UK to Require PE Firms to Conduct Mandatory Human Rights Due Diligence
UK plans mandatory human rights due diligence for large businesses, including private equity firms.
Why it matters: This new law reshapes private equity compliance and investment strategies, demanding tighter scrutiny of portfolio companies. Legal and compliance teams must prepare for due diligence obligations and associated risks.
- Effective December 2027, UK mandates human rights due diligence for businesses with £350M+ turnover globally or UK-generated.
- Applies to UK and non-UK firms, focusing on risks of human rights abuses and labour exploitation in operations and supply chains.
- A regulator will investigate breaches, including forced labour goods, with powers to remove such goods from the Great Britain market.
- Aligns with EU Forced Labour Regulation; UK will provide guidance tools on GOV.UK to help businesses comply.
On November 4, 2026, the UK government announced a proposed mandatory human rights due diligence (HRDD) framework for large businesses. This represents a significant shift from the voluntary Modern Slavery Act 2015, intending to hold companies accountable for human rights abuses and labour exploitation risks in their operations and supply chains.
The legislation targets businesses with a global turnover exceeding £350 million or, for non-UK companies, a UK-generated turnover of that amount, per Skadden’s analysis. Private equity sponsors will need to assess their portfolio companies closely, as compliance risks may affect acquisition terms and exit strategies.
An appointed regulator will have enforcement powers, including investigating violations and directing the withdrawal of goods made with forced labour from the Great Britain market. The regime covers services broadly in the UK and goods in Great Britain, working alongside the EU Forced Labour Regulation that applies in Northern Ireland under the Windsor Framework.
The government's review cited that the current system was fragmented and largely reliant on voluntary reporting. The new law aims to centralize guidance with a dedicated hub on GOV.UK providing tools and templates to support businesses in meeting HRDD obligations.
Legal and compliance teams in private equity should prepare for this enhanced oversight starting December 2027. The regime’s final details, including enforcement and penalty specifics, remain to be clarified, but the strategic impact on investment diligence is already clear.
By the numbers:
- £350 million — turnover threshold for UK and non-UK firms subject to the regime
- December 2027 — expected enforcement start date aligning with EU regulations
Yes, but: Details on enforcement mechanisms and penalty structures under the new regime have not been disclosed, leaving some compliance aspects uncertain.
What's next: Monitoring forthcoming UK government guidance and alignment with the EU Forced Labour Regulation’s December 2027 implementation will be critical for businesses.