Modern slavery - an update and reminder about annual slavery and human trafficking statements

by Dentons


You might have missed "#AntiSlaveryDay" on 18 October but its very existence and the number of social media posts it generated are positive signs of the growing awareness of modern slavery as a global issue. Here in the UK, its abolition has full government support – witness, for example, the stance taken by Theresa May when attending the United Nations meeting in September 2016, as reported here.)

The nature and demands of construction work and its reliance on a migrant labour force as its "lifeblood" unfortunately makes construction one of the industries in which migrant workers can be exploited. Following the enactment of the Modern Slavery Act 2015 (the MSA) and the appointment of Kevin Hyland OBE as the first independent Anti-Slavery Commissioner, the government and various bodies are working hard to raise awareness of and eradicate modern slavery. Read on for a round-up of recent action and some reminders about preparing annual slavery and human trafficking statements.

  • Overview of the MSA: you can find our overview of the MSA here: [MSA] Supply Chain Transparency – new legal duties now in force.
  • Help with understanding the issues and how to stop modern slavery: The Chartered Institute of Building (CIOB) has called for greater industry collaboration to eradicate unfair labour practices in its report, "Building a fairer system: tackling modern slavery in construction supply chains", launched on 13 July. "Clients and tier one organisations need to take greater responsibility for their supply chains. Priority should be given to tackling illegal recruitment fees …" (see the CIOB summary). As well as setting out in brief the implications of the MSA for UK companies (page 56), a useful list of organisations that can help (page 51) and recommendations to eradicate the root causes of the problem, the report provides case studies on ethical recruitment, switching to direct labour, creating a global welfare policy and raising welfare standards in the Gulf region. "Cross-industry collaboration is essential if we are to make a difference. Consultants and contractors will have little impact if they act alone." (Theresa Loar, Senior Vice President, International Government Affairs, CH2M).
  • First annual report by Anti-Slavery Commissioner: Kevin Hyland OBE has published his first Annual Report 2015/16, in which he makes a progress report and sets out the priorities for 2017. He highlights the role that private companies can play in the fight against slavery and notes that, while section 54 of the MSA has highlighted the issues, there is still "much more to be done to ensure that companies produce statements that both comply with the Act's obligations and point to decisive action being taken, as opposed to merely being a 'tick box' exercise. Here the role of consumer and investor pressure is crucial."
  • MSA review, one year on: an independent review of how the criminal justice provisions of the MSA are working has been carried out by barrister Caroline Haughey (see the Government press release). The foreword of her report opens with a quote from Theresa May after the MSA was enacted: "This landmark legislation sends 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." Ms Haughey addressed the following questions: Is there sufficient awareness of the criminal justice measures contained within the MSA? How well are the measures in the MSA being implemented? Are there gaps in the provisions of the MSA? What recommendations are there to fill any gaps found? While Ms Haughey concluded that the operational agencies are starting to use their powers under the MSA , she found a lack of consistency in how law enforcement and criminal justice agencies are dealing with modern slavery. She identified 29 recommendations to help those agencies attain maximum efficiency in their roles under the MSA.
  • Reminder to prepare annual slavery and human trafficking statements: section 54 of the MSA sets out reporting requirements to effect transparency in supply chains. Companies with a £36 million or greater turnover doing business in the UK must prepare and publish an annual slavery and human trafficking statement as soon as practicable after the end of each financial year (publication within six months of the financial year end is suggested). The MSA specifies that the statement must be approved by the board and signed by a director and be accessible via a link displayed on the company's website but, other than stipulating that it should specify what anti-slavery steps have been taken, the MSA does not make clear what information must be included in that statement. However, guidance is set out in Transparency in Supply Chains etc. A practical guide (which includes a foreword by Theresa May, the then Home Secretary) and some guidance can also be taken from those companies that have already submitted their statements.
  • Steps taken to comply with the MSA: some of those companies that reached their year end earlier this year will have prepared and submitted their annual statement already. Steps some of them have taken include introducing staff training and training for their supply chain, creating and publishing anti-slavery policies and setting up processes to ensure abuses can be reported.
  • Analysis of published statements: Ergon Associates produced a report in May which analyses modern slavery statements produced by commercial organisations under the MSA. (You can download Ergon's report from here.) Most of the statements analysed were prepared voluntarily ahead of the MSA requirements coming into force. However, a third did not deal with risk assessment processes, two thirds did not identify priority risks and some statements from unrelated companies had similar wording, which indicated a possible use of a template.
  • Consequences of a breach of section 54: those that do not comply with section 54 can be served with an injunction by the Secretary of State. Most will want to avoid the negative publicity that would attend such action and reports of the failure reaching the public domain. It is to be hoped that most will want to demonstrate their commitment to ridding their supply chains of modern slavery. It is also likely that evidence of a company's anti-slavery commitment will be required as part of the tender processes – and inability to provide it satisfactorily may jeopardise the tender.
  • Public bodies to exclude those who have not issued a statement: companies subject to section 54 should be aware of the Modern Slavery (Transparency in Supply Chains) Bill (a private members' bill), which had its second reading on 8 July. The bill will, if enacted, require commercial organisations and public bodies to include a statement on slavery and human trafficking in their annual report and accounts; and will require contracting authorities to exclude from procurement procedures economic operators that have not provided such a statement (see the Parliamentary report).
  • Effect of MSA on business: Ergon Associates has also published a report in conjunction with Historic Futures looking at the effect of the MSA on businesses. Encouragingly, it shows an increase in engagement on supply chain issues. However, where risks have been identified, few companies surveyed had taken action to address those risks. Also, companies collate little information about their supply chains beyond the first tier.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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