Following on from our recent article on the issue of modern slavery in the construction industry, we have prepared a podcast highlighting the general application of the Modern Slavery Act 2015 and what you need to know.
To listen to the podcast click here.
Cathy Moore: Hi I'm Cathy Moore. I'm a professional support lawyer within the construction and dispute resolution teams at Gowling WLG and I'm here with Andreas Steffensen, an associate in our constructon team.
Andreas, you recently wrote an article relating to the Modern Slavery Act 2015 and I wanted to discuss with you briefly why you wanted to highlight this legislation.
Andreas Steffensen: Well the act is in force now meaning that all companies that are covered by its provisions now need to issue an annual Slavery and Human Trafficking Statement. It's estimated that around 12,000 UK companies are affected and around 10% have published a statement to date. So this issue is high on the agenda this year as companies hopefully finalise internal policies to ensure compliance.
Cathy: Can you remind us which organisations are covered by the Modern Slavery Act?
Andreas: It's primarily larger organisations and there are three stages to the test: an organisation will be covered if it carries out its business or any part of it in the UK, if it also supplies good or services and (and this is the most significant defining factor) has an aggregate annual turnover of not less than £36 million.
Interestingly, there are no requirements as to what the statement actually has to contain - the act simply states that it needs to set out the steps taken during the year to ensure that slavery and human trafficking is not taking place. This applies right across the particular organisation, even where parts of the business are not based in the UK and also, the entire supply chain, where relevant.
Cathy: So, as you said, it's larger organisations that are affected. Your recent article focussed on the construction industry which has been identified as a sector particularly at risk but the Modern Slavery Act applies across all sectors.
Andreas: Yes, the application is right across the board regardless of the particular sector or industry in which your business is operating. Of course all organisations need to be alert to the risks or danger signs of human slavery but the larger firms that fall within the act need to be proactive now to ensure that they can comply with the requirement for a Slavery and Human Trafficking Statement.
Although there are no prescribed penalties for failing to issue a statement, the real risk is reputational damage if an organisation fails to do so or possibly issues a statement that is considered to be unacceptable or defective in some way.
Technically, the statement could state that the business has taken no steps during the year to ensure that slavery and human trafficking is not taking place and still be compliant with the Modern Slavery Act but it's fairly inconceivable that any organisation would choose to do this.
Another factor is that, as the obligations affect businesses up and down the supply chain it's increasingly the case that assurances are required during pre-contract discussions so in that sense any failure (perceived or otherwise) may affect profitability going forward.
Cathy: With the obligations to issue the statement now in effect, what can businesses be doing to ensure compliance?
Andreas: The sorts of areas that organisations should be focussing on will include creating an internal point of responsibility for the issue of modern slavery to ensure that efforts across the business can be stream-lined and effective. Risk assessments can be a valuable tool when seeking to identify potential risks so scoping out types of transactions, organisations involved and so on, and perhaps creating a database to facilitate checks going forward.
Another key point is to embed within the culture of the whole organisation attitudes of zero tolerance towards unacceptable practices, alongside knowledge of warning signs and risk factors together with an environment in which concerns can be raised without fear of negative repercussions. Linking positive behaviours to internal reward systems and performance reviews can help to engage the whole workforce.
Of course, education is key and businesses need to consider internal training on human slavery and exploitation at the point of induction together with refresher sessions and awareness campaigns. We are also already seeing organisations within certain sectors forming industry-wide resources. I think a good example of this is the Stronger Together initiative which was launched last month by stakeholders to the construction industry. They have - together with the industry body Chartered Institute of Building - developed a training toolkit to help construction firms and clients reduce hidden labour exploitation in their operations and supply chains.
Some of this may seem new and cumbersome at present, but hopefully, facilitated by the act awareness about these issues will soon become second nature to organisations and an approach of nationwide zero tolerance will help to eradicate these awful abuses.
Cathy: Thanks Andreas and thank you for listening.