This article was written by Urszula McCormack and Jack Nelson.
The United Kingdom’s Modern Slavery Act is now in force. The International Labour Organization estimates there are nearly 12 million people in forced labour across Asia. This article sets out seven things you need to know to protect your business.
1. The Modern Slavery Act has global coverage
Businesses with UK operations will have an obligation to publish an annual slavery and human trafficking statement (Annual Statement) from next financial year.
This obligation will apply to any business that:
- is a corporation or a partnership;
- supplies good or services;
- carries on any of its business, trade or profession in any part of the UK; and
- has a total, global turnover of at least £36 million.
The upshot is that the Modern Slavery Act has global coverage – that is, where the business has a nexus with the UK, then its activities globally are within scope.
Theoretically, businesses can comply with this obligation by stating that no steps were taken to ensure that slavery and human trafficking is not taking place. However, there are reputational risks arising from this course of action.
Slavery and human trafficking offences
In addition, the Modern Slavery Act also criminalises slavery even where the offence is committed by a non-UK national and outside of the UK.
It also provides that a person can still be held liable for slavery under the Modern Slavery Act if they were in a position to know that slavery was occurring, but lacked actual knowledge of it. The Modern Slavery Act imposes further obligations on UK nationals, as the Modern Slavery Act’s human trafficking offence applies to UK nationals even where the conduct occurred outside of the UK.
2. Slavery is broadly defined
The key elements in terms of identifying slavery, forced labour and human trafficking are the deprivation of freedom, coercion, and the facilitation of travel with a view to exploitation. This is not always easy.
3. Local laws may also apply
A number of Asian jurisdictions already have laws that require businesses to take steps to mitigate the risk of slavery and human trafficking, although the approach is decidedly mixed. These laws may be specific to the issue or operate as a predicate offence to money laundering.
For example, it is an offence under Hong Kong law to traffic persons to or from Hong Kong for prostitution purposes, carrying a maximum sentence of 10 years’ imprisonment. This is the only offence under Hong Kong law that is specific to slavery or human trafficking. The remainder of the Hong Kong anti-slavery and human trafficking regime comprises a patchwork of offences under legislation, such as in relation to immigration and employment, alongside the general criminal law. These offences can be used to prosecute persons who engage in slavery and human trafficking, although they tend to carry less severe penalties, rarely exceeding 4 years.
Most of these trafficking-related offences are indictable offences for the purposes of the Organized and Serious Crimes Ordinance (Cap 455). This Ordinance criminalises dealing in the proceeds of indictable offences. It also makes it an offence to fail to make a disclosure to the Hong Kong Joint Financial Intelligence Unit where a person knows or suspects that property is the proceeds of an indictable offence. Accordingly, a person who deals in or fails to report the proceeds of slavery or human trafficking may commit an offence in Hong Kong.
4. Staff training is essential
There are significant penalties for non-compliance that can extend to both businesses and individuals. Staff should be trained to detect slavery and human trafficking. Staff should also be informed of the potential for individual criminal liability.
5. You need to know what to look for
Businesses should review their supply chains and suppliers to ensure that slavery and human trafficking is not taking place. Promoting compliance requires:
- developing policies and procedures in relation to slavery and human trafficking;
- performing due diligence investigations into suppliers and supply chains;
- assessing slavery and human trafficking risks across the business; and
- complying with the Annual Statement requirements where they apply.
6. There are tools available to assist you
There are a range of tools that can assist businesses with assessing and managing risk, and with compliance generally.
For example, the Global Slavery Index ranks 167 countries according to a wide range of factors that can assist businesses to inform their risk assessments by looking at the rankings of countries in which they operate or which otherwise form part of their supply chain.
Additional information specific to particular typologies, individuals and companies is becoming significantly more accessible through professional third party information providers and specialist bodies.
7. There is more regulation to come
The OECD has indicated a strong focus on human trafficking, including issuing recently Guiding Principles on the subject. Action to combat slavery and human trafficking is also being taken by countries including the United States, Brazil, France and Australia.
We expect a significant body of further regulation in this area.