Legal experts are warning businesses across a wide range of sectors that they could fall foul of the law unless they take steps to check out their suppliers’ working practices by this October.
The warning comes in the wake of The Modern Slavery Act 2015 receiving Royal Assent at the end of March. Jordans Corporate Law Limited’s Head of Commercial, Simon Bates, explained, “The new Act has very broad-ranging powers, making it something that everyone involved in a business supply chain needs to take seriously – not just the larger companies that are immediately affected by it.”
“Modern slavery might seem a remote problem for the UK, but these practices go on in many countries – including Britain, sadly. And if a manufacturer or even a retailer is found to source from companies involved in these practices, it becomes their problem too.”
The new obligations come in as a result of the new Act of Parliament that seeks to abolish modern slavery and human trafficking – which affects an estimated 27 – 30 million people worldwide. And while it is relatively straightforward for suppliers based here to be given a clean bill of health for their working practices, the challenge for those in the UK will be ensuring that there is no slavery in their supply chain of products or components sourced abroad.
Many sectors – including clothing, food, electronics, and even the automotive sector – can find their supply chains affected.
So what does modern slavery look like?
Examples could be employing migrants who may not have permission to work in the country in question (often for a very low wage) or forcing someone to work in order to pay off debts that they, in reality, are unlikely to ever be able to repay.
“It’s not just a developing world problem. Indeed, we know this happens in the UK, with illegal gangmasters ruthlessly trafficking and exploiting people from Southern Asia or Eastern Europe,” says Simon,
And what are the new obligations?
One of the most important changes that the Act has introduced is a new obligation on large businesses to disclose, each year, the steps that they have taken to ensure that there is no slavery in their business or, importantly, their supply chain.
“You must produce a ‘slavery and human tracking statement’ for each financial year setting out the steps you have taken to ensure your business and your supply chain are free from slavery (or a statement that no such steps have been taken). If you have a website you must publish the statement on it and include a link to the statement on your homepage.”
The current date by which business must comply with the above is October 2015, and examples of steps that may be taken to prevent slavery within your supply chain may include:
- Showing that you have incorporated modern slavery due diligence as part of your procurement process; and
- Implementing an ‘ethical working practices’ policy which you require suppliers to comply with as part of your contract with that supplier.
“While the main thrust of the Act is aimed at ‘larger’ companies,” adds Simon, the definition of ‘larger’ has not yet been spelled out – that is expected in the next few months. But as those larger companies will be looking hard at their supply chain, even smaller suppliers could be under scrutiny very shortly.”