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Supply Chain Act | |
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Bundestag | |
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Enacted | 3 March 2021 |
Commenced | 2023–2026 |
Keywords | |
Environmental law, human rights, labor rights, supply chain | |
Status: Not fully in force |
The Supply Chain Act (German : Lieferkettensorgfaltspflichtengesetz, literally Obligation to Exercise Due Diligence in the Supply Chain Act or German : Lieferkettengesetz (LkSG) in short) is a German law requiring companies to monitor human rights and environmental risks in their supply chains. [1] [2]
The law requires companies to carry out analyses on supply chain contracts to identify risks to human rights and requires companies to take action against identified risks. The companies will have to publish an annual report containing the analyses. Companies must also establish a complaint procedure for workers to report potential risks. The law additionally gives civil society organisations the ability to sue companies on behalf of workers over breaches of human rights in supply chains. Companies that fail to respect the terms of the law can face fines of up to two percent of the company's annual revenues. [3]
The law came into effect starting with 2023, only applying to companies with over 3000 employees in its first year. As of now, the law only applies to one group of companies:
Companies that have their central administration, their principal place of business, their administrative headquarters or their statutory seat in Germany or companies that have a branch in Germany. [4]
However, in 2024, the provisions of the law will extend to apply to all companies with over 1000 employees. In 2026, the federal government will carry out an evaluation of the law's effectiveness.
The German federal cabinet proposed the law on 3 March 2021. It had originally been planned to be introduced in 2020, but negotiations were required between the government's coalition partners, with the Social Democratic Party of Germany eventually backing down on including small companies in the law after opposition from the CDU/CSU. [5] [6]
Human Rights Watch supported the passing of the law, stating that "the law is an important step toward meaningful corporate accountability" but that "it does not incorporate the highest international standards." [7]
The Confederation of German Employers' Associations opposed the law, arguing that it was too strict, that it would force companies to stop operations in regions with poor human rights records, and that "foreign companies that do not have to comply with the German rules will jump in and replace German companies." [8]
Observers have described the difficulties of performing independent inspections in Xinjiang, China, where there have been reports of forced labor in Xinjiang internment camps. Auditors have reported harassment by Chinese police and state security officers. [9]
In 2024, German Federal Economics Minister Robert Habeck (Greens) saw comprehensive reporting obligations as a problem for the German economy and called for a fundamental rethink. With regulations such as sustainability reporting, the deforestation directive or the supply chain law, ‘even with good intentions, we have taken a completely wrong turn’, he said, emphasizing that competitiveness is under pressure in Germany and red tape should be cut. He spoke in favour of giving entrepreneurs more responsibility again and against reporting obligations. [10]
The European Union is expected to follow Germany in the coming years with a similarly sweeping piece of legislation. Specifically, the proposed Corporate Sustainability Due Diligence Directive will cover the same measures as the German Supply Chain Act and is built to level the playing field for ESG initiatives and the people throughout the supply chain.
Labour laws, labour code or employment laws are those that mediate the relationship between workers, employing entities, trade unions, and the government. Collective labour law relates to the tripartite relationship between employee, employer, and union.
Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care.
United Kingdom labour law regulates the relations between workers, employers and trade unions. People at work in the UK have a minimum set of employment rights, from Acts of Parliament, Regulations, common law and equity. This includes the right to a minimum wage of £11.44 for over-23-year-olds from April 2023 under the National Minimum Wage Act 1998. The Working Time Regulations 1998 give the right to 28 days paid holidays, breaks from work, and attempt to limit long working hours. The Employment Rights Act 1996 gives the right to leave for child care, and the right to request flexible working patterns. The Pensions Act 2008 gives the right to be automatically enrolled in a basic occupational pension, whose funds must be protected according to the Pensions Act 1995. Workers must be able to vote for trustees of their occupational pensions under the Pensions Act 2004. In some enterprises, such as universities or NHS foundation trusts, staff can vote for the directors of the organisation. In enterprises with over 50 staff, workers must be negotiated with, with a view to agreement on any contract or workplace organisation changes, major economic developments or difficulties. The UK Corporate Governance Code recommends worker involvement in voting for a listed company's board of directors but does not yet follow international standards in protecting the right to vote in law. Collective bargaining, between democratically organised trade unions and the enterprise's management, has been seen as a "single channel" for individual workers to counteract the employer's abuse of power when it dismisses staff or fix the terms of work. Collective agreements are ultimately backed up by a trade union's right to strike: a fundamental requirement of democratic society in international law. Under the Trade Union and Labour Relations (Consolidation) Act 1992 strike action is protected when it is "in contemplation or furtherance of a trade dispute".
