Slavery, servitude, forced or compulsory labour, human trafficking: whatever label it is given, it is still a blight on our society. The International Labour Organisation estimate that over 21 million men, women and children are in some form of forced labour in the world today.
We are not just taking about developing world ‘sweat shops’, where adults and children are paid pennies a day to produce consumables. It happens much closer to home too. For you avid fans of BBC1’s ‘Happy Valley’, there is a currently a story of eastern European workers who have been trafficked to Yorkshire on the promise of a better life only find that they are living in slum accommodation and bussed into to work for a pittance at a local biscuit factory. Oh, and the women are forced into a bit of prostitution on the side too.
The Government has decided to act and has introduced the Modern Slavery Act 2015. It will require some businesses to produce a ‘slavery and human trafficking statement’ setting out the steps they have taken to ensure there is no modern slavery in their own business or, crucially, their supply chains. More on that below. Alternatively, the business can make a statement that ‘they have taken no such steps’. (Good luck to the organisation that decides to go down that route!)
As you would expect, the Government is emphasising the positive to businesses who comply with preparing a statement. Apart from the obvious benefits of protecting vulnerable workers, they consider that it will protect and enhance an organisation’s reputation and brand together with increasing employee, investor and consumer confidence. The Government may have a point here. You can see the effect of ‘consumer power’ when it was marshalled recently on the issue of restaurant chains snaffling hard-earned employees’ tips as ‘administration charges’. When consumers get their teeth into an issue, businesses have to listen. The Government is clearly hoping that ‘modern slavery’ is the next big issue.
So – who has to produce a statement and when? Businesses (who supply goods or services) with an annual global turnover of at least £36 million, which carry on a business or part of a business in the UK must produce a suitable ‘slavery and human trafficking’ statement. This requirement will cover UK subsidiaries of global organisations, even if the UK turnover is less than £36m. The obligation to produce a statement is annual and it is intended to be a living document reflecting the work done over the previous year within the business to eradicate all forms of slavery within its organisation and its supply chains. Businesses with a year end on or after 31 March 2016 will be the first to produce their statement and the Government is expecting these to be published ‘as soon as reasonably practicable after the end of each financial year’.
And the statement itself? It is certainly more than just a ‘’kicking the tyres’ exercise and for many organisations it will involve some wide-ranging enquiries and a full ‘bonnet up’ approach. The final statement must be approved and signed by an appropriate senior person in the business.
Whilst the Government has said ‘it is up to organisations how they present information in their statement and how much information they provide’, they do go on to give businesses an idea of information they ‘could’ produce. This includes:
- The sectors the business operates in and whether any of its work is seasonal;
- The organisational structure and group relationships;
- The countries it sources its goods or services from including high risk countries where modern forms of slavery are prevalent;
- The make-up and complexity of the supply chains;
- The business operating model; and
- Relationships with suppliers and others, including trade unions and other bodies representing workers.
The Government is not expecting businesses to have complete control over their full supply chain, but it is certainly expecting more than a cursory ‘we cannot comment on practices within our suppliers’ – particularly of its ‘first-tier’ suppliers.
Commercial organisations with less than £36m turnover (no, we don’t know where the Government got that precise figure from either), who are in the business of supplying goods or services to larger organisations will not be immune either. You can expect your larger customers and clients to be approaching you as part of their due diligence exercise to determine what your business is doing to eradicate modern slavery. We expect it will become a standard question in any competitive tendering process and feature as a standard obligation in commercial contractual documentation.
And what if an eligible business does not produce a statement? The Secretary of State could seek an injunction requiring the business to produce one. Hardly the scariest of sanctions. But, beware, the Government is likely to go down a ‘name and shame’ route (rather like it does regularly with businesses not paying the National Minimum Wage or breaching immigration work rules). And then you will have your reputation and brand to consider …
If you are a business that is large enough to be caught by this new requirement, or a supplier to larger businesses, and you’d like to know more, please do get in touch with me.