Rana Plaza compensation: What do retailers need to know?

Why are we talking about it?

Primark this week began paying compensation to victims of the Rana Plaza collapse in Bangladesh. Factories housed in the building supplied major fashion retailers and over 1,000 people died.

The disaster prompted international action, leading to the establishment of the Rana Plaza Arrangement to coordinate aid payments.

Under the auspices of the UN International Labour Organisation (ILO), a number of Bangladeshi authorities, industry bodies and retail brands have agreed to raise donations for the Rana Plaza Donors Trust Fund, to be dispersed to the victims and their families. It was set up in January after international lobbying by the IndustriALL, the global trade union, which called for a total compensation fund of $74.6m (£47.2m) to be established.

Which retailers have contributed to the fund?

Primark pledged an additional $10m (£6m) to victims this week, taking its overall commitment to $12m(£9m) to date.

$1m of the payment will be given to workers who were not involved in its own supply chain bringing its total payment to non-Primark workers to $3m.

Bonmarché, which was also supplied by firms within Rana Plaza, has agreed to pay an undisclosed sum into the fund, with Spanish retail giant El Corte Ingles and Canadian retailer and supplier Loblaw also official signatories. Donations are also understood to have been made by a number of brands including retailers Mango, Mascot and Inditex and workwear and uniform supplier Premier Clothing. The payments have all been made voluntarily as an expression of support to the victims.

However, most of the 28 retail brands connected to the disaster have not agreed to provide donations, despite international pressure.

What is the next step?

The Rana Plaza Coordination Committee is overseeing a long and complex process of repayments. It has set up a claims system for victims and their dependents and is inviting companies, brands and individuals to make voluntary contributions to the fund. The fund will last for as long as it takes to compensate all the victims, but the committee hopes to have process all funds within six months.