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October 8, 2015

Modern Slavery Act 2015: Why companies need to act now

The Modern Slavery Act 2015 will have reputational impact for many medium to large sized companies in the UK if they do not embrace the implications of not complying with auditing and monitoring closely the companies in their supply chain.

Speaking this week with Rachel Clark at Consulting Ethic LLP has brought to our attention the new Modern Slavery Act 2015 that came into effect this week, which could have a profound impact on UK companies.

The Modern Slavery Act which was passed Royal Assent in March 2015 and came into force this month will impact on company’s reputations if they don’t take steps to embrace the new legislation.

Uk Modern Slavery Act 2015

The UK Modern Slavery Act

What is this new legislation?

  • From October 2015, commercial organisations with a turnover of £36 million or more carrying on business in the UK will have to prepare a slavery and human trafficking statement each financial year, which outlines the steps they’ve taken to ensure their business and supply chains are slavery free.
  • This statement will have to be published on the organisation’s website.
  • Failure to comply can lead to an injunction.
  • The statement must be approved by the board of directors and signed by a director.
  • A link to it must appear in a prominent place on the company’s website homepage.

What is meant by slavery and human trafficking?

Conduct that constitutes the offences of slavery, servitude, forced or compulsory labour and human trafficking, or would constitute an offence if the conduct took place in the UK.

Slavery is defined as being where ownership is exercised over a person; servitude involves the obligation to provide services imposed by coercion; forced or compulsory labour involves work or service exacted from any person under the menace of a penalty and for which the person has not offered himself voluntarily; and human trafficking concerns arranging or facilitating the travel of another with a view to exploiting them.

The legislation is aimed at tackling recent high profile cases where manufacturers have been found to be using companies in their supply chain that have used ‘slave’ labour – both abroad and in the UK.

What should companies do?

Of course, whilst companies are obliged to put up a statement they are not compelled to adhere to the legislation they just have to state what their policy is.

If their policy is that they are not auditing and monitoring their supply chains for signs of Modern Slavery then they run a reputational risk as the press will want to ‘out’ the companies not being proactive.

The legislation applies to medium sized companies upwards (with a turnover greater than £36m) which will mean that many of the larger companies will have a considerable number of suppliers to audit.

Some sectors, such as FMCG, are well covered in terms of  responsible sourcing and have industry Forums like Aim Progress to guide them in terms of policy, procedure and best practice. For other industries there may be a lot of ground work to cover to get compliant.

What form the auditing and monitoring will take is yet to be revealed and will vary from company to company and industry to industry.  Will the companies require suppliers to complete compliance documents? Request personnel records? Interview HR staff? Undertake site visits?

What is clear is that the early signs of problems with the supply chain and the requirements of this legislation may be found online now and going forward. The emergence of forums and sites regarding employment and jobs such as Glassdoor may reveal discontent amongst the suppliers’ work force.

So if I were looking for early warning signals of impending problems, I would identify the suppliers with the potential to breach this legislation then I would monitor closely what is being said about them online and use this as a way of identifying the potential issues, but also to prove that company has been proactive in trying to comply.

How can Igniyte help?

  • Igniyte can offer an audit of suppliers’ online reputations – a risk assessment. This is a one-off ‘online due diligence’ package which will identify potential reputational issues.
  • We can help draft the statement to be published on your website (it’s been advised by the Government that companies enlist the help of PR specialists to put this together, to ensure they don’t come under scrutiny for any wrong wording etc.)
  • Ongoing online reputation monitoring of suppliers: Monitoring for any potential risks and advising when action needs to be taken, and putting together a crisis management strategy.

If you’d like to discuss this legislation then please contact me on tel: +44 (0) 203 542 8689 or email simon@igniyte.co.uk in complete confidence.

 

 

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