Following internal discussions between the legislation institutions of the EU (i.e. the Parliament and the Council), the Forced Labour Regulation (FLR) was adopted on 19 November 2024 and published in the official journal on 12 December. The regulation will take effect on 14 December 2027. The FLR regulation will ban products made with forced labor from being sold in the EU or exported from the EU and will apply to all sectors and levels of a supply chain, a vital step towards eradicating these abusive practices by effectively forcing companies to eliminate forced labour from their operations and supply chains.
Article 3 of the FLR states that “Economic operators shall not place or make available on the Union market products that are made with forced labour, nor shall they export such products.” Forced labour in the context of this legislation is defined as per article 2 of the International Labour Organisation (ILO) Convention no. 29, i.e., “all work or service which is extracted from any person under the menace of any penalty and for which the said person has not offered themselves voluntarily.”. This definition includes forced child labour. The FLR will apply to all companies, irrespective of size, operating within the EU, as well as to companies exporting from the EU. It will also cover companies based outside the EU that sell goods to EU consumers via online platforms.
Article 1(3) of the FLR states that the regulation will not introduce any new due diligence requirements over and above what is already required under EU or national legislation. As such, it is envisaged that the FLR will work in tandem with other EU legislation, such as the Corporate Sustainability Due Diligence Directive.
Notwithstanding the fact that no new due diligence requirements have been introduced by the FLR, economic operators will be required to ensure that the risk of forced labour cases in their operations and supply chains have been appropriately mitigated or eliminated. It is worth noting that paragraph 12 in the preamble to the regulation makes reference to the “2021 Commission guidance on due diligence for EU business” document as a suitable due diligence model to employ.
The FLR requires the designation of competent bodies in each EU member state to oversee the implementation of the FLR and ban offending products. A risk-based approach will be applied when investigating possible violations of the regulation, with assessments based on the following criteria:
The national competent authority will lead the investigation when forced labour is suspected to have taken place within the EU. For suspected violations outside the EU, the Commission will be the lead investigating body.
The FLR provides several initiatives to support its aims:
Where it has been established that a product has been placed on the EU market or is being exported from the EU in violation of article 3, the authorities can adopt a decision containing:
Economic operators will be able to request that decisions from the authorities be reviewed.
Once a decision on a particular product has been made, the competent authority will inform the customs authority so that the product can be controlled and prevented from entering the jurisdiction of the EU.
The FLR provides for “effective proportionate and dissuasive” penalties to be imposed in the case of noncompliance. Member states will set out rules on penalties applicable to economic operators for noncompliance and ensure the rules are applied in accordance with national law.
Product bans to be introduced under the FLR will not come into effect until 14 December 2027, which should give companies sufficient time to assess their supply chains to be compliant with the forced labour rules. Companies should consider taking the following steps prior to its implementation:
Content adapted from BDO Global.