Modern Slavery Compliance In Supply Chains.
I. Meaning of Modern Slavery in Supply Chains
Modern slavery encompasses:
Forced labour
Bonded labour
Human trafficking
Debt bondage
Child labour
Exploitative recruitment practices
In supply chains, modern slavery risks arise through:
Labour contractors and recruitment agents
Informal and migrant labour
Outsourced manufacturing
Cross-border sourcing of raw materials and components
II. Why Modern Slavery Creates Corporate Liability
Corporates face liability even without direct employment relationships because:
Supply chains are treated as extensions of enterprise responsibility
Knowledge, control, or benefit from exploitation triggers liability
Failure to conduct human rights due diligence (HRDD) is itself actionable
Liability may be:
Civil
Criminal
Regulatory
Contractual
Reputational
III. Indian Legal Framework Addressing Modern Slavery
India does not use the term “modern slavery” in statutes, but equivalent prohibitions exist:
1. Constitutional Provisions
Article 23 – Prohibition of trafficking and forced labour
2. Key Statutes
Bonded Labour System (Abolition) Act, 1976
Child Labour (Prohibition and Regulation) Act
Inter-State Migrant Workmen Act
Minimum Wages Act
Factories Act
3. Corporate and Securities Law
Companies Act, 2013 (Sections 134, 166)
SEBI BRSR disclosures on labour and human rights
Contract law obligations for ethical sourcing
IV. International Framework Influencing Indian Corporates
UK Modern Slavery Act, 2015 (supply-chain reporting)
Australian Modern Slavery Act, 2018
UN Guiding Principles on Business and Human Rights
ILO Forced Labour Conventions
Indian exporters and multinationals are indirectly bound through:
Buyer contracts
Listing requirements
ESG and investor expectations
V. Core Compliance Obligations for Corporates
Supply-chain mapping
Risk assessment of labour practices
Supplier codes of conduct
Audit and monitoring mechanisms
Grievance redressal and remediation
Disclosure and transparency
VI. Key Case Laws on Modern Slavery and Supply-Chain Liability
1. People’s Union for Democratic Rights v. Union of India (Asiad Workers Case)
Issue:
Labour exploitation by contractors in large projects.
Held:
Principal employers cannot escape liability by outsourcing
Forced labour includes payment below minimum wage
Significance:
Foundation of supply-chain labour responsibility in India.
2. Bandhua Mukti Morcha v. Union of India
Issue:
Prevalence of bonded labour in industrial operations.
Held:
Bonded labour violates Article 23
State and enterprises have positive obligations to eradicate it
Relevance:
Judicial recognition of enterprise responsibility in labour supply chains.
3. Sanjit Roy v. State of Rajasthan
Issue:
Forced labour in public and private works.
Held:
Economic compulsion does not justify sub-minimum wages
Forced labour prohibition applies irrespective of consent
Significance:
Forms the constitutional basis for modern slavery compliance.
4. National Campaign Committee for Central Legislation on Construction Labour v. Union of India
Issue:
Non-implementation of labour protections in construction supply chains.
Held:
Principal employers responsible for contractor compliance
Failure constitutes violation of fundamental rights
Relevance:
Extends modern slavery liability to multi-tier contracting structures.
5. Vedanta Resources Plc v. Lungowe (UK Supreme Court)
Issue:
Human rights violations by subsidiary affecting local communities.
Held:
Parent companies may owe duty of care where they control operations
Group-wide policies can create enforceable obligations
Significance:
Highly persuasive for parent-level supply-chain accountability.
6. Okpabi v. Royal Dutch Shell Plc (UK Supreme Court)
Issue:
Environmental and labour rights harm in foreign operations.
Held:
Corporate structure does not immunize parent companies
Operational control triggers duty of care
Relevance:
Strengthens argument for global supply-chain HRDD.
7. Rana Plaza Supply Chain Litigation (Global Apparel Cases)
Issue:
Labour exploitation and unsafe conditions in garment supply chains.
Outcome:
Brands faced settlements and compensation claims
Failure of effective audits highlighted
Significance:
Demonstrates the limits of paper-only compliance.
VII. Liability of Directors and Senior Management
Directors may be liable for:
Failure to implement labour due diligence
Approving misleading ESG disclosures
Compliance, HR, and procurement heads face increased scrutiny
Independent directors protected unless negligence is shown
VIII. Defences Available to Corporates
Robust supply-chain HRDD framework
Regular audits and corrective actions
Termination or remediation of non-compliant suppliers
Effective grievance mechanisms
Transparent disclosures
Note: Mere contractual clauses without monitoring are insufficient.
IX. Remedies and Enforcement Actions
Criminal prosecution under labour laws
Civil damages and compensation
Regulatory sanctions and debarment
Contractual termination by global buyers
Investor actions and ESG downgrades
X. Emerging Judicial and Regulatory Trends
Shift from voluntary disclosure to enforceable duty
Expansion of parent-company and buyer liability
Greater focus on migrant and informal workers
Increased scrutiny of labour audits and certifications
XI. Conclusion
Modern slavery compliance in supply chains is now a core corporate governance and risk-management obligation. Courts increasingly hold that:
Where exploitation is foreseeable within a supply chain, failure to act amounts to complicity.
Indian corporates—especially exporters and multinational groups—must embed modern slavery controls into procurement, contracting, audit, and board oversight, or face escalating legal, regulatory, and commercial consequences.
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