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UK businesses not fully prepared for the Modern Slavery Act

News   •   Mar 31, 2016 15:22 BST

From the 1st April this year, the Modern Slavery Act comes into force in the UK and businesses with a turnover of £36 million or more will be required to make an annual statement setting out the steps they have taken to stamp out slave and child labour from their supply chains.

This legislation is designed to have a cascading effect on SMEs that fall below the £36 million threshold, to encourage them to ensure that their supply chains are also slavery-free. As larger businesses prepare their statements under the new rule, it seems that UK SMEs are shockingly unaware of this knock-on impact on them, and are unprepared to deal with forced and slave labour issues. The research, conducted by the Chartered Institute of Procurement & Supply, found that 61% of UK SMEs are unaware of the reporting requirement, let alone its impact on them.

While more than eight in ten businesses with turnover under £36 million say that they have yet to discover slavery in their supply chain, this appears to be a result of ignorance over prudence with very few businesses actively looking for slavery in their supply chains. Just under a third of businesses (67%) surveyed, have never taken measures to keep their supply chains free of slavery, while 75% would not know what to do if they discovered slavery in their supply chain.

Despite this, only a very small percentage of small UK businesses are proactively taking steps to tackle the issue. One in ten of the SMEs surveyed have ensured all their UK workers are in receipt of the minimum wage and robust immigration checks are in place. Only 5% of businesses have ever mapped their supply chains in an attempt to uncover modern slavery, and just 4% have provided training to staff or suppliers on how to spot the signs of possible slavery amongst suppliers.

Supply chain disruptions are a serious concern for business continuity professionals, with the Business Continuity Institute's latest Horizon Scan Report identifying it as a top ten threat once again, featuring it in seventh place with 50% of respondents to a global survey expressing concern about this type of threat materialising. A disruption does not always need to be caused by a physical event and the the BCI's latest Supply Chain Resilience Report revealed that a business ethics incident was one of the top ten causes of supply chain disruptions.

David Noble, Group CEO at CIPS, commented: “Though the legal duty to tackle slavery in supply chains is on larger corporates with a revenue threshold of £36 million and over, smaller businesses still have a duty to ensure their supply chains are slavery-free, particularly if they supply to businesses that have to comply with the Act. Ultimately, modern slavery is not an issue confined to the supply chains of large multinational corporations. On the contrary, SMEs can often have long and complicated supply chains themselves. They are just as likely to find enslavement in their operations, right here in the UK.

Despite not having access to the same resources as larger companies, small businesses can take simple but effective steps to protect their businesses starting with:

  • Ensure all your UK workers are in receipt of the minimum wage and robust immigration checks are in place
  • Map your supply chains to understand where there is highest risk and exposure to modern slavery
  • Undertake site inspections
  • Provide training to employees and local suppliers on modern slavery risks and compliance
  • Review supplier contracts and include obligations to comply with the UK Modern Slavery Act
  • Publish a statement outlining the steps you are taking to tackle modern slavery

CIPS has put together a comprehensive toolkit for businesses and procurement professionals on tackling modern slavery and to help aid compliance. The toolkit is available here.

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