We recently highlighted the need for companies to investigate their supply chains for human trafficking and slavery in light of the enactment of the Modern Slavery Act 2015 (the “MSA”) in October of last year. The MSA introduced three criminal offences: (i) slavery, servitude and forced or compulsory labour (s1), (ii) human trafficking (s2) and (iii) committing any offence with the intent to commit human trafficking (s4). Section 54 of the MSA also requires organisations with an annual turnover of at least £36 million supplying goods or services within the UK to produce an annual slavery and human trafficking statement identifying those parts of its business and supply chains at risk of slavery and/or human trafficking taking place and the steps the company has taken to assess and manage any such risks.

For organisations that thought the MSA was just a tick boxing exercise, take note. The English High Court has for the first time found a company liable to compensate victims of modern slavery.

The claim was brought by six Lithuanian men against their employer, DJ Houghton Catching Services Ltd (“DJ Houghton”), a company engaged in the supply of labour to chicken farms in the UK. The court held that DJ Houghton was liable to pay compensation to the claimants for unpaid wages under the Agricultural Wages Act 1948 and certain breaches of the Gangmasters (Licensing Conditions) Rules 2009 relating to the charging of prohibited work-finding fees, the unlawful withholding of wages and the failure to provide adequate facilities to wash, rest, eat and drink. The amount of compensation payable by DJ Houghton will be assessed at a separate hearing.

The court’s finding is unsurprising given that houses controlled by DJ Houghton were raided by the police in 2012 liberating a number of workers. The Gangmasters Licensing Authority (“GLA”) then conducted a detailed investigation which described the company as “the worst UK gangmaster ever”. The GLA also revoked DJ Houghton’s licence.

DJ Houghton sought to defend the claims on the basis that an individual unconnected to its business had carried out the actions complained of. However, the GLA found that the individual had in fact played an “active” and “integral role within DJ Houghton” and for that reason, DJ Houghton remained responsible for his actions towards workers irrespective of whether it had consented to or had full knowledge of his activities. The court was also satisfied on the evidence given by the workers that the individual had clearly acted as the company’s agent.

Notably, this decision follows the first conviction of a UK businessman in January of this year for conspiracy to traffic in connection with the supply of labour to Kozee Sleep, a company which provided beds to a number of leading high street retailers.

These cases are a reminder for commercial organisations operating within the UK that eradicating slavery is an objective that both Parliament and the courts are taking seriously. They are also a reminder that a company can be found liable for compensation where the acts complained of have been carried out by an agent – and not by the directing will and mind of the company.

The GLA will soon undergo a number of reforms pursuant to the Immigration Act 2016, which will see the GLA become the Gangmasters and Labour Abuse Authority (”GLAA“). The new GLAA will have a broader remit and stronger powers to investigate modern slavery, including powers under the Police and Criminal Evidence Act to search and seize evidence.

The MSA is also expected to be expanded in scope pursuant to a private members’ bill, the Modern Slavery (Transparency in Supply Chains) Bill, which will face its second reading on 8 July 2016. The Bill will expand upon the current section 54 to require commercial organisations and public bodies to include a statement on slavery and human trafficking in their annual report and accounts and to require contracting authorities to exclude from procurement procedures economic operators who have not provided such a statement.

The claimants in both the Kozee Sleep and DJ Houghton cases had each worked within the supply chains of a number of major retailers yet the modern slavery had managed to go undetected. All organisations should therefore ensure that they are continuously assessing the adequacy and effectiveness of their policies and procedures for preventing modern slavery within their own organisations and supply chains. Those who fail to do so may face criminal prosecution under the MSA and, like DJ Houghton, civil prosecution to compensate workers.