Tackling Modern Slavery: Supply Chains under the Spotlight

31 January 2019

Author: Stuart Anderson
Practice Area: Corporate - M&A

Modern_slavery

Businesses should take note that the obligations and duties imposed on them in relation to tackling modern slavery may be set to increase, following the release of an independent report last week. The report, on the issue of modern slavery and transparency in supply chains, was the second interim report arising from a Home Office sanctioned review of the Modern Slavery Act 2015 (the “MSA”).

The review was launched in the summer of 2018 following the publication of a report which estimated that modern slavery costs the UK up to £4.3 billion a year. Despite the introduction of the MSA, there is little sign that the problem is abating. It is very much a UK wide issue, and Northern Ireland is not an exception. Notably, in 2014 the Police Service of Northern Ireland established a new unit to deal specifically with this and in a 12 month period between 2017 and 2018 they reportedly rescued a 36 potential victims from modern slavery.

It seems inevitable that the pressure on politicians and statutory agencies to tackle the issue will soon lead to an increase in regulation, with stronger sanctions for non-compliance and greater obligations on businesses to mitigate the risks.

A statutory duty. Which businesses must comply?

The MSA places a statutory obligation on any and all organisations that supply goods and services; and have a minimum total turnover (global) of £36 million per year, to act on the issues of human trafficking, slavery, servitude and forced or compulsory labour.

The MSA imposes an obligation on organisations to publish a publicly accessible statement outlining what it is doing to prevent and tackle modern slavery in its operations and supply chain.

The recommendations

The Secretary of State currently has the power to issue injunctions to non-compliant companies but there are no specific financial penalties within the MSA. Whilst the reputational risks are considerable for businesses, the report suggests a more robust and systematic approach is required in terms of ensuring compliance.

It concludes that the impact of the MSA has been limited and details a number of recommendations aimed at clarifying the scope of the MSA; and improving reporting and enforcement mechanisms. In summary they include:

  • clarifying that organisations must consider their entire supply chain in their modern slavery statement;
  • imposing an obligation on businesses to have a designated board member who assumes personally accountability for producing the statement;
  • requiring the government to establish an online central repository for modern slavery statements which is easily accessible to the public, free of charge; and
  • the introduction of sanctions for non-compliance.

The review will aim to produce a final report to the Home Secretary before the end of March 2019.

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