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article imageMexico's Wal-Mart Takes A Hit For Paying Employees Using Gift-Cards

By Nikki Weingartner     Sep 7, 2008 in World
Mexico's Wal-Mart has been legally reprimanded for paying employees using a voluntary program. Despite only one individual employee filing the suit, the Supreme Court of Mexico ruled that the retailer can no longer choose voucher redemption locations.
A hard days work deserves a hard days pay and for Wal-Mart employees in Mexico, a portion of their pay came in the form of gift cards, redeemable for food products sold, you guessed it, only at Wal-Mart stores.
On Friday, the Mexican Supreme Court ruled that "Wal-Mart de Mexico", also known as Walmex, violated the countries constitution by paying its employees in this manner.
Walmex is fully owned by Wal-Mart Stores Inc.
According to several news reports, including the International Herald Tribune, the program to pay employees was one that was explained by the retailer, describing "the program was voluntary, and designed to help our employees acquire basic necessities." Employees could elect, or choose, to be paid by the voucher for a portion of their salaries and the retail giant would give them a store credit on Wal-Mart gift cards. The card could be used at any Wal-Mart nationwide.
The program that was initially designed to help families in Mexico was not sued by a group advocating employee rights or a large number of employees protesting the program. The lawsuit stemmed from one employee, who no longer works for Wal-Mart according to the IHT report.
In the court's ruling, the Wal-Mart's program was said to have the feel of those corrupt payment programs called "old company stores" where bosses paid employees using vouchers redeemable ONLY at stores they owned. Those stores had inflated prices, forcing employees to pay a much higher price for goods than had they been paid in cash and had the freedom to choose where they made their purchase.
The Supreme Court's decision did not force Wal-Mart to eliminate the program, only that they not force employees to spend the vouchers at Walmex. There are over 1,000 Wal-Mart / Walmex owned and operated stores in Mexico.
So where will employees redeem Wal-Mart gift cards for which they opted, voluntarily, to obtain lower-prices on food purchases for the family? It will be interesting to see if other companies in Mexico will begin accepting the Wal-Mart cards or if the company will do away with the program altogether.
Walmex is currently reviewing the program.
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