Agefi Luxembourg - juillet août 2026

Juillet / Août 2026 9 AGEFI Luxembourg Économie A n estimated 27.6m people were in forced labour in 2021. (1) From 14 December 2027, the FLR (2) prohi­ bits any product made with forced la­ bour, at any stage of its supply chain, in any proportion, from being placed on, made available on, or exported from the EUmarket by economic operators. The EU Commission (EC) published Guidelines on the application of the FLR (Guidelines) on 26 June 2026. The forced labour risk database, single information submission point and customs guid­ ance are not yet in place. The Guidelines address scope; the fivestage in­ vestigative process; enforcement and penalties; a voluntary 6step due diligence framework; the FLR’s relationship with CS3D, (3) CSRD, (4) EUDR (5) and EUBR; (6) and the violationreporting proce­ dure. The Guidelines are nonbinding and pro­ vide practical direction on how the FLR is expected to work. Scope and core prohibition The focus of the FLR is to prohibit products made with forced labour. This covers forced labour used at any stage of extraction, harvest, production or manufacture, at any stage of the supply chain. Ser­ vices are excluded from scope, even if linked to the placement of a product on the market. The FLR does not cover the withdrawal of prod­ ucts which have reached end users already. For online sales, authorities assess dispatch areas, currencies, languages and domain names on a casebycase basis. Economic operator applies to natural, legal or associations of persons across the full chain, from upstream producers to on­ line sellers, no matter the tier at which forced labour occurs. Forced labour under Article 2 of ILO Convention No 29 is defined by three key elements: work or service, absence of voluntary consent, and coer­ cion. Voluntary means free and informed consent to take and leave a job. Involuntary work can occur for a number of reasons, such as false promises or misrepresented jobs, very low or no wages with degrading living conditions, or inabil­ ity to terminate employment. Coercion includes restricting movement, debt bondage and with­ holding wages or identity documents. With re­ gard to child forced labour, coercion directed at the child’s parents also covers the child’s work. The Guidelines identify risk indicators for pri­ vately imposed forced labour and for Stateim­ posed forced labour (SIFL), such as forced labour as political coercion, labour discipline or punishment for strikes. SIFL indicators require evidence of systemic coercive State policies and cannot be addressed through standard due dili­ gence. Several private forced labour indicators are also violations of EU labour law and may trigger parallel proceedings under other frame­ works. Documentary evidence from ordinary employment law compliance may be requested during an FLR investigation Investigative process The EU Commission investigates suspected forced labour outside the EU and Member State authorities handle domestic cases. Investigations are productspecific and follow five stages. Initial assessment : the lead competent author­ ity collects factual and verifiable information. The three prioritisation criteria – scale and sever­ ity, volume of affected products, and share of the affected component in the final product – must be weighed together. Preliminary investigation : operators may be asked for information on forced labour risk mit­ igation, with 30 working days to respond. The authority then has 30 working days to determine whether a substantiated concern (7) exists. Due diligence, product traceability, certification schemes and workerdriven monitoring are all recognised approaches. Investigation : where a substantiated concern is established, the lead competent authority no­ tifies the operator within 3 working days of opening a formal investigation; operators have 3060 working days to submit information. Field inspections are permitted within and, in excep­ tional cases, outside the EU. The target is 9 months to conclusion. Decision and review : a banviolation decision carries a general prohibition, a withdrawal order and a disposal order binding any operator subse­ quently placing or exporting the same products on the EU market. Noncooperation can be in­ cluded as evidence to establish a violation. Enforcement : the ICSMS Forced LabourModule (FLM) transmits banviolation decisions to com­ petent and customs authorities. Customs suspend and refuse release of noncompliant products. Member Statesmust notify penalty rules to the EC by 14 December 2026. Due diligence, grievance and compliance expectations Due diligence under the FLR is voluntary and can help eliminate substantiated concerns, but docu­ mentation does not create a safe harbour: author­ ities retain a certain degree of discretion in their investigation activities. TheGuidelines give a 6step voluntary framework based on the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business andHumanRights: embed due diligence in policies; identify risks; prevention and remedi­ ation; monitor; communication; and cooperation in remediation. SMEspecific guidance is included. Although the FLR does not require grievance mechanisms, grievance reports may be relied on as evidence. Companies should ensureworkers and suppliers’ workers