The companies covered by the law are obliged to comply with their due diligence obligations along their supply chains from 2023. Uncertainties often exist regarding the question of which companies are affected by the law.

From 2023, the law will affect all companies, regardless of their legal form, that have their head office, principal place of business, administrative headquarters or statutory seat in Germany and employ more than 3,000 people in Germany. From 2024, it will also apply to companies with more than 1,000 employees. Employees posted abroad and temporary workers (for a period of employment of more than 6 months) must also be included. In the case of affiliated companies, the number of all employees of the parent company employed in the country (“parent company”) applies.

In addition, the requirements of the Act apply both to subsidiaries abroad if the German parent company employs more than 3,000 (or from 2024: 1,000) persons in Germany and to foreign companies with a branch in Germany if they exceed the employee threshold in Germany.

Municipal enterprises also fall under the law if they are economically active on the market. For example, hospitals must monitor their supply chains if they exceed the threshold number of employees.

Since the companies directly affected by the law could impose new requirements on their direct suppliers in the future, it can be assumed that smaller companies will also be indirectly affected by the law. Therefore, it may also be beneficial for companies that fall under the employee threshold to look at their supply chains.

If you would like to find out how exactly your company is affected by the Supply Chain Due Diligence Act, our quick check will give you a quick overview of the requirements and their relevance for your company.

Contact at Arqum: Ellen Leibing