The Modern Slavery Act has taken effect – but non-compliance among UK construction firms is still an issue.
The Modern Slavery Act 2015 was the UK’s latest step towards eliminating slavery in all its forms.
Since then, many UK construction companies have reviewed their own businesses and supply chains and published statements about the approach they have taken.
There are between 10,000 and 13,000 victims of modern slavery in the UK, with 45 million estimated victims across the world according to the Home Office. The construction sector employs a significant proportion of the global workforce and is one of the sectors identified as high risk for modern slavery practices.
In a 2015 research report by the European Union Agency for Fundamental Rights, construction was number two on the list of economic sectors in the EU most prone to labour exploitation.
This high level of risk is not surprising given that construction requires a fully flexible and often temporary labour force to meet constantly fluctuating demand. That creates greater cost certainty for businesses but contributes to a lack of transparency in the labour supply chain.
Fighting on two fronts
Looking at this in more detail, tackling the risk of modern slavery in the construction sector is particularly challenging on both of these fronts:
- The supply of a flexible labour force: The prevalence of outsourcing of workforces and the use of temporary migrant workers means main contractors often have little control or transparency over the identity of its workforce or their working and living conditions. Although the contractor may operate in accordance with its legal requirements, the risk of unethical recruitment practices prevails where the driver is cost.
- The supply of building materials: In the construction sector, traceability can often be a problem because there are so many links in this fragmented chain. Whether it’s bricks, timber, glass, granite or a range of other products, it’s often difficult to trace raw materials – and many are produced in countries where forced and child labour is rife.
What are the legal obligations under the act?
The Modern Slavery Act makes it a criminal offence for a person or organisation to engage in any form of ‘modern slavery’ practices.
This is not new, of course – rather, the act brought together various earlier prohibitions and made a strong statement about the UK government’s commitment to ending modern slavery in all its forms.
Where it goes further is by requiring certain larger organisations (with an aggregate annual turnover not less than £36m) to publish an annual statement detailing the steps they have taken to ensure slavery and human trafficking is not taking place.
Crucially, the Slavery and Human Trafficking Statement (the SHT statement) must cover the organisation itself – including parts of the business not based in the UK – and also its entire supply chain. The SHT Statement should be approved by the organisation’s board of directors and signed by a director (or equivalent). A link to the SHT statement should be published in a prominent place on the organisation’s website.
While it is estimated that some 12,000 UK companies are required to publish an SHT statement, only around 10 per cent have done so to date.
Risk of non-compliance
Although the government can take out an injunction to enforce publication, there is no other prescribed penalty for failing to publish an SHT statement.
Technically, it is even possible to comply with the act by simply publishing a statement that your organisation has taken no steps to prevent slavery in the business or its supply chain.
The real risk in not taking positive steps to comply with the act lies in the reputational damage it might cause to a brand if the anti-slavery commissioner names it as non-compliant, or an investigation was to reveal modern slavery offences.
Reports of ‘no-notice’ site inspections by public authorities have hit the headlines. Increasingly, pressure groups are also challenging companies directly in order to blow the whistle on human rights abuses.
Failing to engage with the supply chain to put the right checks and balances in place may lead to loss of future business as developers are increasingly asking for such assurances during the tender process.
Andreas Steffensen is an associate at Gowling WLG