The Government is acting to stamp out slavery and human trafficking in the UK. Legislation requiring organisations to report on what they are doing to tackle modern slavery in their supply chains is now law. The Modern Slavery Act 2015 represents the first step to eradicating the use and abuse of forced and child labour at home, and abroad, in supply chains. By obliging organisations to report on their efforts to tackle forced labour, the UK is going some way to opening a window on the murky world of modern slavery. The Act consolidates previous offences relating to trafficking and slavery. It also criminalises aiding, abetting or, procuring forced labour or human trafficking, or being an accessory to such offences. What the Act is aiming to do is to take that transparency to the next level. For example, it is encouraging organisations to demonstrate how they check that human trafficking isn’t taking place with suppliers. The UK is the first country in Europe to introduce such provisions on services and goods and therefore this position is unaffected by the recent Referendum result as it is not derived from any EU initiative.
Context
It may seem like it is far-fetched, but modern slavery does indeed exist in this country, as well as most of the countries which are likely to be supplying us, and it will become an increasingly live issue. According to 2014 Global Slavery Index, there are an estimated 35.8 million men, women and children trapped in modern slavery globally. The Home Office figures suggest there are between 10,000 and 13,000 potential victims of modern slavery in the UK alone. Modern slavery is a broad concept encompassing slavery, servitude, forced and compulsory labour, and human trafficking, and is prevalent in many sectors.
Recent research by YouGov, which involved 263 businesses with turnovers under the £36m threshold, found that nearly 61% were unaware of the reporting requirement. 80% said they had yet to discover slavery in their supply chains, yet very few had actively investigated. Two-thirds of the SMEs said they had never taken action to keep their supply chains free of slavery, and 75% said they wouldn’t know what to do if they discovered slavery in their supply chain. Only 5% of organisations have mapped their supply chains in an attempt to uncover modern slavery, and just 4% have provided training to staff on how to spot the signs of possible slavery amongst suppliers.
Obligations
Section 54 of the Act requires businesses with a turnover greater than £36m, to publish an annual slavery and human trafficking statement. The statement must confirm either:
- the steps that have been taken to ensure that slavery and human trafficking are not taking place in any of its supply chains or in part of its own business; or
- that no such steps have been taken;
The reporting that organisations with more than £36 million turnover should follow in respect of their obligations is clearly set out and is straightforward:
- An explanation of its policy
- How it engages with stakeholders
- How it integrates findings into its decision making process
- How it is tracking its impacts in this area
- What it is doing to provide a remedy for any impacts
A link to the statement must be published in a prominent position on their website homepage, and the statement must be approved and signed by a Director. So, although organisations could opt to take no action as a result of the Act, and simply produce a statement under option (b) above, the Government hopes that public pressure and scrutiny from shareholders and the media, together with the risk of reputational damage, will encourage organisations to take real steps to investigate their supply chains, and publish details of their efforts. The goal of the Act is to persuade organisations to do the right thing. It is intended to have a cascade effect on SMEs.
For UK nationals, the trafficking provisions have extra-territorial application which means, an offence is committed regardless of where in the world the arranging, or facilitating of trafficking, takes place.
Next Steps for Employers
The new measures will apply to financial years ending on, or after 31st March 2016. Large organisations should start thinking about compliance now. Steps to consider include:
- Introduce a modern slavery statement into policies.
- Auditing your practices to check that all employees, and agency staff, are paid at least the minimum wage, and have the right to work.
- Updating template commercial agreements to include an obligation that suppliers will comply with the Act.
- Engage more closely with suppliers on a practical level, to resolve any issues around slavery and trafficking.
- Appointing an appropriate senior person to be responsible for compliance.
- Ensuring that staff, particularly those involved in recruitment, procurement and supply chain management, are aware of the law, and are appropriately trained to make the right enquiries of potential suppliers.
- Consider what due diligence steps might be applicable.
- Identify any high-risk sectors in which you, or your suppliers, do business, perhaps referring to third party sources, such as the Global Slavery Index.
Many smaller organisations are unaware of the significance of the Modern Slavery Act, despite it meaning that they will face greater scrutiny from larger organisations they supply to, on slave and child labour issues. That is the conclusion of the Chartered Institute of Procurement and Supply (CIPS), which found that 61% of small organisations surveyed, have not even heard of the Act. If you, like most of our clients, are a small or medium sized employer, but supply larger organisations, then you are likely to go through a supplier assessment, so you need to consider:
- What you can do to prove that you are paying people properly, and only employ people with the right to work here?
- What do your suppliers do about the above, e.g. employment agencies and outsourced suppliers?
- Are you comfortable about the products/services which you buy from abroad?
- Training relevant staff about slavery and human trafficking.
- Expanding your whistleblowing policy to cover any concerns about slavery or human trafficking, or consider introducing new related policies.
Employers need to be sensible about this. You should not be worrying about office paper in this respect, unless you are an office supplies business. It needs good judgment, and a degree of risk assessment. Whilst it is a good idea to make someone senior responsible, no one department or individual can tackle this due diligence issue in isolation. For more information, a useful resource to look at is “The Stronger Together Project” – their website is http://stronger2gether.org.
The reporting obligation aims to prevent forced and child labour in the UK and abroad, by putting greater onus on larger organisations to be accountable for the practices of their suppliers. The legal duties in the Act must not override the moral obligation to make sure that supply chains are slavery-free. It is what some people are calling hidden labour exploitation, or the unseen crime.
You should conduct some sort of analysis of your exposure, and develop an action plan to deal with issues arising.
If you are unsure of how to proceed, please speak to our Consultants.
