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Modern slavery in construction supply chains: does your business comply with the Modern Slavery Act 2015?

19 September 2017 #Construction #Outsourcing & Supply Chain #Supply Chain Governance


‘Modern Slavery’ is a term which encapsulates slavery, servitude, forced or compulsory labour, and human trafficking. Recent estimates suggest that as many as 45 million people could be living in modern slavery, a problem that the Modern Slavery Act 2015 (the “Act”) was introduced to help tackle.

In this article, we consider the impact of modern slavery on the construction industry, the role of the Act, and what you should be doing to ensure compliance.

How the construction industry is affected

Modern slavery in the global construction industry is widespread. The construction industry employs approximately 7% of the world’s workforce, meaning it should be no surprise that the industry captures some part of the 20 to 45 million people trapped in modern slavery.

For a number of reasons, the construction industry is one of the most vulnerable sectors to modern day slavery. By example, there will regularly be a high demand for low-skilled, manual, low-waged work. Temporary agency work is common and supply chains are often long and complex – a single supply chain for a major contractor can consist of hundreds of sub-contractors, labour agencies and materials suppliers with complex inter-relationships. Keeping track of all these links can be difficult, leaving them open to exploitation.

On large or complex construction projects, suppliers used at the bottom of the supply chain are often unknown to management at the top. It is common for the first and second tier of the supply chain to sign up to fairly onerous agreements, but as the supply chain develops, the contractual liabilities can decrease to the point where suppliers at the bottom of the chain are not bound by terms and conditions. This means that responsibility and performance levels of such suppliers are unknown to management at the top of the chain. It is this lack of transparency that enables those wishing to hide human rights abuses to do so easily.

Common abuses of construction labourers include being forced to work for little or no money, in unsafe conditions, over very long shifts. Through treat, violence or coercion, the victim may be forced to live in inappropriate accommodation or have their passport removed from them.

The Modern Slavery Act 2015

The Act is a global piece of legislation. Its supply chain provisions seek to address the role of businesses in preventing modern slavery from occurring in their supply chains and organisations by increasing the level of transparency within them.

When drafting construction contracts or consultancy appointments, we would always recommend that wording is included which obligates contractors / consultants and each of their sub-contractors / sub-consultants to comply with the Act.

Who does the Act apply to?

Businesses are obligated under the Act if they fall within the following criteria: 

  1. the business is a commercial organisation;
  2. the business has a global turnover of over £36 million;
  3. it carries on a business, or part of a business, in any part of the United Kingdom; and
  4. the business supplies goods or services.

What must a business do to comply with the Act?

Under Section 54 of the Act, all obligated businesses must publish a ‘slavery and human trafficking statement’ for each financial year ending on or after March 2016. The statement should be published as soon as possible and within six months of each financial year end.

How can we help you?

Supply chain integrity is vital to building long term corporate value. Reputation and respect matter hugely to any brand and workforce.

The consequences of not complying with the Act include criminal legal liability under the Bribery Act 2010, the associated reputational damage of such a conviction and/or for failing to comply with the Act, and potentially a reduction in an organisations competitive advantage and ultimately their bottom line. It is therefore imperative that obligated businesses comply with the Act. Existing anti-bribery and corruption policies should be reviewed and considered as part of this process.   

To highlight compliance with legal and ethical responsibilities, and help maintain a competitive advantage over rival companies, it is becoming increasingly common for non-obligated businesses to publish a slavery and human trafficking statement to.

We have an experienced team who can provide advice and training on the Act, supply chain management, and drafting of an appropriate statement. For more information on how we can help you, please click on the following link.

 

Clarkslegal, specialist Construction lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Construction matter please contact Clarkslegal's construction team by email at constructionsector@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Victoria  Kempthorne

Victoria Kempthorne
Senior Solicitor

E: vkempthorne@clarkslegal.com
T: 0207 539 8062
M: 0791 783 1789

Contact

Construction team
+44 (0)118 958 5321