$500,000 fine for failure to comply with mandatory standards

Netherlands, a front runner in slavery prevention

Recently the Dutch senate established itself as a progressive frontrunner in combating child labour practices in global supply chains by voting to adopt the Child Labour Due Diligence Bill.  The bill will come into effect at the earliest on 1 January 2020, with the exact date yet to be determined.

The Bill will require businesses to conduct due diligence on suppliers and make a declaration that the company has addressed any issues of child labour. In doing so, the Netherlands has aimed to promote transparency to Dutch consumers, and additionally encourages compliance with responsible business conduct by mitigating child labour in global supply chains.

The law will apply to all companies that sell or deliver goods or services to Dutch customers, including companies that are registered abroad.  Companies will be required to investigate whether there is a ‘reasonable suspicion’ of child labour in their supply chains and if so, what steps have been taken to address this. Consequences for companies that fail to comply with the can range from a fine for the first offense; and if non-compliant twice within five years, the ‘responsible director’ can be imprisoned. In particularly egregious circumstances, penalties can be fines exceeding € 500,000 or up to 10% of the company’s annual turnover.

The enforceability of this law is where it appears to fall short. The only apparent way to enforce compliance is if a person or company takes initiative to submit a complaint to the regulating authority with evidence that their interests have been affected by the company’s failure to comply with the law. This largely leaves it at the discretion of companies to determine what constitutes compliance with these laws, and goodwill to take appropriate action.

Nonetheless, the Child Labour Due Diligence Bill serves as an international catalyst for adopting human rights legislation in labour practices and affords direct responsibility on companies for maintaining ethical labour practices. Therefore, companies should assess and strengthen their supply chain due-diligence processes to respond to risks of child labour in their supply chain.