Modern slavery | UK Regulatory Outlook January 2023

Tesco faces lawsuit in UK for unjust enrichment and negligence in Thai clothing factory 

It has been reported that supermarket giant, Tesco, is facing legal action in the UK by 130 former workers from VK Garment Factory (VKG) in Thailand, who are suing the retailer for alleged negligence and unjust enrichment. 

Between 2017 and 2020 these workers were producing F&F clothing for the supermarket's Thai branch and claim they suffered forced labour and were made to work 99-hour weeks in bad conditions and for very low pay. This is the first time legal action is being taken against a UK company in the English courts over a foreign garment factory. 

Tesco has reportedly said it does not accept the claims being made against it, nor that the claim should be brought under the English courts. The retailer was not involved in the day-to-day running of VKG, but the workers in Tesco's supply chain are trying to hold Tesco accountable for failing to protect them. 

If the company does not agree to settle the workers' claim, then the case will go before the High Court in England. 

This recent development should remind businesses who are based in the UK that environmental and human rights supply chains risks are becoming more prominent, including increasing expectations of oversight of and responsibility for supply chains based in other jurisdictions. 

European regulation prohibiting products produced using forced labour

On 14 September 2022, the European Commission proposed a regulation prohibiting all products made with forced labour to be placed on the EU market. The proposal covers all products, namely those made in the EU for domestic consumption and exports, and imported goods, without targeting specific companies or industries. See our earlier Regulatory Outlook for more. 

The feedback period on the proposal closed in November 2022 and the European Council and Parliament are both working on their positions. In 2023 it is expected that the Council and Parliament will agree on a final text of the regulation which will then be adopted and put into force. The regulation will not apply until 24 months after its entry into force, expected to be in 2025, but businesses should be aware of these changes coming down the line and their implications. 

UK regulations to eradicate forced labour in NHS supply chains 

As detailed in our earlier Regulatory Outlook, under the Health and Care Act 2022, regulations can be made to eradicate forced labour in NHS supply chains. While there have been no further developments on this since our update in July 2022, this topic is on the government's radar and in 2023 we expect there may be further developments (or at least an idea of when we can expect legislative proposals to be put forward). 

In the meantime, we await to hear whether the government plans to update section 54 Modern Slavery Act 2015 (transparency in supply chains).