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What Is the UK Modern Slavery Act & How to Comply with It

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What Is the UK Modern Slavery Act?

The UK Modern Slavery Act is a sweeping piece of legislation that seeks to regulate and address the issues of modern-day slavery in business operations and their global supply chains.

It is estimated that 24.9 million victims around the world are victims of human trafficking, forced labor, and/or child labor. This unacceptable number is driven by $150 billion dollars in profit solely generated every year as a result of this egregious human rights violation.

In this article, we will review the history of the Modern Slavery Act 2015, explore who it applies to, look at what it seeks to fix, and finally examine what companies can do to remain compliant.

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History of the Modern Slavery Act 2015

You may believe that slavery is something from the history books. But in today’s world, unbelievably, 167 countries worldwide still engage in some form of modern slavery, affecting an estimated 46 million people worldwide.

Modern slavery is still prevalent today and mainly takes the form of human exploitation (forced labor, child labor, and human trafficking).

Looking at the stats as reported by the Global Slavery Index in 2018, the top 10 countries in the world with the highest number of slaves are:

  • India – 7,989,000
  • China – 3,864,000
  • North Korea – 2,640,000
  • Nigeria – 1,386,000
  • Iran – 1,289,000
  • Indonesia – 1,220,000
  • Democratic Republic of Congo – 1,045,000
  • Russia – 794,000
  • Philippines – 784,000
  • Afghanistan – 749,000

Looking at the staggering numbers, the UK Modern Slavery Act was put in place as a reaction to the 2013 UK governments estimate that there were between 10,000 and 13,000 victims of modern slavery in the UK alone.

Modern Slavery Act 2015 Requirements

The Modern Slavery Act currently impacts over 12,000 companies in the United Kingdom.

The Modern Slavery Act 2015 applies to UK companies and subsidiaries that have an annual turnover of £36 million. The UK-based companies that fit this criterion have annual reporting requirements to the UK government that include a Transparency in Supply Chain (TISC) clause.

This act has an extraterritorial effect too, meaning it also applies to commercial organizations (no matter where they were formed in the world) if they do business in any part of the UK and hit the annual turnover threshold.

Companies under the Act must do their due diligence to eliminate modern-day slavery in their business operations and supply chains.

This includes an annual report within 6 months of their financial year-end. These statements are published annually, are required to be on the company’s website, and must include:

  • A human trafficking statement.
  • Due diligence processes.
  • Risk assessment and management in their operations, organization structure, and supply chains.
  • Key performance indicators to measure actions taken to prevent modern slavery.
  • Staff training on modern slavery and human trafficking.

1. Risk Assessments of Human Trafficking and Slavery in the Supply Chain

UK companies must undertake their own risk assessment, reviewing their own operations and global supply chains.

This entails mapping out their supply chains and identifying areas (countries and industry sectors) where there is the potential for human trafficking and slavery to occur (e.g. Uyghurs in Xinjiang).

Also, teaching staff and giving them training on modern slavery, and signs to help identify it.

Companies are also expected to communicate with their suppliers, requiring them to fill out questionnaires on operational activities that have a high probability of modern slavery risks.

2. Maintain Systems of Corrective Actions

These companies are also required to maintain applicable laws and have in place systems of corrective actions.

Section 54 (1) of the Modern Slavery Act 2015 states that corrective action must be implemented to eliminate practices associated with slavery and human trafficking within business.

These corrective action steps are laid out in the annual statement and can include specific elements such as the whistleblowing policy.

The whistleblowing policy protects whistleblowers and anyone that notices any potential issues. These people should be able to report on the transgression without fear of repercussions.

This policy includes when the policy should be used, how an issue is to be raised, and what happens when an issue dealing with slavery is uncovered.

3. Conduct Audits to Find Supplier Non-compliance

Part of the modern slavery statement of each company needs to explain how they conduct audits and how they identify supplier non-compliance.

Companies are responsible for making sure their suppliers and service providers are not in violation of the Modern Slavery Act.

Companies need to ask their suppliers to provide a copy of their Modern Slavery statement and conduct rigorous audits on those that fall into high-risk categories.

Operations, the sourcing of labor and materials, and suppliers further down the supply chain all need to be investigated and examined for any potential threats and violations.

4. Uphold a Supplier Code of Conduct

Companies must also have a Supplier Code of Conduct and make it available to their business suppliers.

It is based on the requirements of the International Labor Organization and the United Nations Guiding Principles on Business and Human Rights.

This statement outlines the principles which a company expects its suppliers to uphold.

It covers things like a zero tolerance policy for forced labor (labor should be entered into out of the person’s own free will) and that working conditions should be safe and accompanied by an appropriate living wage.

One of the mitigation steps could be for a relevant supplier has a responsibility to answer a self-assessment questionnaire every financial year as part of an assessment to determine the risk of modern slavery in their supply chain.

5. Perform Due Diligence within Supply Chain Risk Management 

One of the requirements is that companies perform appropriate due diligence within their  supply chain risk management processes.

In the supply chain (the flow of goods and services from businesses and locations), there are many opportunities for modern slavery violations to occur.

By performing due diligence, the pressure is put on the companies to prove that they are taking all necessary steps to identify and prevent any incidences of modern slavery in their operations and supply chains.

In fact, the Joint Committee on Human Rights of the UK Parliament published a report recommending that “reporting on due diligence for all human rights” be mandatory for large companies. This includes having a process for monitoring and enforcing consequences if a company is found to be non-compliant.

The world is watching and further demanding that large companies uphold professional business conduct. 

What You Can Do to Remain Compliant

Every year companies need to provide a modern slavery statement to remain compliant.

The statement is an explanation of how a company took steps to prevent human trafficking and modern slavery from occurring in their business operations and supply chains during the previous financial year.

Actions such as doing their due diligence, conducting audits and risk assessments of their operations and supply chains, working with stakeholders and the board of directors to ensure that every measure that is being undertaken is appropriately reported.

The UK Government has commissioned an independent review of the Modern Slavery Act and December 2021, produced a final report focused on mandating as opposed to guiding activities. It looks to introduce potential financial penalties. 

Exiger’s Supply Chain Explorer is a tool that allows companies to quickly identify threats to their global supply chain management with just one click, thus allowing you to focus on the required mitigation measures.

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Secure Your Supply Chain with Exiger

The UK Modern Slavery Act 2015 was put in place to eliminate the risk of modern-day slavery in business operations and global supply chains.

Companies must provide their annual report according to the UK Modern Slavery Act 2015 and its Transparency in Supply Chain (TISC) clause.

If your company does £36 million in annual revenue, and you do business in the UK, you are legally required to comply with these regulations. Fortunately, Exiger can help you navigate these waters and mitigate your risks while complying with the Act.

Don’t put your company in jeopardy. Protect your business by working with Exiger to audit your entire supply chain and keep your business protected, compliant and profitable.

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