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. 

On October 14, 19, 22 and November 6, 2013, CAO received four complaints regarding Harmon Hall: 

• Harmon Hall-03/Puerto Vallarta: A current teacher at Harmon Hall lodged the complaint with CAO. The complainant raised concerns about fair treatment of teachers, inadequate wages and lack of compensation for extensive working hours. The complaint also alleged that several of the agreements made in response to the first complaint were not being implemented at the school.

• Harmon Hall-04/Puerto Vallarta: The complaint was filed by a current sales representative at Harmon Hall. The complainant raised concerns about withheld compensation and changes made to work schedules without prior notification or consultation.

• Harmon Hall-05/Puerto Vallarta: The complaint was filed by a current teacher. The complainant raised concerns about inadequate wages and lack of compensation for extensive working hours. Furthermore, the complaint also alleged that several of the agreements made in response to the first complaint were not being implemented at the school.

• Harmon Hall-06/Merida Campestre: A former teacher at Harmon Hall lodged the complaint with CAO. The complainant raised concerns about general unfair treatment and non-payment of social security. 

CAO had determined the Harmon Hall-02 complaint eligible in October 2013 and initiated an assessment to explore options for addressing the issues by the complainant.  This assessment was conducted jointly with the assessment on Harmon Hall complaints 03 – 06, that were determined eligible in November 2013. However, as the complainants and Harmon Hall could not agree to engage in a collaborative dispute resolution process, CAO concluded the assessment of the complaints and the cases were transferred to CAO's Compliance function for appraisal, as per CAO’s Operational Guidelines.

For the purpose of the compliance appraisal, Harmon Hall complaints 02-06 were merged with complaint 08, that was deemed eligible in March 2014. 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.