Apple announced that it has put Pegatron, its Taiwanese supplier, on probation after it detected that the company has violated the tech giant’s supplier code of conduct by making student employees work overtime and in night shifts.
Pegatron had falsified paperwork and missorted student workers to mask the violation, and in a few cases, also broke the code by letting students perform work distinct to their majors, the iPhone maker stated.
Pegatron is one of the few Taiwanese manufacturers on the island along with Foxconn, who dominate the iPhone assembly chain. It confirmed in a statement that it found out a few weeks ago that one of Apple’s suppliers in China broke Apple’s Supplier Code of Conduct in its management of a student work-study program.
Though Apple did not announce the terms of the probation, Pegatron will not get any new business from the U.S. technology giant until they fulfill the needed corrective actions. The scrutiny from Apple found no proof of underage or forced labor and further stated that the executive with direct oversight of the program is now fired.
Apple confirmed that the Pegatron’s individuals who were responsible for the violations went the extra mile to avoid their oversight mechanisms.
Pegatron claimed in a statement that the student employees at its Kunshan and Shanghai facilities were found working without obeying the local rules and regulations. Those employees are now taken off the production lines and given appropriate compensation.
Apple and its supplier are blamed for poor labor practices earlier, but the iPhone maker is trying its best to control the situation and resolve the problems by releasing yearly reviews of the iPhone supply chain.
The shares of Pegatron closed by 2.1% on Monday, underperforming a 1.2% rise in the huge Taipei market. It did not express the impact it will face after being put on probation by Apple. In 2019, Pegatron accounted for a T$19.3 billion profit in 2019 which was 74% higher than the earlier year.