09 February 2021
Suppliers told to get rid of their sub-contractors
Following the recent news of Boohoo Group PLC telling its Leicester-based suppliers to bring all their clothes-making work in-house, both suppliers and sub-contractors alike will be digging out their commercial contracts and reviewing their position.
Ever since The Modern Slavery Act 2015 was introduced, companies in both the public and private sector have been under even more pressure to know exactly how their supply chains operate. Last year, Boohoo commissioned a report by Alison Levitt QC into the company’s supply chain, amidst allegations of workers not being properly compensated for their work and that many were not fully aware of their rights. While Boohoo has said it is committed to acting on the report’s findings and has benefited from the surge of online sales during the pandemic, the latest edict issued by the company raises legal concerns as to whether or not contractual terms are at risk of being breached across its supply chain.
From sales and delivery quotas, to product liability and indemnities, well drafted commercial contracts in a supply chain ensures each party is aware of both their and each other’s commitments. When a situation such as this gives rise to either or both suppliers and sub-contractors having their contracts varied or terminated, there is inevitably the potential for commercial disputes. Few would dispute both the legal and ethical benefits of Boohoo taking such action, in a bid to improve working conditions and ensure workers are properly compensated. However suppliers and sub-contractors might have something to say if their business partners are in breach of contract. Boohoo has given its suppliers a deadline of 5 March to stop using outside labour.
Whether your business is a supplier or a sub-contractor, taking legal advice at an early stage in a situation such as this is strongly advised. Early intervention can help resolve both financial concerns and business relationships.