Clarkslegal LLP - Solicitors in Reading and London

Outsourcing & Supply Chain

What is the Modern Slavery Act and who does it affect?

 

The Modern Slavery Act 2015 is groundbreaking law to address the evil of slavery in the UK and in overseas supply chains, taking the form so often of bonded and forced labour, child labour, human trafficking, and suchlike exploitation of vulnerable people. The law has the strong support of the UK Prime Minister who promoted the law in her previous office as Home Secretary. Tackling the problem of modern slavery is also increasingly a global agenda as part of the UN Sustainable Development Goals.

James Brokenshire who introduced the draft bill to Parliament in 2013 has been quoted as saying that the Act would

"send the strongest possible message to criminals that if you are involved in this disgusting trade in human beings, you will be arrested, you will be prosecuted and you will be locked up.”

Who does the act apply to?

Businesses are obligated under the Act if they fulfil the following conditions:

  1. The business is a commercial organisation;
  2. The business has a global turnover of over £36m;
  3. It carries on a business, or part of a business, in any part of the United Kingdom; and
  4. It supplies goods or services.

 

What must a business do to comply with the Modern Slavery Act?

Under Section 54 of the Act all obligated businesses must publish a ‘slavery and human trafficking statement’ for each financial year ending on or after March 2016.

The statement should be published as soon as possible and within six months of each financial year end.

The Transparency in Supply Chains provision in the Modern Slavery Act seeks to address the role of businesses in preventing modern slavery from occurring in their supply chains and organisations.

The ‘Practical Guide’, released by the Home Office, highlights six areas that companies could consider covering in their Statements:

  1. Business organisation, structure, and supply
  2. chains
  3. Policies
  4. Due diligence
  5. Risk assessment
  6. Performance indicators
  7. Training

Recent estimates suggest there are almost 46 million people globally living as slaves. * www.globalslaveryindex.org

 

What else do I need to think about?

You need to consider the value of your brand, or Brand Equity, has it has come to be known.

Brand Equity no longer refers solely to the perceived quality of a product or the reputation a business has with its customers.

Brand equity has a financial value which if affected adversely may impact on your firm’s share value, its ability to borrow money and even its sale price.

Brand equity often takes many years to build but it can be lost in a day and one of the quickest ways to damage Brand equity is through poor supply chain integrity. Thanks to the internet and social media any bad behaviour discovered the other side of the world can be reported instantly to hold a multinational to account.

Many household name companies have been identified as failing to identify and monitor risks and remedy problems in their supply chains, whether labour abuses, environmental pollution, or bribery/corruption issues. These are now so serious that they deserve the highest priority. It is plain to see that controlling supply chains and sources of products is a very challenging task that even the largest corporate struggle with, and realistically it is clear that we are at the beginning of a journey to improve global standards and governance as part of the development of sustainable world trade.

A starting point would be to review all existing Anti Bribery and Corruption policies. Many of the steps to be taken to address modern slavery will be similar to those taken to comply with the Bribery Act.

Key Facts

  • Criminal legal liability under the Bribery Act.
  • Reputational impact of an investigation or criminal conviction under the Bribery Act or failing to adhere to the Modern Slavery Act (MSA). The MSA places a positive reporting duty upon companies with any operations in the UK who also have a global turnover in excess of £36m. UK subsidiaries of overseas headquartered multinationals may not appreciate their obligations. Social auditors are measuring statements and ranking firms accordingly.
  • Competitive disadvantage as against other companies demonstrably compliant with legal and ethical responsibilities. Transparency is a major driver of improving standards.
  • Higher insurance premiums potentially, as the market develops a differential pricing mechanism.
  • The rise of ‘angel litigation’, social auditing, global trade union engagement in workforce issues, and frequent media investigations, all add pressure on multinationals to ensure compliance on human rights issues and best practice in standards. The statements annually published by businesses all become part of the audit trail for possible future investigations and even perhaps legal claims. Long-term development of litigation about corporate responsibility for supply chain workers overseas is totally foreseeable.
  • Fund managers moving towards a ‘shared value’ model, which incorporates sustainability policies into calculations of long-term risk adjusted returns.

Our Team

At Clarkslegal LLP we have a professional team combining different aspects of supply chain legal services, plus HR services through our associated consultancy Forbury People Limited. We offer a multi-disciplinary model to suit such services.

Our team includes James Sinclair who, during his 15-year career as a lawyer, has worked in some of the most challenging and high-risk environments across South Asia, the Middle East and East Africa.

He has significant experience of working within US, UK and EU regulatory environments and, as the co-founder of FSI Worldwide, a UN award-winning ethical employment company, is a recognised expert on global labour supply chains.

The team also includes Michael Sippitt, Chairman of Clarkslegal LLP and Head of its Business Services Group, who has experience dealing with industrial relations strategies, including at international level, and who is Chairman of the Commonwealth Environmental Investment Platform (CEIP). Michael is very active in advising on and promoting sustainable trade and investment.

There is also a strong team of lawyers, HR professionals, communications and business advisors from across the multi-disciplinary Clarkslegal and Forbury group.

Clarkslegal represents a number of multinationals with supply chain management requirements and is a founder member of a worldwide legal network, TAGLaw, which covers most legal jurisdictions.

 

How we may help:

  • Bribery Act advice and training
  • Modern Slavery Act advice and training
  • Drafting and advice on Slavery and Human Trafficking Statements and implementing programmes to address the issues
  • Drafting and advice on supply chain contracts/policies on human rights and sustainability issues
  • Advice on supply chain mapping and risk analysis
  • Corporate communication strategies, social responsibility and reputational issues
  • Assisting with supply chain collaborative working models to best global standards with any related workforce engagement and training programmes.