ECCO Vietnam halted production at its factory in Ho Chi Minh City on Monday afternoon this week. The sudden announcement of the closure left more than 1,600 employees without jobs.
Denmark’s ECCO Sko A/S, the sole shareholder of ECCO Vietnam Co., Ltd., decided to dissolve the company, saying the decision followed several consecutive years of declining market demand that had resulted in substantial excess production capacity.
Employment contracts for workers not offered continued employment will end on November 30, or earlier if their contracts expire before that date. However, some employees will be retained for a few more months to assist with the dissolution process. The company pledged to pay outstanding wages, compensation for unused annual leave and other amounts owed in accordance with the law. In addition to statutory severance benefits, it will provide an extra half-month of base salary for each year of service.
Workers will also receive a 13th-month salary proportionate to the time they worked this year. Those assisting with the dissolution process will receive an additional bonus equivalent to 50% of one day’s base salary for each day worked.
ECCO is a well-known Danish footwear brand founded in 1963. Its Vietnam factory began operating in April 2020 on a 12-hectare site, with an investment of VND861 billion, or approximately US$34 million, and registered annual capacity of around 8.1 million footwear products and components. By: Rithy.
