Cornell University has announced that it is ending its business relationship with the global sports clothing manufacturer, Adidas over the issue of non-payment of severance to Indonesian workers.

University President David J. Skorton has said in his letter to Adidas that after reviewing the apparel honcho's severance responsibilities in the issue, the university is cutting all ties with Adidas effective this October 1.

Skorton wrote that he has followed the issue surrounding the closure of the PT Kizone factory in Indonesia with 'great concern' and after reviewing the German company's severance responsibilities as well as the findings of the Worker Rights Consortium, the university has decided that ending all business relationships as the best possible move.

The PT Kizone factory in Indonesia was shut down in early 2011 and its owner fled the country leaving 2,686 workers without jobs and short of $3.4 million in legally mandated severance pay. Apart from Adidas the factory also manufactured sports goods for Nike and Dallas Cowboys Merchandising who readily paid $1.6 million, leaving $1.8 million unresolved. But, Adidas has refused to pay the amount saying it is not contractually obligated to pay anything to the displaced workers, reports Maquila Solidarity Worker.

In a previous statement issued to the media, the company said, it 'will not accept nor assume the financial duties of the former PT Kizone owner and pay severance to the workers, as some labor groups and business partners have asked us to do.'

To many groups like WRC who are criticizing Adidas' stand, the company responded that it has provided workers with food vouchers and helped them find new jobs.

As if echoing every supporter of the Indonesian workers, Skorton wrote ''We believe that severance is a basic worker's right.''

He wrote: "We are calling on the collegiate apparel industry to develop mechanisms whereby brands can be assured that the factories with which they do business have on hand sufficient and secured funds to pay workers what they are owed should a factory close."

"This gap in the apparel industry's approach to worker rights is a critical issue that demands immediate attention."

However, the Ivy League school is quick to add that it 'will be happy to re-establish its business relationship with the company,' if Adidas takes leadership in addressing these labor right issues.

According to just-style.com, students at the University of Wisconsin-Madison have also been campaigning for an end to its $11 million sponsorship agreement with Adidas.