Why businesses MUST be live to modern slavery in their workplace and supply chain.

In my experience, when you mention ‘modern slavery’ most businesses say that it’s not relevant to them because they would never ‘employ’ slaves.  If only it were that simple!  Sports Direct may have also been of the same view until their name was splashed all over the press a few years ago when two brothers were imprisoned for trafficking 8 Polish workers into the UK and forcing them to work for Sports Direct.

The Home Office assesses that there are at least 10,000 modern day slaves in the UK.  This was certainly the case back in 2013, and the National Crime Agency have assessed that it has been increasing year on year ever since.  However, according to the Global Slavery Index by human rights group Walk Free Foundation, Britain is home to at least 136,000 modern slaves.  Post-Brexit, modern slavery is likely to increase further to compensate for the removal of access to the pool of lower skilled labour from the EU where those roles cannot be sourced from the resident workforce.

Modern slavery is therefore a serious issue and it is getting worse.  Indeed, only yesterday, the sole director and the company secretary of British company, DJ Houghton Catching Services Ltd, which supplied chickens to leading egg producers, who subsequently supplied eggs to leading retailers including McDonalds, Asda and Tesco, were found guilty of trafficking 6 Lithuanian men and exploiting them as slaves in their business.  Interestingly, the High Court also found the individuals personally liable to pay damages for the serious contractual and statutory breaches of their company, where in this case it harmed the reputation and financial viability of the company.

The Modern Slavery Act 2015 (“MSA”)

Whilst section 54 of the MSA states that commercial organisations which provide goods and services in the UK with a global turnover of at least £36 million have to produce and publish a statement on their website every financial year illustrating the steps they have taken to ensure both their business and supply chains are slavery free, this is not simply a problem for larger companies. 

Being aware of and tackling modern slavery in both your workplace and your supply chain not only protects your business from reputational damage, but also sends the message to your customers and potential customers that you take ethical trading issues such as this seriously.  This is therefore an opportunity to differentiate your business from your competitors, particularly in tender processes where it is not unusual to see a question around modern slavery or human trafficking.  However, it is also becoming increasingly common for businesses to be asked by their larger customers, whose supply chain they form part of, what their stance is on modern slavery and human trafficking.  In some cases, customers are making it a condition of the suppliers contracting with them.  Therefore, whilst your business may not reach the £36 million threshold, or does not meet the definition of commercial organisation within the meaning of s.54, there is clear commercial value in taking modern slavery seriously and choosing to make a voluntary statement.

The future?

Whilst the MSA was introduced in a wave of publicity, it is seen to be weak.  The view certainly from the Director of Labour Market Enforcement, Sir David Metcalf, is that businesses are not doing enough to prevent, detect and eradicate modern slavery from their workplaces or supply chains.  In light of this, the government commissioned an ongoing, independent review of the MSA last year.  This combined with the recommendations in Sir David Metcalf’s Labour Market Enforcement Strategy suggest that the government is looking to get tough on businesses in this area.

The government has just completed part of its review; namely to write to approximately 17,000 organisations who it felt were in scope of the MSA to produce a modern slavery statement.  The deadline for submission was the end of March 2019.  The government will carry out an audit of these statements, and will potentially name and shame those organisations who failed to comply.

Further, recommendations arising out of the second interim report of the MSA include:

• embedding modern slavery reporting into the Companies Act 2006, thus making a designated board member responsible for modern slavery, and disqualifying the director for any breach
• improving clarity around which companies are in scope of the MSA
• improving the quality of modern slavery act statements and increasing transparency
• monitoring and enforcing compliance – warnings and fines (potentially as a % of turnover) to be introduced, as well as court summons and director’s disqualification.

The government is also considering the ability to temporarily embargo “hot goods” thus disrupting an organisation’s supply chain where significant non-compliance is found and clearly restricting the organisation’s ability to sell their product.

In addition, joint responsibility measures are also being considered whereby the more well-known brand name at the top of the supply chain would bear joint responsibility for any non-compliance within its own supply chain with its supplier, resulting in naming and shaming of both the brand name and the supplier.

What can your business do to ensure its workforce and supply chain remain slavery free?

In order to prepare for what are likely to be significant changes in this area, the issue of modern slavery should no longer be viewed as a tick box exercise.  Rather, businesses should be thinking about what they can be doing over and above simply producing a modern slavery statement.  In brief these include:

• risk assess your workplace
• raise staff awareness in your own business
• ensure policies/procedures are in place, which are brought to life through training
• obtain buy in from the top – whilst the issue of profit will always be key in the mind of the board, there are clear advantages of being an ethically aware brand
• risk assess your current supply chain
• check your contractual provisions with suppliers – what if abuse is discovered in your supply chain?
• ongoing monitoring.

If you are keen to learn more about how your business can protect itself, please sign up to our FREE seminar on Tuesday 21 May 2019 (9.00am-12.00pm) at West Bromwich Football Club – see link for booking details: https://www.georgegreen.co.uk/site/george-green-news/black-country-business-festival-event-hosted-by-george-green-llp

Beverley Smith
Partner