Modern slavery – more than just compliance

Paul Callum heads our modern slavery team. Paul has a lifetime’s experience in law enforcement, where he played a leading role in protecting vulnerable adults from modern slavery. 

He is supported by Associate Consultant Mark Heath, a former Senior Investigating Officer with the Gangmasters and Labour Abuse Authority, and Partner Carolyn Brown, a specialist employment law solicitor. 

Paul and the team were commissioned by a UK housebuilder to identify and assess modern slavery risks in their supply chain. The client had already shown its commitment to eliminating modern slavery through its policies, statements and actions, but knew that its supply chain risk management needed to be more robust. 

Our team’s role included developing an ongoing review programme and supporting the in-house compliance team. We did this by conducting a series of site inspections and on-site interviews with selected subcontractors.

One of our key findings was that site supervisors often lacked the skills and knowledge to identify vulnerable workers and recognise the red flags of modern slavery. We provided training to front-line teams so that they know how to identify and support vulnerable groups of workers. 

Policy and documentation compliance

We can help to make sure you are legally compliant with the Modern Slavery Act by reviewing your modern slavery statement and aligned policies. We’ll also review your documented approach to supplier risk assessments, the relevant clauses in precedent suppliers and third party agreements, and/or your processes.

Risk management and maturity assessment 

Our comprehensive assessment gives you recommendations you can act on, so that you and your stakeholders have confidence that your organisation is truly committed to eliminating modern slavery.

We can help you to identify and evaluate:

• your current anti-modern slavery performance and strategy;
• best practice and gaps;
• key elements of a working strategy, and appropriate actions to support the implementation of that strategy.

Practical support

We can help you deliver improvements in your working practices, including:

• improvement action plans;
• Modern Slavery Act, section (54) statement writing;
• developing Modern Slavery Act management systems (leadership, supply chain, risk assessment, due diligence, KPIs, training, policies and procedures);
• worker interview strategies;
• worker interviews and on-site assessments;
• modern slavery training on topics such as:
  • spotting the signs;
  • investigating modern slavery; and
  • worker interview skills;
• facilitation of modern slavery working groups;
• supplier engagement, workshops and awareness days; and
• supply chain assessment tools.

What if you fall under the Modern Slavery Act threshold?

If you are working alongside larger firms, or form part of their supply chain, there will be significant expectations even if your company falls below the £36m turnover threshold.

This is particularly true if your organisation’s business relationships involve:

• distribution;
• procurement or supply of goods or services;
• franchising;
• outsourcing or subcontracting; and
• a global workforce or operations in developing countries.

Smaller organisations may already have experience of larger firms passing their compliance measures down the supply chain. This creates more requirements for the smaller firms to meet. Typically, smaller firms are being asked to:

complete questionnaires and give evidence of their approaches and policies related to a number of areas enforced by the Modern Slavery Act;

supply evidence that minimum standards for employees are in place, that the National Minimum or Living Wage is being paid, that they have safe working conditions and that their hours are not excessive;

• provide ethical standards and whistleblowing policies;
• supply pre-employment checks and tightened policies around immigration; and
• grant supplier firms access to records and data so that they can carry out random audits and checks.

Firms should be prepared to demonstrate how they are raising ethical standards and removing any risk of slavery and human trafficking.

What questions should you be asking to ensure compliance?

The Modern Slavery Act aims to eliminate slavery, human trafficking, servitude and forced or compulsory labour. 

Key questions to ask yourself when reviewing and assessing your own firm’s response to modern slavery legislation include: 

