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Breaking the chain: upcoming changes in Modern Slavery Act compliance

Posted: 15/12/2020

In September 2020, the Government published the response to its consultation on transparency in supply chains, promising new measures to toughen up the requirements under the Modern Slavery Act 2015 (MSA). We explore below what these changes will mean for those operating in the social housing sector.

Modern slavery in the UK

Modern slavery may not seem immediately visible here in the UK. However, the pandemic and recent scandals such as those involving the garment industry in Leicester and County Lines show that it’s very much prevalent in our society. Furthermore, some people anticipate that Brexit could lead to increased instances of modern slavery in the UK.

Modern slavery is defined as the recruitment, movement, harbouring or receiving of children, women or men through the use of force, coercion, abuse of vulnerability, deception or other means for the purpose of exploitation. A modern slave may be paid, though at a low rate, or may not have control of their own travel or finances.

Most commonly, people are trafficked into forced labour in industries such as agriculture, construction, hospitality, manufacturing and cash payment services such as car washes. Victims can also be trafficked for sexual exploitation or domestic slavery, or forced into crimes such as cannabis production or begging.

Upcoming changes to the MSA

As a brief reminder, section 54 of the MSA introduced a requirement for large businesses to report on modern slavery risks in their operations and supply chains. The reporting requirements apply to all organisations that:

  • are incorporated or are a partnership (including charities and registered societies);
  • carry on business or part of a business in the UK;
  • have a turnover of £36 million or more; and
  • supply goods or services.

Organisations that are caught by the requirements must publish an anti-modern slavery and human trafficking statement prominently on their website setting out the steps they have taken to ensure that slavery and human trafficking is not taking place anywhere in their business, including their supply chains.

However, in light of criticisms that the current regime "lacks teeth", especially when compared to requirements that have been introduced to tackle modern slavery and human trafficking outside of the UK, the Government now plans to strengthen the current regime as follows:

  • Content – while the current guidance provides a non-exhaustive list that organisations may cover in their statement, the Government now proposes to mandate the areas to be covered. This will include detail on:
    • an organisation's structure, its business and its supply chains;
    • its policies in relation to slavery and human trafficking;
    • its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
    • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
    • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
    • the training about slavery and human trafficking available to its staff.
  • Extension to the public sector – the Government is also set to extend the section 54 obligations to require public bodies with a budget of £36 million or more to produce a statement. This will affect local authorities and may need to be considered by housing associations when they are contracting with public bodies, which will be subject to assessment on ensuring transparency in their own supply chains.
  • Approval and signature of the statement – the proposed changes would convert current best practice (as contained in guidance) into law and require the statement to include the date of its approval by the board as well as the date it was signed. Any group wide statements must also include the names of the group entities that are covered by the statement.
  • Single reporting deadline - currently organisations must publish their statement "as soon as possible", at most within six months of the financial year end. The proposals would introduce a statutory reporting deadline of 30 September each year with organisations reporting on the same 12-month period between April to March, to make it easier to hold organisations to account for progress (and non-reporting).
  • Government-run reporting service – organisations will be required to not only publish statements on their website with a link in a prominent place on their homepage, but also to publish statements on a Government website to help increase transparency, accountability and accessibility.
  • Enforcement - finally, the Government is looking at the enforcement provisions for failure to publish a statement, including a new enforcement body. It is also considering civil penalties but notes that this would require legislative changes. It intends to issue further updates on enforcement options in "due course".

What housing associations should be doing now

Before several of these changes can be implemented, the Government will need to make legislative changes, after which it intends to publish new guidance. In the meantime, it will be updating the existing guidance to help organisations prepare. The timescales for this are currently unclear and we will provide a further update in due course.

Housing associations should already be taking measures to address modern slavery risks and concerns through their procurement processes. This includes scrutiny of suppliers and ensuring they have appropriate contractual provisions in place to terminate if modern slavery risks are identified.

Relevant staff should also be trained at identifying and reporting modern slavery and human trafficking risks, both in relation to supply chains and more generally in relation to residents and the wider community. Warning signs of modern slavery could include evidence of restricted freedoms, overcrowded or substandard accommodation, lack of control over finances, workers looking unkempt, anxious or showing signs of abuse, distrust in authorities and poor working conditions.

Begin preparing now

We have compiled a short list of actions you can start taking now to prepare for these changes, including:

  • review your modern slavery policy and ensure this aligns with the latest requirements;
  • review your whistleblowing policy and communicate it widely so employees are aware of what they can do if they suspect modern slavery is taking place;
  • ensure staff are trained regularly and can identify ‘red flags’;
  • review and amend your procurement processes, contract management processes, ordering and payment processes and any related documentation;
  • if you haven’t already, map your supply chains and carry out risk assessments on your supply base; and
  • consider investigating your high-risk suppliers, including direct engagement with workers if possible.

For public sector bodies, this will be a whole new reporting obligation, but we expect guidance to be published soon to help them meet the new requirements.

We can provide further training and advice on what best practice looks like to ensure compliance with anti-modern slavery and human trafficking requirements.

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Penningtons Manches Cooper LLP