Cordery Compliance: Modern Slavery – What’s it all about for UK Companies

Modern Slavery – What’s this all about?

Modern slavery is a sad fact of daily life throughout the world. To help combat this phenomenon, a compliance obligation that means companies will have to comprehensively train their staff on the issue has been legally imposed on organizations in a number of parts of the world, most notably California and the United Kingdom, and more recently Australia.

Ensuring that businesses affected by this obligation introduce and maintain robust modern slavery or anti-slavery (and human trafficking) compliance practices procedures and policies that also make reference to business reputation is crucial. Companies must make their staff aware of their obligations by providing them with informative training courses that underscore the seriousness of the issue and the importance of calling out any red flags and potential foul play that they identify.

What is the Modern Slavery Compliance Obligation?

The compliance obligation is essentially a transparency and disclosure requirement and is broadly similar in the various places where it has been introduced. The UK Modern Slavery Act 2015 (as supplemented by accompanying official government guidance) serves as a good example of this.  In the UK, businesses of a certain size have to annually disclose in a so-called “Slavery and Human Trafficking Statement” the steps that they’ve taken to ensure there is no slavery (or human trafficking) in their business or supply chains. The compliance requirement does not mean that a business must guarantee that the entire business or its supply chain is slavery-free – instead, businesses should be transparent about the steps that they have taken to ensure that modern slavery is not occurring. In most cases, this will inevitably involve, at the very least, training staff in relevant positions.

Who is covered?

A business supplying goods or services that carries on business (in whole or in part) in the UK whose annual turnover is £36 million or more is required to make a “Slavery and Human Trafficking Statement”. Businesses located outside the UK may, therefore, fall within this scope, and all industry sectors are covered.

What does the “Slavery and Human Trafficking Statement” involve?

The content of the UK “Slavery and Human Trafficking Statement” may include reference to policies, due diligence processes, risk analysis and management that a business has undertaken concerning itself and its supply chains in relation to slavery and human trafficking. It is at the discretion of businesses themselves to determine both the presentation and level of detail of information they wish to provide. The document must be approved and signed by a senior figure in the business and published on the business’s website. The reporting period is the business’s previous financial year, and publication must be undertaken as close as possible to the financial year-end.

What about non-compliance?

Where a business fails to comply, the UK government can seek a court injunction requiring the business to comply. Failure to comply with the injunction will likely constitute contempt of court and be subject to an unlimited fine. A business will be considered to have failed to comply if it has neither produced a statement, nor published the statement on its website (if it has one), nor set out the steps it has taken in the relevant financial year.

A serious consequence for non-compliance, whether real or perceived, will be reputational damage. Further, consumers might stop buying a business’s products or services, and investors might pull out or seek to not invest in a business. There is also the possibility of private action such as litigation, although the scope of this is still in early stages.

What’s next?

In 2018, the UK government wrote to the CEOs of some 17,000 businesses telling them to “open up” about modern slavery in their supply chains, or risk being named as “in breach of the law” – the British government intends to follow this up by publishing a list of non-compliant businesses. Moves are also afoot in the UK (an ongoing review in parliament and draft legislation) to introduce changes, including toughening up on enforcement – possible future sanctions for non-compliance may include disbarment from public procurement procedures, fines, and director disqualification.

How can I get Modern Slavery Compliance help?

Modern slavery compliance is clearly here to stay and involves a number of actions. As with all compliance, training is a key component of modern slavery compliance. Understanding what the issues are and spotting whether modern slavery (or human trafficking) may be taking place are key, which training can help with.

Interactive Services

provides online training to help employees understand modern slavery issues, spot red flags and report – for more see here.

Cordery

provides legal advice and assistance to businesses about modern slavery issues including tailor-made product solutions – for more see here.