The link between the increasing globalisation of the economy and the labour rights of workers has been widely reported and has been firmly put on the commericial agenda by Government.  So, what exactly is the Modern Slavery Act and how can it help to tackle trafficking and modern day slavery? 

The link between the increasing globalisation of the economy and the labour rights of workers has been widely reported. With competition between developing and developed countries incentivising some countries to compete principally on labour cost, the consequence has been a “downward pressure” on the rights of many workers.

In recent years, the deaths of over a thousand workers at the Rana Plaza garment factory in Bangladesh, the involvement of Asian slave labour in the production of prawns for CP Foods, the exploitation of African and Asian migrant workers on Irish fishing trawlers and the sale of Burmese Rohingya migrants as slaves to Thai fishing vessels producing seafood sold worldwide (to name but a few examples), have ensured that modern day slavery is ever present in the awareness of businesses and consumers alike.

Modern Slavery Act 2015

The UK Government has put modern day slavery firmly on the commercial agenda with the introduction of the Modern Slavery Act 2015 (“MSA”).  It is the first legislation of its kind in Europe and was reported by Home Secretary Theresa May as sending “the strongest possible signal to criminals that if you are involved in this vile trade you will be arrested, you will be prosecuted and you will be locked up. And it says to victims, you are not alone - we are here to help you”.

The MSA potentially has far reaching consequences. In particular, under s54 of the MSA (which came into force on 29 October 2015), relevant commercial organisations with a turnover above a specified threshold will have to produce a slavery and human trafficking statement for each financial year.   This applies to organisations conducting business (or part of their business) in the UK, irrespective of where the organisation is based and the amount of work that is conducted in the UK.  The turnover threshold is set at a relatively low £36million.  This threshold turnover includes the turnover of the commercial organisation’s subsidiary undertakings and applies to "an organisations worldwide turnover", not just to turnover in the UK.  The first slavery and human trafficking statements required to be made will be in respect of financial years ending on or after 31 March 2016, and organisations will have six months from the end of their financial year to publish their statement.

What does this mean for business?

A significant number of organisations will be affected by this legislation and the requirement to provide the statement. For companies not caught by the legislation, they may still be asked to supply information to their customers and to make contractual commitments as to the steps they will take to prevent slavery within their supply chains and the information they will provide about these steps.

Not only is it the expectation of customers and consumers that organisations will provide ethically sourced products and services, but sponsors and investors of the future will also wish to safeguard their commercial interests and avoid the negative publicity potentially involved in associating with an organisation that does not take steps to prevent slavery in its supply chains.

Furthermore, organisations will want to demonstrate their social conscience to attract new talent, as societal values and new millennial entrants to the work force are likely to demand.

HR has a key role to play not only in reviewing internal policies, training and due diligence processes to ensure that these are effective but also to work with other functions across the organisation to address these issues and support the organisations strategic aims.  Organisations should analyse their supply chains in detail to identify the risk of slavery and human trafficking and take additional steps required to limit this risk – The United Nation’s Guiding Principles on Business and Human Rights may provide useful guidance as part of this process.

The Government has now published practical guidance to help businesses supplying goods or services comply with the MSA, which includes advice on writing and publishing the statement and guidance for businesses on assessing and managing risk.

Speaking exclusively to the Hub, Jonathan Ivelaw-Chapman, CEO at Sedex, a not-for-profit organisation dedicated to driving improvements in ethical and responsible business practices in global supply chains, says:

data shows that risks such as modern slavery are more likely to occur deeper down the supply chain – past the first tier of suppliers – so gaining accurate information on these lower tiers is particularly important. In addition to visibility down the supply chain, companies need tools, protocols and policies to effectively audit trafficking and to establish mechanisms to protect workers. Audit procedures need to work alongside other assessment strategies and auditor training. Companies also need to ensure due diligence includes areas of greatest risk, including subcontracted facilities and the companies that provide labour, both foreign and domestic."

As globalisation continues, so does the slave trade. The importance of this issue is therefore likely to intensify, along with the commercial pressure on companies to demonstrate a commitment to eradicating modern day slavery. However, there are some barriers that will prevent organisations from being able to properly monitor the labour conditions of its supply chain workers, such as the use of third party agency workers, which causes a “blur in the accountability for labour conditions” (Verite).

Legislation and the commitment of businesses alone are unlikely to be enough to eradicate modern day slavery. Kevin Hyland, the UK’s first anti-slavery commissioner, has recently stated that victims of modern slavery have not been provided with proper support by UK authorities. He acknowledges that without effective victim support, it will be difficult to increase the number of prosecutions and has suggested a plan of action focussed on police training to combat this.

As an embedded element of the modern day supply chain, arguably it will take the combined efforts of strong government legislation, identification of the clauses of slavery, the preventative steps of multinational organisations, the tough punishment of human traffickers and the empowerment and support of victims to fully combat the issue of modern day slavery. This new legislation is, however, a significant positive step in addressing this worldwide challenge.

By Emma Short, Lewis Silkin LLP

 

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