The deceptive complexity of the Modern Slavery Act
At the end of July, Prime Minister Theresa May launched a cabinet-level government taskforce to eradicate modern slavery in the UK.
It was, she said, “one of the great human rights issues of our times,” adding that modern slavery was a “barbaric evil”.
The trouble is, modern slavery is far from rare. Home Office statistics estimate that there are between 10,000 and 13,000 victims of modern slavery in the UK, and a further 45 million estimated victims around the world.
And the premise of the Modern Slavery Act 2015 is that significant numbers of those victims could be working in the supply chains of British companies, both here and abroad.
Consumer groups and fair-trade activists have long campaigned against such practices, of course. But now, their campaigns have teeth. Very real teeth, in the shape of the Modern Slavery Act.
Fanciful? Well, with 289 modern slavery offences prosecuted in the UK in 2015 alone—that’s 5½ a week—modern slavery is hardly unknown.
What does The Modern Slavery Act 2015 mandate?
At its simplest, the Modern Slavery Act requires businesses to publish an annual anti-slavery and human trafficking statement, laying out the steps that they are taking to identify and stamp out any abusive labour practices within their supply chains.
And the relevant statement must have been approved by the Board, signed by a director, and placed in a prominent place on the business’s website.
The Act applies to all businesses (wherever they are based in the world) which:
- Carry on a business or part of a business in the UK;
- Supply goods or services; and
- Have a turnover of £36m or more.
And, quite simply, if that’s your business, then compliance is required.
Supply chain risk
Yet despite the publicity surrounding the Act—not to mention Home Office public awareness campaigns—many businesses are shockingly ignorant of the full implications of the Act.
In short, they’re concentrating on the anti-slavery statement that they must publish, and not on the processes that lie behind it.
Because the sting in the tail of the Act isn’t directly to do with the anti-slavery statement itself, but is instead related to the reputational and commercial risks of being found with modern slavery within your supplier base.
And the primary risk, we believe, lies not with suppliers with a turnover larger than £36 million—who must themselves comply directly with the Act—but with suppliers smaller than that, who think that the Modern Slavery Act doesn’t apply to them.
And here, the risk is very real.
A recent survey by the Chartered Institute of Purchasing and Supply, for instance, found that almost two-thirds (61%) of small businesses were unaware of the Act.
Three-quarters—75%—had no idea what they would do it they found modern slavery in their supply chains, and just 4% had provided any training to for staff in how to spot the warning signs of modern slavery among suppliers.
And yet it’s this group of suppliers that larger businesses—businesses like yours, for instance—will be relying on to ensure that their supply chains remain free from modern slavery.
How is this to be achieved?
Clearly, businesses will need to do more than just publish an anti-slavery statement.
In short, they’ll need to comply with the intention of the law, as well as its specific requirements in terms of publication. Simply put, they will need to ensure that suppliers are also taking steps to stamp out modern slavery.
At its starkest, these businesses—including your business—will want to draft supply contracts that contain explicit anti-slavery clauses, requiring suppliers to guarantee that their operations are free from modern slavery, and that those of their suppliers in turn are also free from the practice.
And bearing in mind the reputational damage that might ensure should slavery be found to be present, they will want those contracts to have teeth.
The Modern Slavery Act isn’t going to go away. And experts expect consumer activists and lobbying groups to be zealous in their monitoring of anti-slavery compliance.
And the real risk, we believe, is in businesses’ supply base. It is prudent, we believe, to not only carefully log the supplier audits, site visits, and supplier risk assessments that your business undertakes, but to also amend supply contracts accordingly.
As ever, we at The Legal Director can help, by providing sensible, business-oriented guidance, outlining the real choices that are open to you. The door is open—so get in touch at any time on 020 3755 5099.
Posted Wednesday, August 31st, 2016 by Warren RylandTweet
Other Articles In This Category
- IR35 and the private sector: are changes on the way?
As the government considers extending to the private sector its public sector reforms of the rules relating to the engagement of contractors through so-called... read more
22nd of March 2018 by Warren Ryland
- GDPR: 3 practical questions facing businesses like yours
In just a few months—on May 25th—compliance with the General Data Protection Regulation (GDPR) becomes mandatory. The biggest change to data protection... read more
1st of March 2018 by Warren Ryland
- I'd like to work from home, says an employee. Now what?
Conversations about employees working from home were once very short. In those rare instances where employees did venture to enquire about the possibility, the... read more
8th of January 2018 by Warren Ryland
- Is a domain squatter set to steal your brand?
It’s fair to say that many businesses are unprepared for the new .uk Internet domain - which is unfortunate, as from June 2019, they could find that their... read more
5th of December 2017 by Warren Ryland
- Did you negotiate your last loan agreement - or just sign on the dotted line?