• What internal policies and procedures exist that contribute to the prevention of modern slavery? This may include corporate policies, such as a code of conduct, ethical and corporate social responsibility (CSR) policies, as well as operational procedures, such as procurement and sourcing.
• How do you ensure your organisation, suppliers and subcontractors comply with these policies and procedures? Are formal declarations confirming compliance regularly required, or are self-assessment questionnaires completed?
• Have there been risk assessments to identify areas of higher risk in your supply chain, in respect of both the supply of materials and labour?
• What due diligence is performed on new suppliers and subcontractors? Does this consider aspects such as human rights and labour conditions? How is this information used to inform/award criteria for supplier selection?
• Do formal contracts with suppliers and subcontractors include obligations to comply with modern slavery rules or other related policies?
• Do performance targets and reward structures incentivise suppliers and subcontractors to comply with ethical policies and requirements?
• Have there been audits and/or on-site assessments at construction sites or supplier premises during the period? If so, what was the scope of these audits/visits, and have any corrective actions been monitored to ensure they are adequately implemented?
• Are there channels for concerns in your organisation or supply chain to be escalated and considered by appropriately senior staff? Is your whistleblowing policy aligned?
• Are your employees aware of the legislation and their obligations? Have you considered training?

What are the HR implications of the Modern Slavery Act?

Writing and publishing a statement is one of a series of steps required to provide evidence and inform the detail in a Modern Slavery and Human Trafficking statement. 

HR teams, on behalf of senior leaders, need to evaluate and consider the extent to which they mitigate risk and ensure compliance the whole way along the people supply chain.

What should people teams do? 

• Ensure contracts of employment, policies and procedures are compliant. Any review should focus on: ethical standards, values, whistleblowing policy, disciplinary and grievance and equal opportunities policies;
• For recruitment, Service Level Agreements with agencies and suppliers should be under constant review, ensuring pre-employment checks are robust and passports are verified, as well as proof of address established in all cases;
• Pay employees national minimum wage and ensure that no groups of workers are being paid into the same bank account;
• Carry out robust immigration checks; and
• Ensure your employees have received training, are aware of wellbeing and know where they can go to seek confidential counselling or advice, whistle blow or raise concerns about the wellbeing of other employees.
  
  

The reality of today’s organisations is that HR exists in part to assist in complying with all relevant labour laws. While the Modern Slavery Act isn’t classified as employment legislation per se, its ramifications around resourcing, managing and remunerating staff must remain with the HR function.

What if your firm does not comply?

The Modern Slavery Act should not be underestimated. Non-compliance will have considerable and negative consequences for the entire organisation and, potentially, its supply chain.

If a company fails to comply, the Secretary of State could start civil proceedings, with an injunction from the High Court requiring the company to comply. Failure to comply following injunction could lead to a contempt of court order and an unlimited fine. Apart from the (at the moment unlimited) financial consequences, this could also impact:

Reputation: Clients, suppliers and local communities are increasingly looking at statements and information around what action firms are taking in this space. By not complying, firms risk brand damage.

A firm’s reputation as an ethical employer could also come into question. If a current and prospective workforce does not want to work for you, how will you continue to operate? We are beginning to see criticism of certain organisations without statements and, more critically, of organisations with statements that are not compliant or useful.

Legal: There is not just a risk of litigation, but of complaints to regulatory bodies and breaches of specific ethical terms.

Financial: Investor confidence will be damaged by the negative impact on turnover and profits. Can an organisation continue to operate without investors? The failure to have adequate modern slavery measures in place could also affect an organisation’s bid for new contracts. 

Operational: Non-compliance will disrupt not just an organisation’s own operations, but also those of its supply chain.

Modern slavery: What lies ahead?

As part of the environmental, social and governance (ESG) agenda, the government is increasing enforcement activity around the actions of corporates to prevent modern slavery and human trafficking, both in the workforce and in the supply chain.

This is being done through a proposed strengthening of Modern Slavery Act statement reporting. HMRC has also issued guidance on labour supply chain assurance, including supply chain due diligence principles.

The government’s direct enforcement of employment rights is to be extended to Modern Slavery Act statements compliance with the formation of the single enforcement body (SEB). The SEB will also have responsibility for fair labour supply treatment, with the aim of tackling serious non-compliance.

The Home Office will introduce fines for businesses that do not comply with their transparency obligations. The measures include a proposal to impose financial penalties on companies that are in scope, but fail to publish an annual MSA statement.

The government will also mandate organisations to publish their statements on the government-run MSA reporting service, enabling direct public scrutiny and benchmarking of organisations’ actions.