The Central General de Trabajadores de Honduras (CGT) and Nike announced on the 26th of July a ground-breaking agreement that will provide a US$1.5 million fund for workers in Honduras that formerly produced Nike apparel.

According to a press release from Nike and the CGT, workers will also receive a year's access to the health care system, training and priority hiring. Over 2,000 workers at the Hugger and Vision Tex factories were laid off last year, leaving them unemployed and owed over US$2 million in unpaid wages and severance pay. The agreement comes after intense pressure was put on Nike by a student-led campaign that had convinced some US universities to end lucrative licensing agreements with Nike.

Please see the message below we've received from the Workers Rights Consortium (WRC) for more details of this truly important victory. We congratulate the brave workers from Hugger and Vision Tex and the CGT Union as well as WRC, Maquila Solidarity Net, United Students Against Sweatshops and anyone else who worked on this case.

Dear Friends,

After a year of increasing pressure from students and universities, Nike has agreed to compensate the employees of two contract factories that closed without paying legally mandated severance, in a case that represents a significant breakthrough for labor rights in global supply chains. The WRC first reported the violations at the two Honduran factories, Hugger and Vision Tex, in October of 2009. At this link you will find a joint statement from Nike and worker representatives announcing their agreement.

The package of cash compensation (US$1.54 million) and health insurance (a year of family coverage for every worker) is sufficient to fully compensate the workers for what they are owed. In addition, Nike has committed to a concrete, enforceable priority hiring program which should restore many of these workers to employment. This is, to our knowledge, the best outcome that has been achieved in a case of unpaid severance in the supply chain of a major brand.

In addition to the benefits for the affected workers, this case establishes a crucial precedent: for the first time, a major apparel brand has assumed /de facto/ financial responsibility for funds owed to workers by its contract factories. Hopefully, other brands and retailers can be persuaded to follow Nike's example. If so, the industry will, for the first time, have a genuine financial incentive to take the steps necessary to ensure that their contractors will actually pay workers the money they have legally earned in the event of lay-offs and closures.

Given how common it is for workers to be denied legally mandated severance, broad progress on this front would be of enormous value to apparel workers globally.

The outcome of this case is a tremendous achievement for the workers of Hugger and Vision Tex and their leaders. Without resources, or much reason for hope, they advocated month after month for a just resolution aided by the CGT union federation which represented workers at both factories at the time of their closure. The workers' courage and perseverance, combined with robust efforts in the North to convince Nike to live up to its obligations, are what produced this extraordinary result. United Students Against Sweatshops and its numerous campus chapters were at the forefront and important work was done by the Maquila Solidarity Network and the Solidarity Center. Jeff Hermanson, of the Writers' Guild of America-West, helped represent the workers in face-to-face negotiations; he and the CGT leaders did a masterful job hammering out this breakthrough agreement. As in prior cases, the outcome demonstrates the effectiveness of the mandatory labor codes that universities in the US and Canada have inserted into their licensing agreements with sports apparel brands. Where voluntary corporate codes have failed, the university's mandatory codes have repeatedly proven effective.