ATA Ims Disputes Dyson Claims Considers Legal Recourse

ATA Ims which has been in the global news for all the wrong reasons on allegations that it had mistreated workers, had issued a statement on the matter as requested by Bursa Malaysia. The resulting effects of the allegation led to its single biggest client Dyson, to terminate all contracts with the component manufacturer.

The company which manufactures components and parts for the global home appliance brand claimed that it was only provided with a summary of the audit report on its labour practices following an on-site investigation. While a request for the full audit findings has not yet been provided, however, it noted that based on the summary the findings were non-conclusive. Among the summary were allegations of poor living conditions, issues around zero-recruitment fees for foreign migrant workers, unethical recruitment practices by agents appointed, use of irregular workers, concerns of retaliation, unpaid allowances and bonuses during COVID-19 in 2020 and unlawful deductions for meals. On all these allegations, that the report clearly states that the auditors were unable to conclusively determine whether all allegations are true or false.

  1. ATA Ims, had also engaged a professional adviser to review the findings of the executive summary. From the review conducted it claimed there was a need for a much more detailed and conclusive report needed. Based on the review majority of the areas of issues raised in the executive summary were non-conclusive, requiring triangulation and based on analysis they are not found to exist. It adds that it has engaged a local law firm to carry out an independent review of this allegation.
  2. The Company further claims that during an audit of the workplace conditions from 22 to 24 Jun 2021 performed by another appointed auditor, the total overall facility score was 89% which was higher than the global average score of 81%. The area of assessment covered included labour, wages and working hours, health and safety, management systems, environment and business practices.

As for the termination, it claims that the notices of termination of the contract manufacturing agreement are without cause and assumes there will be no compensation or claim of damages expected from Dyson. It expects the estimated loss will come from raw materials and components to be around RM500 million, however notes that some of the items can be returned to the client. With that its conservative estimation of stock loss to be around 5% of the total stock purchase for the customer orders amounting to RM25 million.

Dyson is the largest customer for the company with 80% of the revenue contribution and with the termination, the company estimates the turnover for the financial year 2022 to reduce by approximately 30% as compared to 2021. It also predicts another 40% drop in turnover for the financial year 2023 and will be conducting cost-cutting measures due to the termination.

ATA Ims reiterates that the contracts were terminated without cause and its presently taking legal advice on possible recourse.

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