The Situation: On November 13, 2019, the Child Labor Due Diligence Act ("Act") was published in the Dutch Government Gazette. The law introduces a duty of care for companies to prevent the supply of goods or services which have come into existence using child labor. The Act's exact date of entry into force is not yet known.
The Result: Companies, including companies registered outside the Netherlands, selling goods or services to Dutch end-users (be it companies or individuals) are required to exercise due diligence to assess whether a "reasonable suspicion" exists that the services or goods to be supplied have come into existence using child labor. Failure to comply with the Act exposes a company to the risk of an administrative fine of up to EUR 870,000 oralternatively10% of its annual turnover. The Act also provides for criminal liability.
Looking ahead: The Act's date of entry into force as well as certain important aspects need to be clarified by subordinate legislation. In the meantime, companies should consider conducting a preliminary applicability assessment and assessing current due diligence procedures against the ILO-IOE Child Labour Guidance Tool for Business.
As we reported in our August 2018 White Paper, " The Global Spotlight on Labor Trafficking in Corporate Supply Chains - Know Your Obligations," countries around the world are combatting labor trafficking through legislation that requires companies to disclose steps taken to combat forced labor in their supply chains. And as specifically mentioned in the December 2019 follow-up, " Labor Trafficking in Corporate Supply Chains - Where We Are Now," the Netherlands, introduced an Act establishing a duty of care for companies to prevent the supply of goods or services which have come into existence using child labor, to Dutch end-users. This Commentary serves to further detail the Act.
Currently, the Act is not expected to enter into force before 2021. In the meantime, certain important aspects of the Act, as described below, are to be clarified by subordinate governmental decrees.
The Act will apply to all companies selling or delivering goods or services to Dutch end-users, including online sales. Companies registered in the Netherlands, as well as those registered outside the Netherlands that deliver goods or services to Dutch end-users, are to comply with the Act. Companies that solely transport goods do not fall within the scope of the Act. Potential exemptions...