U.K. Employment Rights Bill Aims to Curb Forced Labor but Faces Criticism Over Weak Enforcement

For the past decade, the United Kingdom has sought to hold businesses more accountable for forced labor within their supply chains.

However, legal experts caution that the government’s latest initiative to strengthen protections against worker exploitation risks being diluted and inadequately enforced by regulators.

A U.K. Parliamentary committee recently convened to examine how corporations ensure their supply chains are free from labor abuses, forming part of the evidence-gathering process for the proposed Employment Rights Bill. This extensive legislation aims to bolster workplace protections both domestically and within global supply chains.

As part of this inquiry, Chinese fashion giant Shein was called to testify, but its senior legal counsel for Europe, Yinan Zhu, evaded key questions. She was unable—or unwilling—to disclose the origins of the company’s cotton, which is widely suspected to come from China’s Xinjiang region, where forced Uyghur labor has been reported. Regulators reacted with frustration, accusing Zhu of “wilful ignorance” and stating that she had “given us almost zero confidence in the integrity of your supply chains.” The controversy comes as Shein eyes a potential listing on the U.K. stock exchange.

The proposed bill—if passed—would not take effect until 2026 and would establish a new regulatory body, the Fair Work Agency (FWA). This entity is intended to consolidate the enforcement powers of multiple agencies currently tasked with investigating labor exploitation, including the Gangmasters and Labour Abuse Authority, HM Revenue and Customs National Minimum Wage Unit, and the Employment Agency Standards Inspectorate. The goal is to address the shortcomings of the existing fragmented and underfunded system.

A recent report by the World Economic Forum highlights the urgent need for such measures, revealing that over 50 million people worldwide are victims of modern slavery, with forced labor generating illegal profits of approximately £189 billion (U.S. $236 billion) annually.

The U.K. previously took a leading role in tackling this issue with the introduction of the 2015 Modern Slavery Act. The legislation, favoring a “carrot” rather than “stick” approach, required large corporations with annual revenues exceeding £36 million (then U.S. $54.4 million) to assess and disclose the risks of forced labor in their supply chains. Companies were also expected to outline steps taken to prevent such abuses.

While groundbreaking at the time, the law has significant weaknesses. Notably, it imposes no penalties for noncompliance, and businesses can fulfill their obligations by issuing vague, one-line statements. In fact, under the Modern Slavery Act, firms are legally permitted to take no action at all. Legislators had initially hoped that public scrutiny would compel corporations to adopt ethical practices.

However, legal professionals are divided on whether the Employment Rights Bill will have the necessary strength once it undergoes parliamentary debate. Concerns persist over its practical implementation, the adequacy of enforcement mechanisms, and the extent to which businesses will genuinely strive for compliance.

Notably, the current draft of the bill does not establish direct corporate liability or financial penalties for supply chain violations. One of its primary enforcement tools—a labor market enforcement order—already exists under other legislation and merely prohibits certain actions without imposing punitive measures. Consequently, some legal experts fear that the U.K. is falling behind its European counterparts, such as France and Germany, where supply chain laws include financial penalties for noncompliance.

“Having a single agency may well bring better reporting of abuses and more action against offending employers, but the FWA will take several years to fully take shape, and it faces the inevitable challenge of securing adequate funding to do the policing duties that the bill envisages,” said Rob Smedley, director of employment law at Freeths.

Hannah Strawbridge, CEO of employment law firm Han Law, expressed skepticism over the FWA’s potential effectiveness. She warned that the bill’s “softly, softly” approach might mean compliance remains voluntary, and the threat of a labor market enforcement order “may not be enough to get businesses to take meaningful actions further along their supply chains.”

Furthermore, while the bill mandates that businesses identify and monitor risks of labor exploitation, there is ambiguity regarding whether these duties will be enforced under civil or criminal law. “Companies will have a duty to remedy any abuses that are identified, but again the lack of punitive measures means that compliance is likely to be voluntary and/or poorly enforced,” Strawbridge said.

She also pointed to Shein’s lack of cooperation as a worrying sign of future enforcement challenges. “As seen by Shein’s unwillingness to come to the table, reaching—and acting against—those players with particularly long and complicated supply chains is unlikely to improve following the bill,” she added. “It is a shame that we have not gone as far as France and Germany who actively apply financial penalties to those businesses that have been found wanting.”

Jo Mackie, a partner at law firm Burlingtons, warned that the FWA’s originally intended powers could be significantly diluted. “Deputy Prime Minister Angela Rayner has said that she intends the FWA to have ‘real teeth,’ but with little new enforcement provision on the table, it is more a merger of existing powers and inspectorates,” she noted.

Smedley echoed similar concerns, stating that it remains uncertain how the bill and the FWA will align with other supply chain-related legislation. Nevertheless, he urged U.K. companies to remain proactive. “U.K. companies should continue to engage with the requirements of the U.K. Modern Slavery Act, push for more due diligence within their supply chains, and impose greater penalties on suppliers through contractual arrangements.”

Despite these concerns, some legal professionals support the bill’s broader objectives. Alan Delaney, a partner in law firm MFMac’s employment team, emphasized that the bill extends beyond the Modern Slavery Act by aiming to improve workplace rights overall.

“In many ways, the bill goes beyond the Modern Slavery Act in protecting vulnerable workers, particularly those in insecure roles like zero-hours or low-hours contracts. By strengthening job security and employment protections, it provides greater safeguards for low-paid workers across multiple sectors,” Delaney said.

He advised businesses to start preparing for the changes ahead. “For employers, now is the time to audit existing practices and assess what changes will be needed to stay compliant. Failing to prepare could lead to legal claims, regulatory scrutiny, and reputational damage—making proactive compliance essential,” he warned.

While the Employment Rights Bill represents an effort to strengthen labor protections, whether it will result in meaningful change remains to be seen. Without strict enforcement mechanisms, financial penalties, and proper funding for the FWA, experts fear that forced labor in supply chains may continue unchecked, leaving the U.K. trailing behind its European counterparts in the fight against modern slavery. 

By fLEXI tEAM