Modern Slavery Update
As you may be aware, the Modern Slavery Act 2015 (the Act) introduced changes throughout the UK in regard to the need for increased transparency in supply chains. While not all of the Act impacts Northern Ireland, what follows is relevant for Northern Ireland (and GB) purposes.
But how is this relevant to my business?
We are now in the second year of reporting under the Act, which requires any organisation in any part of a group structure that supply goods or services with a minimum turnover of £36m to produce a slavery and human trafficking statement each financial year. This statement must appear on your external website and there must be an internal audit process. Additionally, both should be adapted annually to reflect the changes and improvements which the business has made in the previous financial period.
Moreover, even if your business turnover is less than £36m – you are undoubtedly a consistent part of another entities 'supply chain' who is bound to report under the Act – so you will be increasingly obliged to respond to 'Modern Slavery Act Questionnaires' each year. How to, when to, and what obligations you are exposed to, is unique to each business both in GB and NI.
Unfortunately for businesses in Northern Ireland, the Act remains unclear, underdeveloped and subject to interpretation in many areas. This is as a result of the limited guidance in the legislation and (so far) a lack of case law.
However, the UK Government has recently published its 2018 UK Annual Report on Modern Slavery (the Report). The Government outlines that there are increasing examples of good practice, including some companies implementing the 'Employer Pays' principle to prevent worker-paid recruitment fees which can contribute to debt bondage. However, the Government recognises that more action is required.
As such, the UK have collaborated with the US, Canada, Australia and New Zealand at the UN General Assembly in September 2018 to jointly launch the 'Principles to Guide Government Action to Combat Human Trafficking in Global Supply Chains' with.
These Principles commit endorsing countries to:
1. take steps to prevent and address human trafficking in Government procurement practices
The Government's Report has indicated that the future response may include:
1. the Home Office writing to the Chief Executives of UK businesses reiterating the action required to report under the Act
Additionally, the Home Office have recently announced that they are set to launch an independent review of the Act. This decision was made in response to its recent corporate report that discovered that the annual economic and social costs of modern slavery for the UK has totalled £4.3 billion. The Government's independent review seeks to improve the UK's ongoing response and accelerate enforcement of breaches, as well as encourage progress made by the Government and businesses to end modern slavery.
A key focus of the review will be to consider what more can be done to strengthen the current legislation and minimise the risk that the goods and services available in the UK are produced through forced labour and slavery. In particular there will be emphasis placed on reviewing transparency in supply chains to ensure compliance and to drive up the quality of statements produced by eligible companies.
The review will produce a final report by the end of March 2019. Therefore, it is important UK businesses are prepared and confident in their modern slavery procedures.
With the recent publication of the Modern Slavery Report and the upcoming legislative review, it is a good opportunity to review current procedures in your business to ensure compliance in advance of any more stringent measures being implemented.
We will continue to keep you updated on developments in this area so that you can properly prepare and take the necessary steps to ensure modern slavery compliance within your business and its supply chain.
If you require guidance on your obligations under the Act; or assistance in understanding how you should respond to a questionnaire received from a key customer in the supply chain, please contact any member of the specialist team at A&L Goodbody.
- The Government Amends Government Regulation on Foreign Ownership in Insurance Companies
- Trends in Medium- and Long-Term Incentive Plans for Senior Executives in Spain
- What is RICO?
- Financial Analysis Unit Provides Guidelines for the Efficient Application of General Instruction No. 59/2019
WSG Member: Please login to add your comment.