Violations of labour law in luxury fashion ‘made in Italy’

Serious allegations were made against the leading global luxury brands, France’s Louis Vuitton Moët Hennessy (LVMH) and Switzerland’s Compagnie Financière Richemont SA (Richemont). Cases of worker exploitation have been uncovered in northern Italian factories that manufacture for the brands. These incidents not only damage their image but also raise questions about the resilience of their supply chains and, consequently, their long-term business success. The shortcomings that have been uncovered point to systematic gaps in the companies’ risk management. We therefore call on both companies to remedy the shortcomings and to respect and protect labour rights.

In June 2024, a Milan court placed LVMH subsidiary Manufactures Dior Srl (Dior) under judicial supervision. This was followed in summer 2025 by Loro Piana, also majority-owned by LVMH. In both cases, official investigations revealed serious shortcomings among the companies’ subcontractors, including a lack of employment contracts and excessive working hours. Even though both cases were dismissed without a criminal conviction, the court clearly criticised LVHM's inadequate monitoring of its suppliers. Although controls were carried out, these were limited to direct suppliers only. However, the actual violations occurred at lower levels of the supply chain. Almost at the same time, it became known in September 2024 that exploitative working conditions were also in place at a Montblanc subcontractor in northern Italy. Montblanc belongs to Richemont, which ranks second among global luxury brands after LVMH.

Causes of fundamental labour rights violations

In both cases, fundamental labour rights and thus our normative basis were systematically violated. We are in active dialogue with both LVMH and Richemont via our partners. Our aim is to encourage these companies to identify the causes of these shortcomings, derive targeted measures, and achieve tangible improvements.

These violations of labour rights involving luxury fashion ‘made in Italy’ result from two main causes: on the one hand, changes in consumer behaviour and, on the other, in the structure of the companies themselves.

Fashion consumer behaviour has changed radically. Today, customers expect a rapid response to trends, immediate availability and an ever-growing selection. This pressure is also passed on to suppliers. To meet short-term fluctuations in demand, they rely on a network of small factories and subcontractors, which in turn commission other businesses. This results in highly intricate supply chains where control and transparency are quickly lost. Additionally, employees in the affected factories often come from countries such as Pakistan, China or Bangladesh. This makes them particularly vulnerable due to their precarious residence status and lack of knowledge of their labour rights, which ties them to their employers. This dependency encourages exploitation: long working hours, unfair wages, inadequate safety and labour standards, and informal employment, i.e. a lack of employment contracts.

The second reason lies in the organisational structure of the companies themselves. Both LVMH and Richemont consist of numerous independent brands – known as ‘Maisons’ – that operate largely autonomously. They have their own suppliers, production strategies and monitoring systems. This fragmentation leads to weak central control and inconsistent standards. The degree of maturity of the brands towards social responsibility varies greatly. Nevertheless, companies are obliged to ensure compliance with labour rights along the entire supply chain. The Dior case made it clear that central guidelines existed, but were insufficient to identify shortcomings at lower levels of the supply chain. At Richemont, it also became apparent that individual brands had been confronted with shortcomings for a long time, without this being recognised at headquarters. This resulted in the risks remaining invisible – until they escalated.

Dialogue has an impact

LVMH responded with internal reforms: the company created a central function to monitor supply chains, overhauled control methods and strengthened audit teams. In addition, requirements for suppliers with regard to human and labour rights have been tightened. Richemont also reviewed internal processes and re-evaluated its supply chains. The effectiveness of these measures to protect workers remains unclear. Both companies are cautious when it comes to communicating their risk management in the supply chain. Regulatory pressure could help, for example through the EU CSRD or the planned EU Supply Chain Act. These require companies to carry out and disclose a systematic risk analysis.

The cases show that there is a need for action in the supply chains for northern Italian luxury fashion. At any rate, companies are gradually taking on responsibility: for instance, Dior agreed to allocate around EUR 2 million to support victims of labour exploitation. For us, one thing is clear: we are continuing the dialogue and want companies to assume their responsibility and respect human and labour rights. In this way, the value of these premium products can also reflect the appreciation for the people who make them.