Slavery may feel like a matter that should be confined to the history books but unfortunately it remains an issue in the UK today that very much needs attention and action. Figures have been reported that, over the last five years, the number of potential victims being trafficked into the UK has risen by 245%. Whilst some may argue that this increase suggests that more victims are willing to come forward for help than before, others argue that the figures have confirmed trafficking and slavery are escalating problems in the UK.
The UK has taken action in the form of the Modern Slavery Act 2015 (“MSA”), which was given Royal Assent and became law on 26th March 2015. It has been described as ground breaking legislation and it consolidated existing slavery and trafficking offences, as well as introducing new measures to tackle their existence in the UK’s workplace.
A landmark civil case concerning modern slavery has shone light on the subject in an employment law context: Galdikas & Ors v. DJ Houghton Catching Services Ltd. This is the first time that the High Court has ruled in favour of victims of trafficking against a British company. The English Court has sent out a warning signal to organisations to ensure adequate steps are taken to eradicate modern slavery and human trafficking from their supply chains.
Modern Slavery Act 2015
The Modern Slavery Act 2015 (“MSA”) aims to prevent labour exploitation and to increase the transparency of labour practises and supply chains within organisations. There is now a disclosure duty under section 54, which came into force on 29th October 2015. Larger organisations must now report annually on the steps they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains. It is purposely intended to make suppliers accountable to consumers, and to use consumer pressure to drive change within the organisation. Non compliance will no doubt have adverse consequences for a company’s reputation.
Who does the duty apply to?
This new disclosure duty applies to organisations which:
- supply good or services;
- are either incorporated in the UK or carry on business in the UK (the term ‘carries on business’ is not defined in MSA, although this is the same wording as is used in the Bribery Act 2010 and it has been suggested that a common sense approach be applied in determining whether a company or partnership ‘carries on a business’ in the UK for this purpose);
- have an annual turnover of £36million or more; and
- under transitional rules, the disclosure duty only applies to financial years ending on or after 31st March 2016.
The obligation should be fulfilled within 6 months of the end of the normal financial year.
How to comply with the duty?
The minimum that companies must do is to publish a statement on their website – the Slavery and Human Trafficking (“SHT”) statement – detailing what steps they have taken to combat slavery over the previous financial year, in all parts of their supply chain and all parts of their business. There is no prescribed form for the statement. In the words of MSA, it may include details about:
- the organisation’s structure, 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.
The statement must be approved by the company’s board and signed by a director.
There is no legal obligation to take any steps to ensure that modern slavery is not taking place. If a business has not taken any steps, the SHT statement should simply state that no steps have been taken. Whilst there is no legal obligation to take steps, only publish a statement, failure to act may still be unwise because the SHT statement must be published in a prominent place on the company’s website, which could result in loss of reputation.
How is the duty enforced?
The only power of enforcement given to the Secretary of State is the power to apply to the courts for an order requiring a company to publish a statement in accordance with section 54. In reality, the practical effect of this power of enforcement is likely to be to create adverse publicity, inevitably causing damage to business reputation and prosperity.
Galdikas & Ors v. DJ Houghton Catching Services Ltd & Ors
The facts of this case are that 6 Lithuanian claimants were supplied by DJ Houghton Catching Services Limited (the company officers were Darrell Houghton and Jackie Judge) to catch chickens on farms around the UK. They frequently worked on farms producing premium free range eggs for well-known supermarkets and food chains. The men asserted that they were victims of trafficking and claimed they were made to travel for several hours between farms without pay, housed in overcrowded and dirty accommodation, subjected to intimidation and abuse, and were paid per chicken caught, without ensuring they were earning the minimum wage.
The High Court ruled in favour of the 6 Lithuanian men and held that the claimants were owed compensation for DJ Houghton’s failure to pay the agricultural minimum wage, for the charging of prohibited work-finding fees, for unlawfully withholding wages, and for depriving the workers of facilities to wash, rest, eat and drink.
The amount of compensation due to the 6 claimants will be assessed at a future date but it is expected to run to hundreds of thousands of pounds for unpaid wages alone. Their claims for personal injury are still to be heard by the Court. Ten other Lithuanian men who were employed by DJ Houghton over the same period in similar conditions have also now brought claims, which are waiting to be heard.
The DJ Houghton case did not directly focus on the Modern Slavery Act 2015, with proceedings based on breach of contract, negligence, harassment, assault and unpaid wages, but it does provide a cautionary tale for international businesses, such as those supermarkets and food chains the farms were supplying. Claims regarding modern slavery, human trafficking or treatment of workers are likely to result in reputational damage of all of the organisations involved, irrespective of who is directly responsible for any wrongdoing.
Practical Steps
In light of MSA and the recent DJ Houghton decision, steps businesses may consider taking include:
- mapping suppliers and identifying any high risk geographies and/or activities;
- drafting and regularly reviewing a specific company policy on modern slavery and human trafficking;
- reviewing other policies that could be related to the slavery and human trafficking one, including policies on bribery, corruption and human rights;
- appointing a compliance officer who is charged with monitoring and enforcing the modern slavery and human trafficking policy;
- providing training to staff;
- considering and adopting appropriate risk management, including supplier audits and adequate supplier due diligence processes; and
- identifying key performance indicators to allow progress to be benchmarked and monitored.
KPIs should be measured and policies, procedures and risk management strategies should be annually reviewed and adapted, as appropriate, to ensure your’re doing your utmost to eradicate modern slavery and human trafficking from your operations.
If we can help all with any of the above, please do contact us on 0330 223 5253 or office@fitzgeraldhr.co.uk.
