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.

Widespread ignorance

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.

What next?

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 Ryland

 

 


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