Modern Slavery in Supply Chains: Understanding the UK Modern Slavery Act 2015

Introduction & Background

Modern Slavery Bill received the royal assent on 26th March, 2015, steered by Theresa May and Lord Bates, it became an act of parliament on 30th March, 2015. The Act focuses on various aspects of modern slavery and human trafficking including child trafficking and migrant labor. It provides a clear guidance on various offenses under slavery, servitude and forced or compulsory labor, human trafficking, exploitation and intend to commit an offence. It also elaborates various penalties and sentences. Currently the organizations, those have a total turnover of not less than an amount prescribed by regulations made by the secretary of state.

Currently based on the turnover of organizations various threshold levels are proposed with regard to the total number of active companies in the UK. For example, 12,259 companies exceed the threshold of £36 million, 2,554 companies exceed £250 million, 1,409 companies exceed £500 million and 724 companies exceed £1 billion respectively. However, the final call will be taken by the secretary of state to decide what threshold values will be included for determination of organizations that will fall under the modern slavery act 2015However it is certain that large organizations will definitely fall under this act. Section 54 of the act focuses on transparency of the supply chains of various organizations operating in the United Kingdom. Organizations are expected to prepare slavery and human trafficking statement for each financial year, however currently there is no mandate on what a statement should contain but from observing the trends it is clear that ensuring slavery and human trafficking is not taking place is not taking place either in supply chain or it business.

Sub section 5 of section 54 elaborates six areas of information that a slavery and human trafficking statement may include. Sub section 6 requires the statement to be approved and signed at a senior level, for example by the Board and Directors. It is also expected that the organization must publish slavery and human trafficking statement on their website. If a commercial organization fails to comply the secretary of state may bring civil proceedings in the high court.

Business Implications:

Business plays a vital role in building an economy and it has a significant role in developing a comprehensive response mechanism to address the issue of modern slavery and human trafficking. The UK Government with its newly introduced ‘Act’ wants to ensure that every business organization takes adequate measures to stop slavery and human trafficking in its business and its supply chain. The key challenge for businesses is to ensure that their supply chains do not involve any kind of slavery or human trafficking including child or migrant labor and exploitive labor conditions. It is of earnest importance to address this issue, as organizations will suffer reputational risks which will make a long lasting damage on their consumer base. Organizations may also face several penalties and sentences for offences made under slavery and human trafficking. Addressing these risks effectively may help an organization to gain reputational advantage and take sector stewardship.

How business should respond?

Business can make a huge difference in the fight against slavery. They should ensure their operations are free from slavery, along with those of their suppliers and their suppliers’ suppliers. Then they should take action to ensure anti-slavery policies are implemented in their supply chains all the way to source. Various organizations have discovered that by only setting standards and code of conducts for suppliers, labor violations across the supply chain can’t be tackled. Corrective action plans and activities to address any slavery risks and issues are more successful if they are combined with programs to build supplier’s capacity. Trainings and guidance should be organized to raise awareness of organizations anti-slavery policy and also to provide capacity building and development opportunities that build management capabilities and workers skill set. Training’s should help workers understand their rights and give them a transparent opportunity to address their grievance.

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