Harmon Hall is a large English language school chain in Mexico, with a network of 110 English schools in 63 cities and over 40,000 students in the entire system. Harmon Hall also has two K-12 schools and plans to grow this business line. The International Finance Corporation (IFC) provides Harmon Hall with an equity investment that consists of two components: (i) the purchase of a selling shareholder’s shares and (ii) a capital increase in Harmon Hall to finance the expansion plans of the company over a period of 18 months. IFC will provide a $7.9 million equity investment.

In March 2014, a former teacher of Harmon Hall Puerto Vallarta School lodged a complaint with CAO. The complainant argues that he was a full time employee (“nomina”) as opposed to being self-employed (“asimilados”) as Harmon Hall claimed.  As such, the complainant contends that Harmon Hall owes him benefits withheld for his two years’ service with the school.   

CAO found the complaint eligible in March 2014 and conducted an assessment of the issues with the relevant parties.  The parties did not agree to participate in a voluntary dispute resolution process and in accordance with CAO's Operational Guidelines, the case was transferred to CAO's Compliance function.  

For the purpose of the compliance appraisal, Harmon Hall complaints 02-06 were merged with complaint 08. CAO completed a compliance appraisal with regard to the Harmon Hall 02-06 and 08 complaints in April 2015. On the basis of this appraisal, CAO concluded that absent aggravating circumstances, disputes between an employer and individual employees around issues of pay and benefits do not raise substantial concerns regarding the E&S outcomes of an IFC investment such that would merit a CAO compliance investigation. While CAO has identified questions as to IFC’s appraisal and supervision of its investment in the company, CAO also notes that IFC is supervising this investment with a focus on the implementation of Performance Standard 2 (Labor and Working Conditions). Given the nature of the complaints, and considering IFC’s ongoing engagement with the company in relation to the implementation of Performance Standard 2, CAO found that a compliance investigation was not the appropriate response in this instance. As a result, in accordance with its Operational Guidelines, CAO has decided to close this case.