The UK Modern Slavery Act compared to the German Supply Chain Act

On January 1st, 2023, the new Supply Chain Due Diligence Act will come into force in Germany. This obliges larger companies to comply with environmental, social and human rights standards in their (international) supply chains. And indeed, I have been observing more and more corporate inquiries on the topic for a few weeks now. What I have also observed time and again: Many companies are not aware that comparable mechanisms have already been introduced in other countries in the past, such as the Human Slavery Act in the United Kingdom in 2015. I would like to take this article as an opportunity to briefly highlight the Modern Slavery Act and then draw a comparison with the Supply Chain Due Diligence Act.

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The law ties in with the term “modern slavery” – a collective term that encompasses the crimes of human trafficking and forced labor in particular. The subjects of protection are specifically described in paragraphs 1 to 3 of the Act. The definition of forced labor and slavery refers to Article 4 of the European Convention on Human Rights. The companies affected are those with a turnover of more than GBP 36 million, including the turnover of subsidiaries, which do business in the United Kingdom or conduct part of their business there and distribute goods or provide services. Specifically, companies are required to report annually on the measures. At the same time, remedial action must be taken and made public.

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As a sanction measure, the UK government is keeping open the possibility of obtaining injunctions against companies that fail to comply with their obligations under the Act. In specific terms, the competent minister can issue an injunction against a company if it has not published a report on its website as required by the law. Direct regulatory penalties for non-compliance with the Act cannot be imposed.

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Sections 40 to 44 of the Act provide for the appointment of an Independent Anti-Slavery Commissioner (“Anti-Slavery Commissioner”). The commissioner’s task is to promote the prevention, detection, investigation and punishment of forced labor and human trafficking and to support the identification of victims. To this end, he conducts training, publishes information material and conducts studies. The Independent Anti-Slavery Commissioner reports annually on his work and publishes strategies.

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First, some parallels can be observed between the German law and the Modern Slavery Act: Both norms establish corporate rules regarding “human rights”. Both sets of rules standardize an annual reporting obligation and both laws provide for the creation of an internal framework in the sense of internal company personell. And there is no civil liability in either set of regulations. But this is where the similarities mostly end. The German law has a much broader scope of application, including general employee protection rights and even ecological standards. Ultimately, the most significant difference is that the German Supply Chain Act provides for a concrete sanction mechanism (§ 24 LkSG) with specific possibilities for fines based on the annual turnover of the company.

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In light of the fact that the Modern Slavery Act is often mentioned in the same breath as the German Supply Chain Act, it is perplexing that the laws actually – in direct comparison – have big differences. In further discourse – especially when the international comparison with other protective laws such as the French Loi de Vigilance, the Dutch Wet Zorpflicht Kinderarbeid or the California Trasparency in Supply Chain Act is continued – this analysis should be kept in mind. Thus, a direct comparison also helps to understand the characteristics of the individual laws even better.

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