KUALA LUMPUR (REUTERS) - Fast food giant McDonald's said it has dropped a labour supply agency in Malaysia after claims emerged that it was underpaying its migrant workers and housing them in appalling conditions.
An investigation by British newspaper the Guardian said the agency supplying workers to McDonald's was withholding their salaries, which were as low as US$0.75 (S$1.07) an hour, underpaying promised wages and confiscating their passports.
The report was based on interviews with 15 Nepali workers who had worked at different McDonald's restaurants in the capital Kuala Lumpur.
McDonald's said it has ended its contract with the agency, Human Connection HR, and pledged staff welfare is a "top priority", with companies globally under mounting pressure to ensure their supply chains are free of slavery and exploitation.
"Earlier this year, we became aware of certain circumstances relating to services provided by Human Connection HR which were not in compliance with our standards," spokesman Ron Christianson said in a statement. "As a result, we have terminated our contract with them."
There was no suggestion of any wrongdoing by McDonald's. Human Connection HR said it will hold a meeting and issue a response soon.
Christianson would not confirm details of the exploitation, saying the workers were employees of the labour agency.
"Because the workers are not employees of McDonald's, our efforts to address the issues were unsuccessful, as were proposals for McDonald's to assume responsibility for paying workers directly," he said.
Human Connection HR had been supplying workers to McDonald's in Malaysia for "a number of years", Christianson added.
He said the company's suppliers were bound to uphold a code of conduct which includes safeguarding worker's rights.
McDonald's hires over 12,000 people in Malaysia, and less than 5 percent are foreign workers.
Malaysia, which is South-east Asia's third-largest economy, relies heavily on foreign workers especially in construction, plantation and domestic work, but human rights campaigners have long voiced concerns that they face widespread abuses.
Aegile Fernandez, director at Kuala Lumpur-based migrant rights group Tenaganita, said labour exploitation happens"almost every day" among multinational firms in the country.
She urged McDonald's to take responsibility and ensure its supply chain is free of exploitation and slavery.
"They can't run away because they are the main company," she told the Thomson Reuters Foundation. "No matter if you're in the United States or Europe, you have to ensure your suppliers are following all the regulations and upholding the rights of the workers."