Not Worried About Modern Slavery or Forced Labour Laws? Perhaps You Should Be.

Recent “Shocking” European case – of Modern Slavery and Forced Labour

Earlier this week, another case of apparent Modern Slavery and Forced Labour came to light in the UK. [1]  According to media reports, the former UK Prime Minister, Baroness Teresa May of Maidenhead, now Chair of the Global Commission on Modern Slavery and Human Trafficking[2] – described the case as “shocking” and showed “large companies not properly looking into their supply chains”. The UK Government is now contemplating further steps to strengthen UK Modern Slavery and Forced Labour laws. This recent UK case, follows a number of other cases in Europe – particularly the EU – including those involving high profile Italian fashion houses.[3] In all these cases, the ethical and social responsibilities – including the legal obligations – incumbent on large companies to root-out modern slavery and forced labour concerns in their supply chains, have been focused on. This comes in the wake of, a number of concerns in the same area with, for example, a United Nations Working Group recently noting a general lack of understanding in the banking and investment community that ESG data and information requires undertakings to provide information and data on the “S” – including, therefore, on human rights issues.[4]

Increasingly more robust US, EU and UK laws on modern slavery and forced labour

There is an increasing desire in the US, UK and EU to clamp down on Modern Slavery and Forced Labour issues – by strengthening the legal regimes in place, and vamping-up enforcement activities including investigations. 

In the US, the Biden and Trump administrations have taken a leading role in recent years with the Uyghur Forced Labour Act, which subjects companies to the detention of goods if there is reasonable suspicion that they were produced using forced labour.

The EU appears to be following this general trend, with new proposed EU regulations specifically addressing forced labour issues, as well as other EU laws requiring companies to conduct due diligence in their supply chains and report ESG data to authorities or make it publicly available (e.g. Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), Deforestation Regulation, Batteries Regulation, etc).    

And in the UK, there are now calls to strengthen the UK Modern Slavery Act of 2015, with concerns that it is no longer fit-for-purpose. A House of Lords Committee  was established to review the current legislation and identify areas in need of amendments to enhance protections for victims and increase corporate accountability. Those advocating for reform, have called for revision in a number of areas including:

• • • Stricter Reporting Requirements: Requirements for companies to provide more detailed disclosures about their efforts to combat forced labour within their supply chains.
    • Increased Penalties for Non-Compliance: More severe penalties for companies that fail to comply with reporting standards or that are found to engage in forced labour practices.
    • Expanded Definitions: The scope of what constitutes modern slavery may be broadened to include additional forms of exploitation, ensuring that more victims are recognized and supported.
    • Greater Government Oversight: Increased government oversight and monitoring of compliance with the Act will be implemented to ensure that businesses are taking their responsibilities seriously.

The increasingly robust legal frameworks in the US, EU and UK all reflect the underlying aim codified in UN Sustainable Development Goal 8.7 – which seeks to eradicate forced labour by 2030.

What is “forced labour” – and how prevalent is it in reality?

“Forced” or “compulsory” labour generally means “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily”[5] however these terms may take on different definitions, and be interpreted differently, in different jurisdictions. According to the UN IOM: it was estimated that in 2021, 50 million people lived in situations of modern slavery, “either forced to work against their will or in a marriage that they were forced into.” [6] That number, as highlighted by the UN IOM, translated to nearly “one of every 150 people in the world”.  The UN IOM also noted, perhaps most depressingly, that the problem of forced labour and modern slavery was not improving – but, in fact, worsening.[7] 

What should companies be doing?

Companies need to take a number of actions to take the increasingly robust laws on forced labour and modern slavery seriously, spot warning-signs of forced labour, and address legal risks, as well as real-life concerns, head-on.  This includes:

1. 1. 1. Establishing internal processes and procedures to address forced labour and modern slavery concerns e.g. recruitment procedures (including the use of translators and third parties); vigilance for tell-tale signs (e.g. shared banks accounts, shared employee addresses, excessive working hours, etc); confidential or other reporting procedures; etc. This may include ad hoc or periodic spot-checks and audits of specific plants by external entities.
      2. Ensuring companies proactively look for and address forced labour and modern slavery issues throughout their supply chains, taking into account their evolving and changing nature, and the involvement of employment agencies and other service providers.
      3. Considering forced labour and modern slavery issues in the wider context – such as due diligence processes in Merger & Acquisition transactions, and investment decision-making issues.

Next month - in November 2024 – Crowell will be hosting Roundtable meetings in London and Brussels with companies to discuss these issues. Please contact David Stepp (Dstepp@crowell.com) and Pierfilippo Natta (pnatta@crowell.com) for more information. 

For more information on Forced Labour and Modern Slavery issues, please see previous Crowell Client Alerts including:

https://www.crowell.com/en/insights/client-alerts/the-eu-forced-labor-regulation-a-legal-breakdown

https://www.crowell.com/en/insights/client-alerts/2024-uflpa-strategy-update-forced-labor-in-the-xuar-remains-top-concern-for-us-government