GERMANY Law and Practice Contributed by: Jan-Ove Becker and Lukas Heber, Littler
ny. This also applies to foreign companies that maintain a branch of a corresponding size in Germany. Prohibitions and Obligations The LkSG requires: • prohibition of child labour; • protection against slavery and forced labour; • freedom from discrimination; • protection against unlawful land confiscation; • occupational health and safety and related health hazards; • prohibition of withholding an adequate wage; • the right to form trade unions or employee representatives; • prohibition from causing harmful soil or water contamination; and • protection against torture. Furthermore, the LkSG regulates the following due diligence obligations: • establishment of a risk-management system (Section 4 (1)); • definition of an in-house responsibility (Sec - tion 4 (3)); • the performance of regular risk analysis (Sec - tion 5); • issuance of a policy statement (Section 6 Paragraph 2); • establishment of preventive measures in the company’s own business unit and direct sup - pliers (Section 6); • taking of corrective measures (Section 7); • establishment of a complaint procedure (Sec - tion 8); • implementation of due diligence with regard to risks at indirect suppliers (Section 9); and • documentation and reporting (Section 10). “Supply chain” should be taken to mean all steps in Germany and abroad that are nec -
essary for the manufacture of a company’s product(s) and the provision of its services – from the extraction of raw materials to deliv - ery to the end customer. The due diligence obligations along the supply chain extend to a company’s own business operations and direct and indirect suppliers. Consequences of Non-Compliance Various sanctions may be imposed for viola - tions of the LkSG. These include fines of up to EUR800,000 or up to 2% of the company’s glob - al annual turnover (for a legal entity with aver - age annual sales of more than EUR400 million). In the event of serious violations, the company concerned may also be excluded from public procurement for up to three years. The Federal Office for Economic Affairs and Export Control ( Bundesamt für Wirtschaft und Ausfuhrkontrolle , BAFA) is responsible for monitoring and imposing sanctions. BAFA may execute inspections (unannounced and unprovoked), and is authorised to enforce its orders and measures with a forced payment ( Zwangsgeld ) of up to EUR50,000. Future Meaning The new government has already announced its intention to abolish the LkSG. Whether and when this will happen is still uncertain. However, as the Corporate Sustainability Due Diligence Directive (CSDDD) entered into force on 25 July 2024, Germany has until 25 June 2026 to trans - pose it into national law. Due to this EU directive there will still be similar due diligence obligations set out in the LkSG. Furthermore, this EU direc - tives will lead to a tightening of obligations under the LkSG.
65
CHAMBERS.COM
Powered by FlippingBook