An end to forced labour?

27th October 2017

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Two years on, what has been the impact of the Modern Slavery Act? Colleen Theron reports

New global slavery statistics released in September 2017 state that an estimated 40.3 million people were victims of modern slavery in 2016.

The report calculates that, of 24.9 million victims of forced labour, 16 million are in the private economy, 4.8 million are in forced sexual exploitation and 4.1 million are in state-sponsored forced labour, including mandatory military conscription and agricultural work. Women and girls accounted for 71% or 29 million of all the victims in 2016.

Modern slavery is prevalent in virtually every sector across the globe. In the past few years, investigations into commodities tainted by slavery have included prawns from Thailand, debt bondage and forced labour in the global electronics industry and claims of the trafficking of migrant workers into the Scottish and Irish fishing industries.

The most recent media reports highlight the issue of child labour and debt bondage as a form of slavery in granite. Habitat and John Lewis, as a result of the report and pending further investigation, made a decision to remove black/star galaxy granite from sale.

In a bid to combat, or at least recognise and tackle the scale of the problem, the UK introduced the Modern Slavery Act 2015, which is the first piece of legislation to punish anyone found guilty of human trafficking.

The act introduced a provision on transparency in supply chains (TISC). Section 54, also known as the TISC clause, which requires that businesses meeting the requirements of the act have to publish an annual modern slavery and human trafficking statement.

Who does legislation apply to?

Commercial organisations that carry on all or part of a business in the UK and supply goods or services with a turnover equal to or more than £36 million are subject to the disclosure requirement.

The act does not restrict the requirements to listed or large companies, nor is it limited by sector or product.

What is modern slavery?

There is no single definition in the act. It defines the offences of ‘slavery, servitude and forced or compulsory labour’ and ‘human trafficking’.

How has business responded ?

The Business & Human Rights Resource Centre published an analysis of company statements under the UK Modern Slavery Act, concentrating on the performance of the FTSE 100 as a litmus test of business action to combat slavery.

The analysis revealed patchy compliance to the act: a small number of leading companies have produced rigorous statements, but there was no company that received their top score. Only 15 (56%) of the company statements examined fully and explicitly complied with the minimum requirements of the act.

While the report recognises that a number of companies are revising their practices and procedures to drive change, it states that there is still a long way for firms to progress. It also highlights the decisive role that company leaders can play in setting the culture of the company to tackle the eradication of slavery. However, it acknowledges that the act is driving some change.

In 2016, CLT envirolaw undertook some research to see how businesses were responding to the act and implementing its requirements.

While over three out of four respondents were aware of the act, there were still 14% that had not heard of it, or were unsure of its existence. 85% of respondents firmly stated that they were aware of the act; however, only one in four felt they had sufficient awareness in relation to what the act requires.

This indicates not only a lack of awareness-raising in relation to the act but also a lack of detail around its implementation and the necessary support that businesses require to effectively challenge slavery.

While the act does not set out what specific due diligence systems businesses should have in place, one thing that is immovable is the requirement for companies to produce a statement. In spite of this, 61% of companies either did not have a statement in place, or were unable to clarify whether or not a statement was in place.

Some 46% of respondents who were aware of the act had yet to produce a statement. This means almost 50% of firms are failing to adhere to the act. Some companies may not have completed their reporting cycle as of the date of the research and so may not have been required to produce a statement, which could affect the percentage of companies reported to be failing to adhere to the act. (All firms were obliged to have produced their statement by 31 September 2017).

While there is always a level of internal risk, that risk increases throughout each tier of the supply chain. As a result of this, many organisations are working to improve the traceability of products, so ethical trade programmes can begin to leverage practices on a more global scale.

Unfortunately, the lack of implementation internally by businesses was echoed in their commitments to supply chain management, with three out of four companies not following their commitments of the act through to the lower tiers of their supply chain.

Some 47% were unaware or unable to clarify whether supply chain engagement occurred. Research by Ergon Associates confirms the failings of companies to report on due diligence.

Media scrutiny and legal cases

The first reported conviction of a UK-based business owner for a human trafficking offence since the inception of the Modern Slavery Act was in January 2016.

Mohammed Rafiq, the owner of UK bedmaking business Kozee Sleep, was convicted of conspiracy to traffic. Rafiq’s conviction followed that of two Hungarian gang-masters who were found guilty of supplying the UK factories run by Kozee Sleep and its subsidiary Layzee Sleep with slave labour.

The gang-masters promised Hungarian nationals good wages and housing if they travelled to the UK. Instead, the workers were detained in overcrowded, squalid conditions, without freedom to travel, and forced to work 10 to 16 hours a day, often for seven days a week, and for less than £2 a day. The court concluded that Rafiq had knowingly employed these trafficked men and “went along with their exploitation as a slave workforce”.

Earlier this year, two brothers from Nottingham were jailed for six years on account of modern slavery. The brothers recruited 18 vulnerable men from Poland to work at a Sports Direct warehouse.

In another case involving the trafficking of Lithuanian men to catch chickens for the ‘Happy Eggs’ brand, a landmark settlement of more than £1m in compensation and legal costs was reached. The deal was the first settlement of a civil claim against a British company in relation to modern slavery.

We have also seen a series of lawsuits being launched by residents in California against Nestlé, Mars and Hershey, claiming that businesses that have been linked to slave labour have deceived consumers through inadequate public disclosures, demonstrating that consumers are willing to take corporate accountability into their own hands.

These cases should provide a cautionary tale for global business. Kozee Sleep was a significant supplier to two key high-street brands and Happy Eggs is a brand that is prevalent in the supply chains of many supermarkets. On the face of it, the act only applies to larger companies that meet the threshold, but to be able to understand the risk in their supply chains, companies are having to carry out due diligence across their supply chains.

Increasingly, it is common for companies to require suppliers to confirm that they comply with the act and that those below them do too. This may leave many smaller companies with little choice but to be proactive to maintain their relationships with larger organisations.

Given the potential reputational impact to companies where modern slavery is uncovered in their operations, taking this issue seriously may call for more than a box-ticking exercise.

Colleen Theron is the director of CLT Envirolaw. She is an environmental lawyer and consultant


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