Know your customer (KYC) guidelines and regulations in financial services require professionals to verify the identity, suitability, and risks involved with maintaining a business relationship with a customer. The procedures fit within the broader scope of anti-money laundering (AML) and counter terrorism financing (CTF) regulations.
Tax withholding, also known as tax retention, pay-as-you-earn tax or tax deduction at source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, tax withholding applies to employment income. Many jurisdictions also require withholding taxes on payments of interest or dividends. In most jurisdictions, there are additional tax withholding obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use tax withholding as a means to combat tax evasion, and sometimes impose additional tax withholding requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.
Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Sustainability reporting deals with qualitative and quantitative information concerning environmental, social, economic and governance issues. These are the criteria often gathered under the acronym ESG.
The Fair Labor Association (FLA) is a non-profit collaborative effort of universities, civil society organizations, and businesses.
The Companies Act 2006 is an act of the Parliament of the United Kingdom which forms the primary source of UK company law.
Mother's rights are the legal obligations for expecting mothers, existing mothers, and adoptive mothers. Issues that involve mothers' rights include labor rights, breast feeding, and family rights.
The eastern Democratic Republic of the Congo (DRC) has a history of conflict, where various armies, rebel groups, and outside actors have profited from mining while contributing to violence and exploitation during wars in the region. The four main end products of mining in the eastern DRC are tin, tungsten, tantalum, and gold, which are extracted and passed through a variety of intermediaries before being sold to international markets. These four products, are essential in the manufacture of a variety of devices, including consumer electronics such as smartphones, tablets, and computers.
United Kingdom agency worker law refers to the law which regulates people's work through employment agencies in the United Kingdom. Though statistics are disputed, there are currently between half a million and one and a half million agency workers in the UK, and probably over 17,000 agencies. As a result of judge made law and absence of statutory protection, agency workers have more flexible pay and working conditions than permanent staff covered under the Employment Rights Act 1996.
Workplace privacy is related with various ways of accessing, controlling, and monitoring employees' information in a working environment. Employees typically must relinquish some of their privacy while in the workplace, but how much they must do can be a contentious issue. The debate rages on as to whether it is moral, ethical and legal for employers to monitor the actions of their employees. Employers believe that monitoring is necessary both to discourage illicit activity and to limit liability. With this problem of monitoring employees, many are experiencing a negative effect on emotional and physical stress including fatigue, lowered employee morale and lack of motivation within the workplace. Employers might choose to monitor employee activities using surveillance cameras, or may wish to record employees activities while using company-owned computers or telephones. Courts are finding that disputes between workplace privacy and freedom are being complicated with the advancement of technology as traditional rules that govern areas of privacy law are debatable and becoming less important.
European labour law regulates basic transnational standards of employment and partnership at work in the European Union and countries adhering to the European Convention on Human Rights. In setting regulatory floors to competition for job-creating investment within the Union, and in promoting a degree of employee consultation in the workplace, European labour law is viewed as a pillar of the "European social model". Despite wide variation in employment protection and related welfare provision between member states, a contrast is typically drawn with conditions in the United States.
A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization that is either private or public. The Whistleblower Protection Act was made into federal law in the United States in 1989.
Robert Habeck is a German politician and writer who has been serving as Vice Chancellor of Germany, Federal Minister for Economic Affairs and Climate Action in the cabinet of Chancellor Olaf Scholz and as a Member of the German Bundestag for Flensburg – Schleswig since 2021. From 2018 to 2022, he also served as co-leader of Alliance 90/The Greens, alongside Annalena Baerbock. For the 2021 German federal election, he was a member of the leading duo, alongside Baerbock, who ran for chancellor of Germany.
The distribution of medications has special drug safety and security considerations. Some drugs require cold chain management in their distribution.
The Uyghur Forced Labor Prevention Act is a United States federal law that changed U.S. policy on China's Xinjiang Uyghur Autonomous Region with the goal of ensuring that American entities are not funding forced labor among ethnic minorities in the region. It was signed into law in December 2021 and took effect in June 2022.
The Scholz cabinet is the current cabinet of Germany, led by Federal Chancellor Olaf Scholz. The cabinet is composed of Scholz's Social Democratic Party, Alliance 90/The Greens and the Free Democratic Party, an arrangement known as a "traffic light coalition" in Germany after the parties' traditional colours, respectively red, green and yellow, matching the colours of a traffic light (Ampel). This traffic light coalition-government is the first of its kind at the federal level in the history of the German federal republic.
The Corporate Sustainability Due Diligence Directive 2024 (2024/1760) is a directive in European Union (EU) law to require due diligence for companies to prevent adverse human rights and environmental impacts in the company's own operations and across their value chains. It was adopted in 2024.
Events from 2024 in the European Union.