The UK Government recently announced the active steps it is taking to drive modern slavery out of supply chains. How can you make sure your company is compliant?

By Simon Shooter, Nicola O'Connor

04-2020

On 26th March 2020 the UK Government published its modern slavery statement.  In the foreword written by the Prime Minister, he highlighted the determination to take active steps to drive modern slavery out of our supply chains. 

The principle theme of the Statement is on what the Government is doing in the public sector to increase the focus on slavery and how that sector, which has an annual spend in the order of £50Bn, will use its position to drive compliance into their supply chains. 

The Statement makes it clear that the Government is taking a tougher stance with its suppliers with strong reference to the Supplier Code of Conduct, the Code of Conduct for Grant Recipients, the Cabinet Office Guidance of September 2019 and the new Modern Slavery Assessment Tool or “MSAT”. 

The MSAT was piloted last year and it is now expected to be used across the Government supplier base.

The key take away from the Statement for suppliers to the public sector is that the Government will scrutinise your Modern Slavery Act compliance measures. The Government has declared its intention to take a tough line and so lax compliance risks loss of public sector contract tenders and potential loss of existing contracts. 

The Scale of the Problem

In the UK annual report on Modern Slavery, published in October 2019, the Government stated that police in England and Wales recorded 5,059 modern slavery offences. This was a 49% increase on the previous year. 

Last year saw the largest ever modern slavery UK prosecution to date involving the successful prosecution of individuals who had enslaved mainly Polish nationals. Victims were forced to work on farms, in factories and recycling centers.  Those activities were able to go on for years before those responsible were brought to Justice. The offences took place here in the UK.  

Worldwide modern slavery affects millions of lives.  Research conducted by the International Labour Organisation estimated over 40 million people worldwide are victims of modern slavery. Modern slavery can  include forced labour,  bonded labour (where someone is forced to work to pay off a debt), human trafficking, forced marriage and domestic servitude. 

Many organisations work with suppliers all over the world. Suppliers in countries where the rule of law is weaker are particularly susceptible to slavery of various forms. Certain product sectors also present higher risks. 

What are we doing to drive Slavery and Human Trafficking out of our Supply Chains?

The Modern Slavery Act ("The Act") came into force on 29 October 2015. This set out three criminal offences in sections 1, 2 and 4, namely slavery, servitude and forced or compulsory labour (s1), human trafficking (s2) and committing any offence with the intent to commit human trafficking (s4).

The criminal offences of slavery and human trafficking carry penalties of life imprisonment. If convicted of an offence with intent to commit human trafficking, a maximum penalty of 10 years applies.

However, the hefty potential punishment for individuals and financial implications including confiscation of assets and property are not the only target. The Transparency in Supply Chains provision in the Act seeks to address the role of businesses in preventing modern slavery from occurring in their supply chains and organisations.

Transparency in Supply Chains

Section 54 of the Act requires commercial organisations to publish a Slavery and Human Trafficking Statement each year. 

Any organisations that do business or part of their business in the UK;  who supply goods or services; and who, together with their global subsidiaries have a turnover equal to or greater than £36m are required to publish a statement. It does not matter where the business is incorporated for the purposes of the Act or where a partnership was formed. The Act applies to corporates or partnerships so long as they are carrying on a business or part of a business in the UK. 

The statement should be visible in a prominent place on a company website and should be approved by the relevant board of directors and signed by a director from that board.  

In order to produce a statement an organisation will need to have taken steps to identify risks in the business and supply chain. The statement should also set out the action taken in that financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its own business. It is expected that the risks and measures in place will change as a business evolves over time.  

Guidance for Publishing a Modern Slavery and Human Trafficking Statement 

The Act sets out guidance covering six areas for consideration when drafting a statement. That guidance includes basic information setting out the business structure, nature of the business and supply chains. While the six areas are currently only recommended points of consideration, it is expected that these areas will become mandatory in the near future. The statement should set out the policies in place in relation to slavery and human trafficking. In addition the following topics should be considered:-

  • Due diligence processes in place to identify slavery and human trafficking risks in business and supply chains; 
  • How effective the organisation has been in ensuring that slavery and human trafficking is not taking place in its business and supply chains and how that can be measured;  
  • Training undertaken at various levels and points in the supply chain to identify modern slavery and human trafficking.

What will happen if we Fail to Publish a Statement?

There are no criminal sanctions for failure to produce a modern slavery and human trafficking statement currently.  However, the Government can apply to the High Court for an injunction to force an organisation to publish a statement.

Last year many businesses that failed to publish statements received letters from the Home Office. Those that continue fail to publish statements may find that they are publically named and shamed by the Government.

Organisations also risk significant reputational damage if they do not take adequate steps to tackle modern slavery.  Consumers are very concerned about modern slavery issues in supply chains and non-compliant businesses can expect considerable press interest.

Any investigation for modern slavery offences committed by employees or senior management will focus on modern slavery policies in place. Careful attention will be given to training and procedures in place when considering whether a Company Director or employee, for example knew, or ought to have known, that an offence was being carried out.  

Likely Changes Moving Forward

Two predictable changes are that:

1. there is likely to be a financial sanction introduced to enforce compliance by organisations with the Act; 
2. the current recommended areas to be covered in transparency statements will become mandatory areas that have to be addressed in each annual statement.  

We also know that the Government has compiled and is keeping a public list of businesses who need to comply and is likely to publish lists of defaulters. 

What Can You Do Now?

The likely direction of anticipated amendment to the Act can largely be predicted from the Government Response to the Independent review. We can assist you in reviewing your statements, policies and measures to help you. 

If you would like help in ensuring that your company is compliant with the Act please do not hesitate to contact us.