Legal

Ensuring compliance with the Modern Slavery Act

1 Feb 2019 By Jim Lister

What should employers bear in mind when preparing their company’s slavery and human trafficking statement? Jim Lister reports

There is a tendency to view slavery as something that can be consigned to the history books, a blight on humanity that took place centuries ago. However, it very much remains a problem for our society, at both an individual and commercial level. The introduction of the Modern Slavery Act 2015 (MSA) sought to combat this complex problem, and at the time, it put the UK at the forefront of a global fight against modern slavery. 

This isn’t to say the scale of the problem has shrunk in the last four years; in fact, it is estimated there are around 130,000 victims of trafficking and slavery in the UK. In 2016/17, modern slavery offences were estimated to cost the UK £4.3 billion, and the number of offences recorded by police in England and Wales was up by 49 per cent the following year.

Section 54 of the MSA requires any commercial organisation in the UK with a global turnover of £36m or more to publish a slavery and human trafficking statement each financial year. Just last year, the Home Office announced plans to write to the CEOs of 17,000 companies who had failed to publish such a statement; only 60 per cent of required employers had complied with the Act.

HR professionals within relevant organisations must ensure compliance in the battle to tackle modern slavery, and the statement itself requires little as a minimum. Typically, it will involve following fairly straightforward measures:

  • A statement must be produced for each financial year after 31 March 2016.
  • There is no prescribed form; a business has complied if it simply states ‘we have taken no steps’.
  • The statement must be approved by the board and signed by a director or equivalent.
  • The statement must appear on the company website, with a clear link on the home page.
  • Where a parent and one or more subsidiaries is required to produce a statement, the parent may produce a statement that subsidiaries may rely upon, provided it deals with the supply chain of the subsidiary.

As well as reporting on internal business practices, the MSA requires relevant companies to report on their ‘supply chains’, a term which is not further defined. The government guidance, Transparency in Supply Chains, says the term supply chain has its ‘everyday meaning’. Wikipedia defines supply chain as “a system of organisations, people, activities and resources involved in moving a product or service from supplier to customer”. At its narrowest, it is difficult to see how organisations in the service or financial sectors have a supply chain, which is likely to be at risk of involving modern slavery.

When compiling an MSA statement, companies tend to include the following elements:

  • Summary of the MSA and the company’s approach to it.
  • Summary of the company’s approach to human rights/corporate citizenship generally, or reference to other policies, eg minimum wage, money laundering, human rights.
  • Advocating for a risk-based approach to the MSA – assessing which geographical areas or sectors the company is involved in which might be likely to be at risk of modern slavery.
  • A summary of the supply chain, identifying geographical risks.
  • A description of the due diligence processes adopted in relation to the supply chain.
  • Summary of the training available to staff.
  • A statement relating to policy and approach to child labour in supply chains.

While there are no criminal sanctions for non-compliance, in theory, the secretary of state could apply for an injunction against a defaulting company. UK businesses are unlikely to inadvertently commit the primary offences under the MSA (slavery or servitude, forced or compulsory labour, or human trafficking), but risks may exist, for example in relation to staff provided by gang masters or worker agencies. There are certain sectors – such as agriculture, textiles, construction, extraction/mining – which may result in higher risk for the primary offences occurring within the supply chain, or even the business.

With a recent independent review into the effectiveness of the Act putting its scope and influence under increased scrutiny, HR professionals have a key role to play in ensuring their organisation, if required, meets the obligations set out in the MSA. Though it is easy to view compliance as a box-checking exercise, UK companies should view the Act as an opportunity to rigorously ensure their business and supply chains – both domestic and abroad – are not engaged in harmful labour practices.

Jim Lister is an employment law partner at BLM

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