For businesses wanting to grow or invest, external finance can be an attractive option: access to the funds that they need, without equity dilution or... read more
2nd of November 2017 by Warren Ryland
- Protecting the value of your newly-acquired businesses can be a challenge
Buying a business is exhilarating. Hard work, to be sure - but undeniably exciting, and with a rich sense of the opportunities that lie ahead. So perhaps... read more
2nd of October 2017 by Warren Ryland
- GDPR. The clock is ticking: a tough new take on data protection is fast approaching
With effect from 25 May 2018—in other words, less than a year away—your business is exposed to a new regulatory regime backed by hefty fines. And by... read more
6th of September 2017 by Warren Ryland
- Persons of Significant Control: important changes to reporting requirements
It’s barely a year since the introduction of the PSC regime - and already, the compliance requirement has been tightened. And at a time when many businesses... read more
23rd of June 2017 by Warren Ryland
- Avoiding conflict when forming a business: probing questions for potential partners
Every year, several hundred thousand new businesses are created. In 2015, according to the Office for National Statistics, the total was 383,000—the highest... read more
28th of April 2017 by Warren Ryland
- Is your business at risk from the Uber decision? Why your self-employed contractors could really be employees
Fuelled by companies such as ride-hailing business Uber and personal courier firm Deliveroo, the so-called ‘gig economy’ is on the rise. So much so,... read more
12th of January 2017 by Warren Ryland
- The Legal Director - Commended for Innovation in the FT Innovative European Lawyers awards
Law firm The Legal Director (TLD) has been commended in the FT Innovative European Lawyers awards, which were announced at the beginning of this month. TLD ranked... read more
28th of October 2016 by Warren Ryland
- Debt versus Equity - Financing for SMEs
The need for additional finance is often the price of success for small to medium-sized enterprises (SMEs) that are looking to grow. The question that faces the... read more
14th of October 2016 by Warren Ryland
- How our clients will benefit from the Bar Council's escrow account
Outside the narrow realms of consumer technology, there’s often an inevitable trade-off between cost and quality. In other words, you can have something at... read more
7th of July 2016 by Warren Ryland
- As the net starts to close, the Bribery Act prosecutions begin
As we have written before, the Bribery Act 2010 is a law with undoubted teeth. Fines are potentially unlimited, and custodial sentences can be up to ten... read more
1st of May 2016 by Warren Ryland
- New rules on shareholder identification are now in force
New rules on shareholder identification are now in force - and yet many businesses aren’t aware of them. Does your business have corporate or nominee... read more
12th of April 2016 by Warren Ryland
- First SRA-regulated law firm signs up to Bar Council's escrow account
PRESS RELEASE: The Legal Director has become the first law firm regulated by the Solicitors Regulation Authority (SRA) to sign up to the Bar Council’s... read more
31st of March 2016 by Warren Ryland
- Trade marks: the 3 biggest mistakes to avoid
Wander around a supermarket, or browse the advertisements in newspapers and magazines, and you’ll see trade marks everywhere. And it’s likely, too, that... read more
29th of February 2016 by Warren Ryland
- Avoiding flexible working's hidden pitfalls
You don’t have to look too far to see that traditional modes of employment are increasingly giving way to more flexible working arrangements. Returnee... read more
9th of November 2015 by Warren Ryland
- Are you paying your workers the right amount of holiday pay?
A recent ruling by an Employment Appeal Tribunal is set to cause many businesses a headache. Quite an expensive headache, at that. Simply put, it means that... read more
15th of July 2015 by Warren Ryland
- The Bribery Act 2010: are you running a risk of breaking the law?
To see the difficulties that businesses can get into through bribery - or even allegations of bribery - look no further than the reputational damage suffered... read more
11th of June 2015 by Warren Ryland
- It's official: "Lawyers are not cost-effective"
Imagine, for a moment, that when faced with a serious illness, significant numbers of people took no action. And of those who did take action, around... read more
20th of January 2015 by Warren Ryland
- Could a Shareholder Agreement save your business?
Here at The Legal Director, we’ve recently come across a business where the two co-founders have fallen out -- one is now leaving, in order to set up on his... read more
1st of December 2014 by Warren Ryland
- The high-fee culture that's hobbling British business
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at... read more
11th of November 2014 by Warren Ryland
- Is crowdfunding the answer to your business's financing challenge?
As the credit crunch and ensuing recession of 2008 began to bite, lending to businesses dried up. To their shock, even long-established, profitable businesses... read more
2nd of September 2014 by Warren Ryland
- Complying with the Data Protection Act: 3 business bear-traps awaiting the unwary
Visit the website of the Information Commissioner’s Office, and there’s an interesting section entitled ‘Enforcement’. In it, the... read more
1st of September 2014 by Warren Ryland
- What might a Legal Audit reveal about your business?
When we start working with a business we assess their existing legal arrangements to determine how these can be improved and aligned with commercial objectives. We... read more
9th of July 2014 by Warren Ryland