Supply chain · 30 March 2016

Modern Slavery Act to have “cascading” impact on Britain’s small firms

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Three quarters of small firms would not know what to do about forced or slave labour if found in supply chains

Britain’s small business owners have been advised to take a more proactive stance towards modern slavery issues ahead of renewed terms under the Modern Slavery Act coming into force on 1 April 2016.

The renewed act will require all UK firms with a turnover of £36m or more to submit annual statements to the government, setting out the measures that have been taken to stamp out slave and child labour from supply chains.

The new measures are designed to have a “cascading” effect on smaller businesses, encouraging these firms to ensure their supply chains are also slavery-free. Forced and slave labour is far more likely to occur in small business’ operations than larger ones, it is claimed by the Chartered Institute of Procurement & Supply (CIPS), due to lack of formal compliance procedures or thorough knowledge.

Nearly two thirds of small business owners surveyed by CIPS revealed that they were unaware the act even existed, and remained in the dark about its impact on their company. In all, 67 per cent of the more than 250 small firm owners surveyed said that they’d never taken any steps to tackle the issue in their supply chains.

If slavery was found to have occurred to some extent in supply chains, three quarters of UK small business owners would not know what to do about it, the survey found. Whilst eight out if ten larger businesses claim that slavery has yet to be discovered in their supply chains, the CIPS’s findings suggest this is down to ignorance rather good due diligence.

CIPD group CEO, David Noble said that smaller firms remain just as duty-bound to ensure supply chains remain slavery-free as those large corporations that have to comply with the Act directly, particularly if they supply those businesses.

“Ultimately, modern slavery is not an issue confined to the supply chains of large multinational corporations,” said Noble. “On the contrary, small businesses can often have long and complicated supply chains themselves. These ventures are just as likely to find enslavement in operations, right here in the UK, as recent cases show.”

Noble outlined some simple steps small business owners can take to protect themselves. Firstly, he advised owners to guarantee each UK worker receives the minimum wage whilst making robust immigration checks on all staff. Supply chains should be mapped out to properly understand which areas might pose the highest risk and exposure to modern slavery, whilst contracts with suppliers should be reviewed.

Finally, all staff should be trained and educated on the risks of modern slavery and compliance, and owners should undertake site inspections and premises checks.

Noble went on to say: “To truly eliminate this evil from UK procurement, supply chains need to be mapped and simple measures put in place. Partnerships between larger corporations and smaller firms will be instrumental in driving out malpractice. The legal duty in the act must not override the moral obligation of us all to make sure our supply chains are slavery-free.”

Originally passed in in March last year, the UK Modern Slavery Act puts greater onus on businesses to be accountable for the practices of suppliers, as several recent criminal cases exemplify that forced and slave labour remains a major issue in Britain.

The London Universities Purchasing Consortium (LUPC) – a not-for-profit public supplier of goods and services to universities and colleges in London, has been one of the most high-profile organisations to have so far submitted a statement outlining the steps it has taken to guard against supply chain human rights abuses.

LUPC director Andy Davies commented: “We wanted to send a message to other small businesses that we all have a contribution to make in eradicating child labour, excessive working hours and unsafe working conditions. We hope more organisations will now follow suit and join this global campaign.”

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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