Updated: 3 June 2019
On the 14th of May 2019, the Dutch Senate voted to adopt the “Child Labour Due Diligence Law” (“Wet Zorgplicht Kinderarbeid”), which requires companies to determine whether child labour occurs in their supply chains and set out a plan of action on how to combat it. Below we explain what is known about the content of the law as of June 2019. Several aspects of interpretation and especially implementation of the law are still to be determined via an instrument known as a General Administrative Order or GAO (‘Algemene Maatregel van Bestuur’, AMvB). GAOs are an executive responsibility of the government, but will have to be approved by both Chambers of Dutch parliament for this law. This means that the information provided below does not cover some of the final details of the law.
What is the purpose of the law?
The stated goal of this legislation is to protect Dutch consumers. The legislation aims to prevent goods and services produced with child labour from being delivered to consumers in the Netherlands. Dutch consumers should be able to trust that the companies from which they purchase products and services are conducting due diligence (i.e. doing everything that can reasonably be expected of them) to prevent child labour from being used in their products and services. The Senate has challenged this goal, stating that, in reality, combating child labour is the ultimate goal of the law.
What does the law ask from companies?
Companies covered by the law have to submit a statement to regulatory authorities declaring that they have carried out due diligence related to child labour in their full supply chains. The government will have to decide on which regulatory authority will be tasked with supervising companies’ adherence to the law, which so far has proven a challenging task.
There are no specific requirements for the statement (yet) – the form and content will be determined by the GAO. Companies only have to submit the statement once; it has a long-term validity and there is currently no provision about the length of time for which it is valid. This is different from the UK Modern Slavery Act and the French ‘Devoir de Vigilance’ bill, which both require an annual statement. All statements will be published on the website of the regulator.
When does the law take effect?
The law was initially scheduled to enter into force on 1 January 2020. However, as the Senate only adopted the law in May 2019 and the government needs to elaborate the GAOs first, the new date on which the law enters into force is yet to be determined. Companies have to send their statement to the regulator six months after the law enters into force.
How is due diligence defined under the law?
Due diligence under this law means that companies should first assess whether there is a reasonable presumption that the goods and services to be supplied have been produced with child labour. For the quality of this assessment, the law refers to the International Labor Organization’s and International Organisation of Employers’ “Child Labour Guidance for Business”. This guide is in turn based on the UN Guiding Principles on Business and Human Rights (UNGPs). The investigation must focus on sources that can be reasonably known and that are accessible.
If the investigation indicates that there is a reasonable presumption that child labour has contributed to the product or service, the company is expected to draw up an action plan in line with international guidelines (the UNGPs or the OECD Guidelines for Multinational Enterprises) to prevent this impact.
As of now, there are no specifications for the quality of the action plan. Such criteria may be developed at a later date. The regulatory authority can consider joint plans of action (e.g. through a sectoral or multi-stakeholder initiative) as a valid way of addressing the impact.
Hence, the expectation is not that the company provide a guarantee that child labour does not occur in the supply chains, but that the company has done what can reasonably be expected to prevent this from happening.
Which companies are covered under the law?
The law applies not only to companies registered in the Netherlands, but also to companies from anywhere in the world that deliver their products or services to the Dutch market twice or more a year. The government can exempt certain sectors or categories of companies for which the risk of child labour is low. This is to be determined in the GAO.
What happens if a company does not publish a statement or if child labour is found despite?
Companies that fail to submit a statement will be fined, though at a mere € 4,100, the fine is largely symbolic. The fine can be raised if there are further complaints and if a company fails to follow the subsequent legally-binding instructions and terms of execution imposed by the regulatory authorities.
However, there will be no pro-active enforcement by the regulatory authority. Only complaints submitted by a third party will trigger enforcement. Any person (natural or legal) can file a complaint with the regulator on the basis of concrete evidence that the company’s products or services were produced with child labour. Any individual or entity wishing to submit a complaint must first submit the complaint to the company itself. If the company’s reaction is ‘inadequate’ according to the complainant, he/she can escalate the case to the regulator.
If the regulatory authorities determine that the company has not conducted due diligence in line with the legislation, the regulator provides the company legally-binding instructions and a timeframe for execution. If that is not followed, the company can be fined. If a company is fined twice within five years, the next violation can lead to imprisonment of the responsible director. At the most extreme, failing to follow the law can lead to imprisonment and fines of € 750,000 or 10% of the company’s annual turnover.
There remain many open questions regarding enforcement of the law. One of the main questions is how the regulatory authorities will assess whether due diligence was sufficient or insufficient in cases where a complaint provides evidence of child labour.
What effects and side effects can we expect?
MVO Platform expects the law to have an overall positive effect and to contribute to a decrease of child labour in supply chains of consumer products. However, it is important to keep in mind that companies are not required to guarantee that child labour does not occur in the supply chain, but merely to state that the company has done what can reasonably be expected to prevent this from happening.
There are some potential side effects of the law depending on how companies respond to it. For example, companies could start avoiding sourcing from countries with a high risk of child labour in order not to run the risk. However, this is likely to be impossible or very difficult for many products.
In addition, companies might do the absolute minimum to meet the law’s requirements. For example, they may quickly get rid of child labourers if discovered without taking responsibility for remediation of impacts that have already occurred.
Therefore, it is crucial that the still-to-be-defined quality criteria for the action plans clarify that due diligence is not seen as avoiding risks but as taking responsibility for getting children not only out of work but also into school.
Where did the initiative of this law come from?
The Child Labour Due Diligence Law was initiated in 2014 by then Member of Parliament Roelof van Laar (Labour Party), after which it was passed by the Dutch House of Representatives in 2017. Van Laar started a petition in order to generate support from the general public as well as some companies. Chocolate company Tony’s Chocolonely even campaigned actively in support of the law, which also led to various other large companies expressing their support for the law.
Van Laar – right of the chocolate bar – campaigns with Tony’s Chocolonely. The Hague, January 2017 (photo: Tony’s Chocolonely)
Van Laar’s efforts paid off, and following a few amendments, the law received broad support in Parliament. This is quite surprising in the Dutch political context, in which traditionally there has been a strong preference for self-regulation and negotiated solutions. The vote in the House of Representatives was 82 in favour (out of 150). The Liberal Party (VVD), Freedom Party (PVV), and the Christian Democrats (CDA) all voted against the law. In May 2019, the Senate adopted the law with 39 votes in favour (out of 75).
How does the new Dutch law relate to international developments?
With the unanimous adoption of the UNGPs by the UN Human Rights Council in 2011, human rights due diligence was established as a global expectation from companies. In recent years, several international and European institutions, as well as national parliaments, have asked for a business and human rights framework that embeds human rights due diligence into law. While the European Commission has so far largely failed to address the growing number of calls to enhance legal standards of responsibility for human rights abuses and environmental damages caused by European companies, there are several legislative initiatives at the national level. The new Dutch law is thus part of a larger trend towards regulating human rights due diligence, either through transparency requirements, or through obligations to conduct due diligence.
In France a duty of vigilance law was definitely adopted in March 2017. A similar law is currently being considered in Switzerland. The German government has prepared a draft law, which it will introduce if a majority of large companies fails to implement due diligence by 2020. In 2016, the UK adopted the Transparency in Supply Chains Clause of the Modern Slavery Act. Australia implemented its own Modern Slavery Act in 2019. The government of Luxemburg has also announced that it will investigate introducing human rights due diligence legislation.
(Sources of photos: 1) MVO Platform 2) Tony’s Chocolonely)
