The employment contract with Jinjiang, a contractor for the Chinese automaker, included conditions such as handing over their passports to their new employer, allowing most of their wages to be sent directly to China, and others to work on the construction of a factory in Bahia.
Workers who traveled from China to northeast Brazil to build a new factory for the automaker BYD were earning about $70 per 10-hour shift, more than double the Chinese minimum hourly wage in many regions. For many, signing on was an easy decision, but leaving would be much harder.
Chinese workers hired by BYD's Brazilian contractor Jinjiang had to hand over their passports to their new employer, let most of their wages go directly to China and hand over a deposit of nearly $900 that they could only get back after six months of work, according to an employment contract seen by Reuters .
The three-page document, signed by one of the 163 workers who labor inspectors say were freed last month from "slavery-like conditions," includes clauses that violate labor laws in both Brazil and China, according to Brazilian investigators and three Chinese labor law experts.
Other clauses, which had not been reported until now, allowed the company to unilaterally extend the employment contract for six months and to impose fines of 200 yuan for behaviour such as swearing, arguing or walking around the construction site or in their homes without a shirt on.
Many of these clauses "are 'red flags' for forced labor," said Aaron Halegua, a lawyer and professor at New York University School of Law who won compensation for Chinese workers who sued their employers for forced labor in the U.S. territory of the Northern Mariana Islands.
He added that withholding workers' passports or requiring any kind of performance bond or security payment would not be permitted under Chinese laws and regulations.
Jinjiang, which is working on building BYD factories across China in cities including Changzhou, Yangzhou and Hefei, has disputed the allegations, saying the findings of Brazilian labour inspectors are inconsistent with the facts and the result of confusing translations.
"The claim that Jinjiang employees were 'enslaved' and 'rescued' is totally misplaced," Jinjiang said in a statement last month.
Alexandre Baldy, senior vice president of BYD Brazil, told Reuters the electric carmaker was not aware of any violations until the first Brazilian media reports in late November, when BYD contacted Jinjiang about the allegations.
Baldy and BYD Brazil President Tyler Li met with Brazilian President Luiz Inácio Lula da Silva on Dec. 2. They told Lula at the time that BYD was addressing the issue, according to two people familiar with the conversation.
Lula's office did not immediately respond to a request for comment.
Two weeks later, a raid by labour inspectors found the workers living in overcrowded quarters with no mattresses. Thirty-one workers were crammed into a single house with only one bathroom and food piled on the floor alongside their personal belongings, in what inspectors said were “degrading conditions”.
Baldy denied having raised the matter with Lula at their meeting and said the company was not aware of the Jinjiang labor contract. BYD is taking steps to ensure that "this situation does not happen again," he told Reuters.
Inspectors have not provided evidence that BYD knew of the violations, but BYD is “directly responsible,” said Matheus Viana, acting head of Brazil’s Inspection Division for the Eradication of Slave Labor, because the automaker is responsible for the actions of an outside contractor at its plant.
FORD REPLACEMENT
The previously unreported contract provides new details of how a plant that was billed as a beacon of closer ties between Brazil and China became the scene of a scandal for BYD in its biggest market outside China.
BYD agreed in late 2023 to take over and invest heavily in electric vehicle production at an industrial park in Camaçari, near the Bahia state capital, the site of a Ford Motor Co plant for two decades.
Ford abandoned the plant in 2021, laying off about 5,000 workers as it ended manufacturing in the country.
For President Lula, a former leader of a Sao Paulo metalworkers union, the BYD deal promised to create 21st-century manufacturing jobs in a stronghold of his Workers' Party.
News of the massive investment raised hopes that the Chinese company would bring back twice as many jobs as Ford had cut in a state where nearly 10 percent of the population is unemployed.
But when BYD brought in the Chinese contractor to build the factory, Antonio Ubirajara Santos Souza, coordinator of the local construction workers' union (Sindticcc), said it was a sign the company was "not playing fair."
In a statement to Reuters, BYD said the company is committed to generating local employment and that when the factory complex is fully operational, it will employ 20,000 workers, including Brazilians.
During the December raid, inspectors found copies of 10 contracts with clauses similar to those seen by Reuters , they said. Some workers told inspectors they had no contracts, and others said they only signed theirs after months in Brazil.
BYD and Jinjiang will be charged with obstructing the investigation because they failed to provide inspectors with the addresses of workers' accommodation when requested, said Daniel Santana, a labor inspector investigating the case, exposing the two companies to a possible fine.
INVESTIGATION STIRS UP LOCAL RESIDENTS
Hundreds of Chinese workers are still working on the site alongside Brazilians, union officials told Reuters . Union officials say Brazilian workers complained this month about irregularities at the site, including a lack of clean water.
BYD shared photos with Reuters of the new accommodation and cafeterias it has made available to employees. However, the local construction workers' union, Sindticcc, has decided to sue both BYD and Jinjiang for past violations.
Local politicians also expressed concern about other projects in Bahia planned for construction by Chinese companies, such as a bridge in the state capital Salvador budgeted at 7.6 billion reais ($1.28 billion), which some local residents fear could be the latest in a series of projects relying on imported labor.
"We will never be able to bring development to our state at the expense of slave labor," said Alan Sanches, a state representative.
Bahia Governor Jeronimo Rodrigues told Reuters that BYD is still expected to create 10,000 local jobs and that the state cannot "lose that opportunity." Still, he said, BYD has to provide work in decent conditions.
Julio Bonfim, head of the Camaçari metalworkers union, said he had already warned BYD officials that his office would not accept Brazilians losing job opportunities to workers brought in from China.
If that happens, he said, "the factory will face its first strike under BYD before production even starts."
