Apple says Pegatron put on probation after violating supplier code of conduct

SHANGHAI/TAIPEI (Reuters) – Apple AAPL.O said on Monday it has put its Taiwanese supplier Pegatron 4938.TW on probation after finding that the company violated Apple’s supplier code of conduct by asking student employees to work night shifts or overtime.

FILE PHOTO: The logo of Apple company is seen outside an Apple store in Bordeaux, France, March 22, 2019. REUTERS/Regis Duvignau

Pegatron had misclassified student workers and falsified paperwork to disguise the violations, and in some cases also breached the code by allowing students to perform work unrelated to their majors, the U.S. technology company said.

“Several weeks ago, we discovered Pegatron – one of Apple’s suppliers in China – violated Apple’s Supplier Code of Conduct in its administration of a student work study program,” it said in a statement.

“Apple has placed Pegatron on probation and Pegatron will not receive any new business from Apple until they complete all of the corrective actions required.”

Apple’s investigations had found no evidence of forced or underage labour, it said, adding that Pegatron had now fired the executive with direct oversight of the program.

“The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms,” Apple said.

Pegatron said in a separate statement that student workers at its Shanghai and Kunshan campuses had been found working without complying with local rules and regulations.

They had now been taken off the production lines and given “proper compensation,” it said.

It did not address how being put on probation by Apple might impact the company in its statement.

Pegatron is one of a handful of Taiwanese manufacturers, alongside, alongside Foxconn 2317.TW2354.TW, who dominate Apple’s iPhone assembly chain.

Apple and its suppliers have been accused of poor labor practices in the past, but the U.S. technology giant has been trying to get a grip over such issues by releasing annual reviews of the iPhone supply chain.

In 2017, Apple and Foxconn said a small number of students were discovered working overtime in one of the latter’s Chinese factories, violating local labor laws.

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