Posted by Anya Marcelis

Dutch take the lead on child labour with new due diligence law

Almost three years since its introduction into parliament, the Wet zorgplicht kinderarbeid (Child Labour Due Diligence Bill) was adopted in the Dutch Lower House this week, passing by just three votes (39 to 36). The bill will come into force at the earliest on 1 January 2020, with the exact date still to be determined.

Focusing on reporting requirements, the new law aims primarily to provide transparency to Dutch consumers and other stakeholders on products and services whose sourcing may involve child labour. Additionally, the law encourages companies to participate in International Responsible Business Conduct (IRBC) agreements (sectoral roundtables set up by the Dutch government) and in other initiatives to identify, prevent and mitigate instances of child labour in global supply chains.

Which companies are covered? What are the requirements?

The law will apply to all companies registered in the Netherlands that sell or deliver goods or services to Dutch customers, as well as companies that are registered abroad but sell or deliver goods or services to Dutch customers. Companies that only transport goods are exempt. Companies will be required to submit to the Dutch supervising authority (yet to be determined) a disclosure statement declaring that there are adequate due diligence measures in place to prevent their products or services from being produced in a way that involves child labour. These statements will be made publicly available by the state authority. Unlike the UK Modern Slavery Act and the French Duty of Vigilance Law, companies that fall under the scope of the Dutch Child Labour Due Diligence Law will only be required to make this statement once, rather than annually.

New companies will be required to make their statement immediately after registration, whereas existing companies will be required to submit their statement within six months of the law’s enforcement date. Statements from foreign companies will be required within six months’ of providing goods or services to Dutch consumers for the second time in a single year. Further provisions on the scope of the law and the scope and content of the due diligence statement are to be elaborated in subsidiary administrative orders (Algemene Maatregel van Bestuur), which will be crucial in determining the law’s effectiveness.

How is due diligence defined?

Companies will be required to investigate whether there is ‘reasonable suspicion’ of child labour in their activities and supply chains. The law suggests that companies should use the ‘Child Labour Guidance Tool for Business’ from the ILO and IOE, to assess the risk of child labour in their activities and supply chains (we can expect other tools to be produced by separate bodies). If such a ‘reasonable suspicion’ is identified, companies are required to develop an action plan to prevent and mitigate the risk of child labour, in line with the Guidance Tool and other international guidelines.

What is the enforcement mechanism?

The only apparent way to enforce the law will be if a person or company submits a complaint to the relevant regulating authority, with concrete proof that their interests have been affected by a company’s actions or failure to comply with this law. The company will have an opportunity to respond and remedy this failure. Companies that refuse to comply can be fined up to € 4,100 for a first offence. If companies commit two offences within five years, executive directors could face imprisonment. Unlike the French Duty of Vigilance Law, complainants do not have access to seek remedy through a civil lawsuit.

Proving that a party has been affected by a failure to issue a statement may be difficult. So it is possible that complaints are raised simply in relation to companies that do not provide a statement, rather than regarding the adequacy of a company’s measures, given that the law does not define criteria setting out what is expected of the quality of risk assessment or from a company’s action plan on preventing and mitigating child labour in their supply chains.

What can be expected? Will the law be effective?

In the wider context of the SDG objective for child labour eradication by 2025, the Dutch Child Labour Due Diligence Law is an important step in incentivising all companies active in the Netherlands to build an awareness of risks to child labour into their activities, and to take direct and collaborative actions to prevent and mitigate such risks. The law may also be an important stimulus to promote an element of human rights due diligence across the entire private sector active in the Netherlands.

A potential adverse effect from the law, however, could be that companies, instead of finding and addressing difficult root-causes, might cut links with suppliers that have higher risks related to child labour. Companies seeking to show leadership will have to carefully consider the consequences of any termination actions as this could have a worse impact on children and their families.

Potential shortcomings

There are a number of areas where the law may be considered by some to fall short. First, given that there are no criteria defined for the content and quality of statements or the risk assessment and the action plan, this may lead to significant variation between companies’ statements and approaches. This also creates a lack of certainty for companies in terms of what is expected of them. There is a danger of companies opting for the minimum activity.

Second, as the law currently stands, it raises significant questions regarding its enforceability and its potential effectiveness. As opposed to comparable UK and Australian laws on modern slavery and the French Duty of Vigilance law, this law does not have annual or progress reporting requirements and, as pointed out above, does not define how companies must assess and respond to child labour risks.

Third, focusing corporate action on a single human rights issue (and child labour rather than forced labour at that) runs contrary to trends in other jurisdictions that are considering a broader approach to human rights due diligence (e.g. Germany, Switzerland). Finally, its limited enforcement mechanism and lack of remedy may be seen as weaknesses.

The new law should encourage greater transparency and dialogue on human rights due diligence, but its success will require likely goodwill and leadership from companies to go beyond straightforward compliance. As with equivalent laws in other countries, it will also depend on the means by which civil society and government engage with companies, particularly in terms of benchmarking and monitoring, and how they hold companies accountable for their statements and action plans.

Ergon has wide experience of advising on human rights due diligence. For details of how Ergon could assist you on undertaking child labour due diligence in compliance with the new law, please contact our Dutch office on +31 232 050 226