information about their practice in all performed audits.
What are the conditions for being allowed entry into the CIP?
A factory must agree to be completely transparent about its current wages and working hours practices and must be free of any other serious violations of the ICP standard.
Describe the Continuous Improvement Process.
Factories not already in compliance will be given the opportunity to come into compliance over time, with the pre-condition that they must be fully transparent about current practice.
- Factories found not to be compliant with wages requirements in their first ICP audit must calculate and pay minimum and overtime wages correctly within three months of their first ICP audit. This will be verified by a second audit 120 days after their initial audit. If they still are not compliant, they will be re-audited again one month after their next payroll. This provides a total of approximately five months to reach compliance. If they still are not compliant, they will be placed on probation or terminated.
- Factories found not to be compliant with working hours limits in their first ICP audit must agree to enter into a Continuous Improvement Process that will bring them to the current target level by 30 June 2012. All factories that receive their first audit after 30 June 2011 will have up to 12 months to reach the target level. They must move in regular steps, verified by progress audits, toward compliance by the appropriate deadline.
What is the target level of working hours?
Ultimately, to comply with Chinese law, which stipulates 40 regular hours per week plus a maximum of 36 hours per month of overtime, which translates to approximately 49 hours per week. Under certain conditions, provincial and local governments may permit longer hours.
In the interest of making regular, achievable progress toward this ultimate goal, an interim target of 66 hours per week has been established. Once this level has been achieved generally in the industry, we expect to set new targets that move practice toward compliance with Chinese law.
Why 66 hours?
Our technical advisors recommended this as being a reasonable and significant step from current practice toward our ultimate target. This also complies with legally allowable maximum hours per day (eight hours regular plus up to three hours overtime per day, six days a week) permitted under some circumstances.
What happens if a factory stops progressing toward its goal or even moves backwards?
A factory must demonstrate continuous improvement in order to retain and/or improve its status (Level of Seal) within the ICP. Failure to improve or if a factory “backslides,” will cause it to be subject to education and training activities for factory management and a series of progress audits that, if not passed, will lead to probation or termination.
What’s in it for the factory, if it complies?When does this program take effect?
Most importantly, compliant factories will be certified and receive an ICP Seal of Compliance. This will qualify them to remain a vendor to brands, retailers, licensors and others who have committed to sourcing only from compliant suppliers. It will also serve as an advantage when attracting new business.
We began with a soft launch in July 2009, in which we introduced the new policy to the audit firms, provided training to certified auditors and began a series of pilot audits. All new audits beginning 1 September 2009 were conducted using this new policy. The program results will be analyzed regularly and any necessary improvements will be recommended to the ICTI CARE Foundation’s Governance Board for approval.
How will the public know the results?
The ICF Governance Board will make the results public annually. The ICP is updating its communication activities in 2010 and the continuous improvement process will be covered there.