have access to clear reporting channels. Remediation of a known forced labour risk does not protect against a banviolation decision while the product remains on the EUmarket. Legal pro­ fessional privilege over internal assessments is governed by Member State law. Enforcement, remediation and penalties Once a banviolation decision is adopted, oper­ ators must withdraw unsold banned products and dispose of them following the waste hierar­ chy. (8) For products in supply chains of strategic or critical importance to the EU, authorities may withhold rather than dispose of them during re­ mediation. Financial penalties apply for noncompliancewith a banviolation decision, and not just for violating the forced labour ban itself. The penalty is calcu­ lated in 5 steps, with a gravity component of up to 60% of product value or between 01% and up to 4% of global annual turnover, adjusted for du­ ration and proportionality. Member States must notify their frameworks by 14 December 2026. Remediation means restoring affected individu­ als or communities to the position they would have been in had the forced labour not occurred, proportionate to the company’s involvement. Recognised forms include: restitution (return of documents, recovery of withheldwages); rehabil­ itation (medical, legal and social support, voca­ tional training); financial compensation (unpaid wages, physical or mental harm); nonfinancial compensation (reduced hours, improved safety); guarantees of nonrepetition; and internal ac­ countability measures. Where risks cannot be addressed through preven­ tive or correctivemeasures, the Guidelines recom­ mend disengaging from the supplier as a last resort in compliance with national law, interna­ tional labour standards and collective bargaining agreements; informing management and any trade union; articulating escalation measures up­ front; mitigating adverse impacts; and giving rea­ sonable notice. Reporting possible violations From 14 December 2027, any natural or legal per­ son or association may submit information on al­ leged violations via the Forced Labour Single Portal (FLSP). Submissions must be in good faith with supporting evidence; manifestly unfounded submissions will be discarded. Useful submis­ sions identify the nature, location, duration and scope of the alleged forced labour and the prod­ ucts and operators concerned. Submissions are confidential. The FLR amends the Whistleblower Directive’s Annex, extending protection to those reporting FLR violations in a workrelated context that covers a broad scope of employees and stakeholders. (9) Companies with 50 or more employees must maintain internal re­ porting channels. Retaliation exposes the em­ ployer to sanctions. Implementation by authorities The Union Network Against Forced Labour Products, coordinating na­ tional authorities and the EC; the Ex­ pert Group on Forced Labour, advising on guidelines and good practices; and the aforementioned ICSMS Forced Labour Module under­ pin implementation. The FLR requires Member States to designate competent authorities and notify the EC by 14 December 2025. Luxembourg has not yet done so. The lead authority is determined by where the suspected forced labour occurs: the EC leads where it takes place outside the EU; the relevant Member State authority leads where it occurs on that State’s territory. Interaction with other regulatory frameworks The FLR is lex specialis to the CS3D’s lex generalis , which gives precedence to more specific EU acts with stricter obligations. Compliance with other interconnecting frameworks does not insulate a company from FLR exposure nor does evidence gathered for those frameworks carry automatic exculpatory value before a lead competent author­ ity. There is no mandatory coordination mecha­ nism across the EU’s regulatory frameworks, resulting in differing traceability standards, pro­ portionality thresholds and enforcement cycles. Conclusion The FLR applies from 14 December 2027. The OECD’s 2026 Responsible Business Outlook found that 70% of corporate audit programmes reach Tier 1 suppliers only, while 78% of forced labour cases occur at Tier 2 and beyond. Com­ panies whose supply chain visibility stops at Tier 1 are directly exposed to risks. Although the FLR imposes an obligation of result that voluntary due diligence alone cannot discharge, building robust compliance infras­ tructure now – supply chain mapping, docu­ mented risk assessments and governance frame­ works – will strengthen a company’s position throughout the investigative process. Inscope entities should begin preparing their FLRspe­ cific compliance plans now. Sara GARCIA, Associate – ESG & Sustainability, Caroline Fort, Senior Associate – Employment Law, Dino SERAFINI, Counsel, Arendt &Medernach 1) Recital 2 FLR 2) Regulation (EU) 2024/3015 3) Directive (EU) 2024/1760 4) Directive (EU) 2022/2464 5) Regulation (EU) 2023/1115 6) Regulation (EU) 2023/1542 7) Defined in Article 2(16) FLR 8) Directive 2008/98/EC 9) Directive (EU) 2019/1937, Article 4 EU Forced Labour Regulation: new EC guidance explained Et si votre engagement allait au-delà de votre vie ? En choisissant un legs solidaire, vous continuez à soutenir l’accès à la santé, à l’éducation et à la protection des enfants les plus vulnérables. ZZZ IÁ OX © FFL / A. Ernst