NEXT shuts down its only unionised factory in Sri Lanka after posting £1.08 billion profit forecast

On the 19th of May, just four days after NEXT’s AGM approved shareholder dividends, the company abruptly shut down its only directly owned factory with a recognised trade union at NEXT Manufacturing Ltd (NML) Katunayake, without proper notice, without consultation, and in blatant violation of Sri Lankan labour law (Section 2 of the Termination of Employment of Workmen (Special Provisions) Act) and the OECD tripartite declaration on Multinational Enterprises. The impacted employees, some of whom had worked at the factory for over 30 years, were informed of the decision via WhatsApp, and we have received reports that some were pressured to sign letters of resignation after the closure was announced as they were falsely informed that doing so would ensure their compensation package. 

This facility in Katunayake is where workers, through union representation with the Free Trade Zones & General Services Employees Union (FTZ & GSEU), have secured safer and better working conditions, including better pay and a significant decline in instances of sexual harassment. It is also the only factory NEXT has chosen to close, despite operating two other non-unionised factories nearby. The implications are clear: this is union-busting dressed up as business strategy. 

Since the announcement of the decision, NEXT has offered contradictory justifications for the closure — from “high production costs” to “declining orders” to “higher wages”. As NML is a fully owned subsidiary of NEXT PLC, NEXT owns this Katunayake facility and therefore has significantly more control over production than is typical in the usual brand-supplier model, further calling these opaque excuses into question. The truth is simple: this is the only unionised factory with better wages for workers, and it’s the only one being shut down. 

The ramifications of this decision for the rights of workers in Sri Lanka’s garment sector are huge. A UK company that feels able to disregard national laws and collective bargaining agreements is setting a dangerous precedent that organising for better conditions risks job losses – a message already being actively promoted by other employers – and that no matter how high the profits, fashion brands will never share that wealth with workers across its global supply chain, despite the motion at NEXT’s recent AGM which saw a rebellion of shareholders vote for pay transparency. 

The Free Trade Zones & General Service Employees Union, Clean Clothes Campaign, War on Want, and Labour Behind the Label are calling on journalists and ethical investors to ask: 

• Why is a billion-pound UK retailer, in its most profitable period ever, shutting down a factory where workers had successfully achieved better working conditions and pay through unionisation? 
• Why was the closure decision communicated by text message, without due process, legal notice, or dialogue? 
• What is the basis for NEXT’s claim that this factory has been loss-making for four years, considering unionisation began four years ago? Why does a company still branding itself as “ethical” act in ways that violate both Sri Lankan law and the OECD Guidelines for Multinational Enterprises?

We demand that NEXT immediately reverse the factory closure decision, consider any resignation letters null and void, and reinstate all employees with the same conditions and union recognition.  
 NEXT is not just closing a building. They are closing off the possibility for fair, negotiated working conditions in its own supply chain and sending a clear message that despite reporting their highest profits to date, they still refuse to pay their workers fairly. For a company that claims to value ethics, transparency, and responsibility — this is a moment of truth.

View CCC's reply to Next below: