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How strong a model is the UK Modern Slavery Act?

This blog is part of our series on the Modern Slavery Inquiry which the Australian government is currently undertaking. In this blog, Dr Shelley Marshall and Daniel O’Neil examine the benefits and flaws with the UK Modern Slavery Act, which many think of as the model for a possible Australian Act. How good a model is the UK Modern Slavery Act? In particular, Dr Marshall and Mr O’Neil consider how effective is it in addressing the constant drive for cheaper goods and services in the global economy’ that ultimately motivates the ‘exploitation and abuse of workers’.

 

 Credit: Global Slavery index

Credit: Global Slavery index

 

Background

The current Inquiry into Modern Slavery aims to address one of the most pressing human rights problems of our times. The International Labour Organization estimates that, around the world, 21 million people live in conditions that amount to a modern form of slavery or forced labour.[1] Seven per cent of these modern slaves are in the European Union, North America, or Australasia.

At the time of its passing into law, the Modern Slavery Act 2015 (UK) (‘the Act’) was fêted as a major watershed in the fight against the evil referred to in its name. In summary, the Act imposes obligations on certain ‘commercial organisations’ with a turnover exceeding £36 million with respect to modern slavery in supply chains for their products.[2] In practice, the turnover threshold has resulted in some 17 000 firms being subject to these obligations.[3] This post considers the strengths and pitfalls of the Act.

 Credit: Acre resources

Credit: Acre resources

What obligations does the UK Act impose?

Perhaps the most important aspect of the Act is the statements that it requires businesses to prepare. Corporations covered by the Act must, under s 54, ‘prepare a slavery and human trafficking statement for each financial year of the organisation’,[4] that is, ‘a statement of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place … in any of its supply chains, and … in any part of its own business’.[5] These statements must be approved by the board of directors and signed by a director, placing responsibility at the highest level of the corporation. The statements must be published on the organisation’s website, if it has one. At the time, then-Home Secretary Theresa May described this reporting requirement as a ‘truly ground-breaking measure … provid[ing] a strong incentive for businesses to take this issue seriously’.[6]

While there is no legal obligation to do so, ‘cover[ing] non-UK subsidiaries in a parent company statement, or asking those non-UK subsidiaries to produce a statement themselves … would represent good practice’. [7] Likewise, as regards companies that operate through franchising arrangements, the Guide suggests that (though, again, they are not obliged to do so) franchisers covered by the Act ought to keep in mind ‘the impact on their brand of the activities of franchisees in relation to modern slavery, and in so doing report on the steps taken to ensure the franchise as a whole is free from modern slavery’. (Of course, any franchisee that meets the turnover threshold will themselves be required to produce a statement).[8]

How strong is this requirement to prepare statements?

Critics have pointed out that the requirement in s 54 may not, in actual practice, be terribly stringent — it would be perfectly feasible, for instance, for companies to simply ‘publish a cursory statement under section 54 or report that “the organisation has taken no such steps”’.[9] The Home Office appears to be counting on companies’ fear of such reputational damage as may result from a disappointingly brief statement signed by a director and published on a firm’s website to incentivise such companies to take the anti-trafficking due diligence steps contemplated by the Act, rather than on statutory compulsion as such.[10] For example, Schona Jolly QC, a leading human rights practitioner at the London bar, has wondered whether ‘[t]he flexibility permitted to companies’ may ‘mean[] that there is a real danger that the provisions will become tokenistic’.[11]

What happens when a business identifies slavery?

When British businesses identify an instance of slavery in their supply chain, the Guide recommends that a business simply phone the police in the conventional manner (ie, dialling ‘999’) if the abuse occurs in the United Kingdom.

If, however, the abuse occurs outside the United Kingdom, businesses are advised to ‘engage with local NGOs, industry bodies, trade unions or other support organisations’, or perhaps with ‘local Government and law enforcement bodies’, depending on ‘which approach would produce the safest outcome for the potential victims’.[12] British businesses are reminded of ‘the economic influence and control’ they may wield ‘over those who may be committing these crimes’,[13] which again draws the focus back to the strategic use of commercial incentives as a tool to combat modern slavery.

Loopholes

Unfortunately, the Act does not cover supply chains in the production of goods that are not sold and distributed in the UK. This means goods might be produced for a UK brand under slavery conditions, but the Act does not cover this instance of slavery because the good is sold outside of the UK. The Anti-Slavery group has been particularly critical of this loophole. Klara Skrivankova writes:

It is a shame then that a loophole has been identified which allows companies hide their supply chains overseas as long as the goods they produce don’t end up in Britain. This, for example, means letting off the hook companies building sites for the FIFA World Cup in Qatar. Finally, a major shortcoming in the Act is the lack of an extraterritoriality of slavery offence. This means that a British citizen could abuse someone overseas and not be held to account back in UK.[14]

How enforceable is the UK Modern Slavery Act?

One strength of the UK Modern Slavery Act is that it is enforceable by courts. The obligations the Act’s supply chain provisions impose ‘are enforceable by the Secretary of State’ against companies in England and Wales by way of ‘civil proceedings in the High Court [comparable in powers and jurisdiction to the civil division of an Australian state Supreme Court] for an injunction’ to compel compliance.[15] Where applicable, an order of ‘specific performance of a statutory duty’ may be sought by the Secretary.[16]

The enforceability of the Act is made potentially more effective by making individuals within a firm criminally liable for an offence. If, under s 1 of the Act, ‘the person requires another person to perform forced or compulsory labour and the circumstances are such that the person knows or ought to know that the other person is being required to perform forced or compulsory labour’ they can be found criminally liable.

 Credit: Huddersfield Daily Examiner

Credit: Huddersfield Daily Examiner

The first criminal conviction in British history for a human trafficking offence was handed down in January 2016, when the owner of a bed-manufacturing business headquartered in West Yorkshire was sentenced to 27 months in prison for conniving in trafficking men from Hungary who were then ‘detained in overcrowded, squalid conditions, without freedom to travel and forced to work 10 to 16 hours a day, often for up to seven days a week and for less than £2 a day’.[17]

Though the fact that there was a criminal conviction is heartening in some ways, it was particularly concerning that ‘human rights due diligence processes’ did not help to detect this grave human rights breach. Indeed, one of the more distressing facts to emerge during Rafiq’s trial was that none of the retailers who marketed his beds in Britain ‘succeeded in detecting any issues’ with Rafiq’s business practices, despite each such company having ‘recently undertaken some form of ethical supply chain audit’.[18]

This failure does not augur well for the investigatory and reporting requirements imposed by the Act as its solution to human trafficking in supply chains: if retailers were unable to detect modern slavery in supply chains located wholly within Britain, what hope have they of discovering forced labour in a supply chain that spans continents?

Nevertheless, the Act’s extraterritorial reach provides a basis for the extension of its provisions to companies ‘not physically present in, or [that] do not consider themselves as having a direct link with, the UK’.[19]

Care for victims?

Given how egregious the breaches of human rights covered by the Act are, it is highly desirable that identification of forced labour result in the provision of services and care for victims. However, the Modern Slavery Act has been subject to criticism from rights groups ‘for focusing too much on law enforcement and not enough on the needs of victims’.[20] ‘There’s no aftercare provision at all; after 45 days people are thrown on to the street’, commented Anthony Steen, then the Home Secretary’s special envoy for human trafficking and chair of the Human Trafficking Foundation, at the time of the Act’s passage through Parliament.[21]

Policy contradictions

A further criticism is that at the same time as passing the Modern Slavery Act, the UK government has taken other legislative steps which increase the likelihood of forced labour occurring. One example is the so-called ‘tied visas’ for domestic workers in wealthy households. The visas are ‘tied’ in the sense that an individual’s permission to remain in the United Kingdom is ‘tied’ to their continued employment by their sponsor.[22] A spokeswoman for Kalayaan, a London-based NGO representing foreign domestic workers, has condemned the persistence of these visas as ‘a shameful gap in the Modern Slavery [Act]’.[23] Some 16 000 such domestic workers are brought to Britain each year, often working in the very heart of London,[24] and typically subject to ill-treatment: 96 per cent are not permitted to leave their employer’s home without supervision, and 74 per cent faced some form of psychological abuse from their employer.[25] An attempt to amend what ultimately became the Modern Slavery Act in order to allow those on tied visas to legally change employers was defeated in the House of Commons.[26]

Part of the shrinking space for labour law?

Judy Fudge, a legal academic at the University of Kent, has suggested the Modern Slavery Act is, in fact, an example of the downsizing of labour law. By shifting the onus of enforcement and compliance to the criminal law, the government may thereby avoid ‘strengthening employment law and employment rights’, and so abuses such as those suffered by tied-visa workers may be safely ignored.[27] The regulatory net thusly set up catches ‘marginal players rather than tackl[ing] the social processes that normalise [the] exploitation’ at the heart of modern slavery.[28]

The Ethical Trading Initiative joined this chorus: ‘The criminal justice system is a hammer. The problem is, modern slavery is not a nail’.[29] The Act, they observe, is unlikely to address ‘the constant drive for cheaper goods and services in the global economy’ that ultimately motivates the ‘exploitation and abuse of workers’, though they applaud the Act’s supply-chain provisions as a step in the right direction towards ‘making these layers of abuse and exploitation more visible and making companies more accountable’ for their connivance in these abuses.[30]

In a later blog piece in this series we consider what modifications to the Modern Slavery Act 2015 (UK) would be required in Australia to avoid the problems identified in this piece.

About the authors:

Dr Shelley Marshall is an international expert on corporate accountability and business and human rights. She is the current secretariat, together with Brynn O’Brien, of the Corporate Accountability Network of Australia.

Daniel O’Neil is a second-year Juris Doctor student at the University of Melbourne.

 

[1] International Labour Organization, Statistics on Forced Labour, Modern Slavery and Human Trafficking (2017) <http://www.ilo.org/global/topics/forced-labour/policy-areas/statistics/lang--en/index.htm>.

[2] Section 54(2); Annie Kelly, ‘The UK’s New Slavery Laws Explained: What Do They Mean for Business?’, The Guardian (online), 14 December 2015 <https://www.theguardian.com/sustainable-business/2015/dec/14/modern-slavery-act-explained-business-responsibility-supply-chain>.

[3] Amelia Gentleman, ‘UK Firms Must Show Proof They Have No Links to Slave Labour under New Rules’, The Guardian (online), 28 October 2015 <https://www.theguardian.com/world/2015/oct/28/uk-companies-proof-no-links-slave-labour-supply-chain>.

[4] Section 54(1).

[5] Section 54(4).

[6] Home Office (UK), Modern Slavery and Supply Chains: Government Response (2015) 3 <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/448200/Consultation_Government_Response__final__2_pdf.pdf>.

[7] Ibid 8.

[8] Ibid 8.

[9] Elise Groulx Diggs, Catherine Meredith and Vera Padberg, Doughty Street International, The Modern Slavery Act 2015: Corporate Reporting Requirements to Tackle Slavery in Supply Chains (29 October 2015) <http://www.doughtystreetinternational.com/blog/modern-slavery-act-2015-corporate-reporting-requirements-tackle-slavery-supply-chains>.

[10] Home Office (UK), Transparency in Supply Chains Etc: A Practical Guide, 16 <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/471996/Transparency_in_Supply_Chains_etc__A_practical_guide__final_.pdf>.

[11] Halsbury’s Law Exchange, Modern Slavery Act 2015 — First Steps in the Right Direction (1 May 2015) <http://www.halsburyslawexchange.co.uk/modern-slavery-act-2015-the-first-steps-in-the-right-direction/>.

[12] Ibid 16.

[13] Ibid 16.

[14] Klara Skrivankova, Anti-Slavery, Analysis of Modern Slavery Act (27 March 2015) <https://www.antislavery.org/analysis-modern-slavery-act/>.

[15] Section 54(11).

[16] Ibid.

[17] Michael Quayle, Freshfields Bruckhaus Deringer, Modern Slavery — Closer than You Think? (11 April 2016) <http://humanrights.freshfields.com/post/102dtrc/modern-slavery-closer-than-you-think>.

[18] Ibid.

[19] Abigail McGregor and Jehan-Philippe Wood, Norton Rose Fulbright, Challenges for Australian Businesses Arising from Modern Slavery Legislation (March 2015) <http://www.nortonrosefulbright.com/knowledge/publications/126258/challenges-for-australian-businesses-arising-from-modern-slavery-legislation>.

[20] Halsbury’s Law Exchange, Modern Slavery Act 2015 — First Steps in the Right Direction (1 May 2015) <http://www.halsburyslawexchange.co.uk/modern-slavery-act-2015-the-first-steps-in-the-right-direction/>.

[21] Emily Dugan, Reuters, ‘Government’s Modern Slavery Bill Will “Fail Victims and Spare Criminals’, The Independent on Sunday (London), 14 December 2013.

[22] Daphne Demetriou, ‘“Tied Visas” and Inadequate Labour Protections: A Formula for Abuse and Exploitation of Migrant Domestic Workers in the United Kingdom’ (2015) 5 Anti-Trafficking Review 1, 4 <http://www.antitraffickingreview.org/index.php/atrjournal/article/view/81/129>.

[23] Kate Roberts, Modern Slavery Bill: Migrant Domestic Workers Fall through the Gaps (24 March 2015) <https://www.opendemocracy.net/beyondslavery/kate-roberts/modern-slavery-bill-migrant-domestic-workers-fall-through-gaps>.

[24] Katie Nguyen, ‘Britain’s Tied Visa Rules Fuel Abuse of Live-In Maids, Nannies’ (28 May 2015) <http://uk.reuters.com/article/uk-rights-domesticworkers-britain-idUKKBN0OD0FD20150528>.

[25] Divya Talwar and Catrin Nye, Government Visa Rules ‘License Domestic Slavery’ (31 March 2014) <http://www.bbc.com/news/uk-26769349>.

[26] Frances Perraudin, ‘Modern Slavery Bill Amendment Rejected by MPs’, The Guardian (online), 17 March 2015 <https://www.theguardian.com/world/2015/mar/17/modern-slavery-bill-lords-amendment-rejected-mps>

[27] Judy Fudge, The Dangerous Appeal of the Modern Slavery Paradigm (25 March 2015) <https://www.opendemocracy.net/beyondslavery/judy-fudge/dangerous-appeal-of-modern-slavery-paradigm>.

[28] Ibid.

[29] Cindy Berman, Modern Slavery: If I Had a Hammer (11 December 2014) <http://www.ethicaltrade.org/blog/modern-slavery-if-i-had-hammer>.

[30] Ibid.