How will the Modern Slavery Act 2015 affect small businesses?
The Modern Slavery Act was passed in March 2015 and part of it requires businesses to ensure that they have no forced labour or human trafficking in their business or supply chains.
17 April 2015
What has been enforced as part of the Modern Slavery Act?
This means that businesses over a certain size must ensure that at no point in their supply chain is anyone being exploited or enslaved to work. Large businesses will have to publish an annual statement which discloses what steps have been taken to ensure that slavery and human trafficking is not taking place in any of its supply chains.
But this means that suppliers of suppliers of suppliers, no matter how far down the chain, must ensure the same thing. If you are a small company who provides goods to a larger company, you must ensure that anyone who supplies you also doesn’t engage in any type of exploitation.
It can be difficult to work out who is doing what when purchasing products or services. For example, you create something that has multiple components that are sourced from various different manufacturers around the world. Have you checked to see that they are not exploiting their workers? Have you checked who provides their materials to produce what you have bought?
It can become a rabbit warren of investigations ensuring that you don’t put your contract with a larger company at risk. And if it’s discovered that somewhere down a supply chain of a large company there is modern slavery or exploitation, the large company will have committed a and will be fined. This may result in the large company, who you supply, suing you for not checking your suppliers.
Who is responsible for complying with the Modern Slavery Act?
Everyone is responsible in the fight to eradicate slavery, human trafficking and exploitation anywhere in the world. Businesses at the top of a supply chain can commit offences because of what happens at the bottom.
Slater and Gordon advises small businesses to:
- Ensure that they are aware of turnover thresholds to see if they are obligated to report under the Modern Slavery Act 2015.
- Immediately begin to review supply contracts and the policies and practices of their contractors and sub-contractors in their supply chain, identifying areas for improvement.
- Look at other protective measures such as the introduction of anti-slavery clauses in to relevant contracts.
- Recognise that the duties upon a business to report are enforceable by the Secretary of State.
- Recognise that inadequate investigations will likely result in significant reputational damage, financial losses and disruption to supply chains.