Slavery and human trafficking: guidance for businesses

Part 1

Why does my business need to take action on human trafficking and exploitation?

Human trafficking is on the increase in Scotland, across the UK and worldwide. It can be found in a multitude of legitimate businesses and their supply chains. It is often hidden in plain sight.

What is human trafficking and where does it take place?

Human trafficking is the recruitment or movement of people for the purposes of exploitation, including:

• labour exploitation;
• sexual exploitation; and
• domestic servitude.

Victims are often brought into Scotland from overseas, but there is a growing number of British victims trafficked within Scotland.

The legal definition in Scotland is set out in the Human Trafficking and Exploitation (Scotland) Act 2015. In simple terms it is trading adults and children for the purpose of personal gain or profit. It is a violation of human rights, preying on some of the most vulnerable in society. It often involves long-term exploitation and its effect on victims can be devastating.

Human trafficking is happening in Scotland, and the number of identified victims is increasing every year. The National Referral Mechanism, the UK’s route for identifying victims of trafficking and directing them to support, shows increases each year in potential victims recovered in Scotland. In 2017, Scotland saw a 38% increase on the previous year^[1].

Victims can be found in legitimate businesses having been trafficked via labour supply chains. They may also be in the supply chains of Scottish-based businesses, with a large range of raw materials, products and services being susceptible to human trafficking, here or overseas.

Everyone in Scotland – individuals and organisations – has a responsibility to play their part in tackling and preventing this crime.

The Scottish Government and partners are committed to working together towards the goal of eliminating human trafficking and exploitation. The Trafficking and Exploitation Strategy, published in May 2017, sets out an ambitious set of outcomes to be achieved under three key action areas:

• Identifying victims and supporting them to safety and recovery;
• Identifying perpetrators and disrupting their activity; and
• Addressing the conditions, both local and global, that foster trafficking and exploitation.

The business sector has a key role in this work, particularly in relation to the third action area.

A Corporate Group has been established to support delivery of elements relevant to businesses, and in June 2018 the first annual progress report on implementation of the Strategy was published.

What is the legal requirement on businesses?

The legal requirement for UK businesses is set out in the Modern Slavery Act 2015. Section 54 of the Act requires all commercial organisations with a turnover of £36 million or more to produce an annual Slavery and Human Trafficking Statement setting out the steps they have taken to prevent modern slavery in any part of their business and supply chain. This legislation applies in Scotland as it does in the rest of the UK.

The requirements of the Statement include being approved by the Board, signed and dated by a Director and published on the organisation’s website with a prominent link from the homepage. Statements should be published within six months of the end of the financial year.

For businesses with a turnover below £36 million, whilst there is no legal requirement to publish a statement, it is still advisable to be taking action to address the risks of human trafficking. Organisations who are in the supply chain of those required to publish statements, are likely to be asked to demonstrate what actions they are taking as part of ongoing supplier selection and management processes.

The Home Office has produced ‘Transparency in Supply Chains – a Practical Guide’. This is not a legal document but does provide some specific guidelines.

What are the business risks associated with human trafficking?

It is impossible to guarantee that human trafficking will not occur in any supply chain and many businesses find it difficult to acknowledge the risks in their own supply chain. However, it is better to identify and acknowledge that there is a risk and explain what steps have been taken in mitigation than to ignore the issue until violations are discovered. Any business which states a ‘zero tolerance’ approach and suggests that their supply chains are ‘trafficking free’ is exposing itself to the risk of being robustly challenged if trafficking is found.Leading businesses have already begun to talk about issues where they occur, and provide examples of what they are doing in response.

Public awareness and understanding of human trafficking is growing. The number of consumers who will directly challenge a business on its approach to human trafficking is limited but consumers are likely to respond negatively if a business is found to have trafficking within its business operations or supply chains and not to have taken any action to prevent it.

Additionally, businesses who provide goods or services to the private and public sector have a growing requirement to demonstrate what they are doing to address the risks associated with their business or supply chain through tender processes.

Investors are increasingly focussing on human trafficking as a key risk. For instance, a 2016 report from Schroders, Modern slavery: how new regulation will impact consumer companies suggests “As active owners we will engage with the companies identified as high risk to encourage them to strengthen their practices and provide more transparency and evidence that they are mitigating potential risks along their supply chains.” Additionally, investors are becoming increasingly interested in corporate compliance with section 54 as failure to comply with the requirements of the Act is seen as a governance failure, as evidenced by the joint intervention in May 2018 by the Independent Anti-Slavery Commissioner and investors including Rathbone Greenbank, Aviva Investors, Edentree Investment Management, CCLA, Ircantec and two further anonymous investment houses.

Organisations may be subject to investigation and legal action which holds considerable risk for time, cost and reputation and there is a move by some to seek remediation through civil actions.

In addition, the Gangmasters and Labour Abuse Authority and HM Revenue and Customs have an enforcement role in relation to trafficking and exploitation. HMRC will seek to disrupt human trafficking by taxing profits derived therefrom, by investigating businesses exploiting labour to maximize profitability and by applying the National Minimum Wage rules.

The GLAA takes both an investigative and prevention role. It continues to license those organisations that supply labour into the agricultural sector to ensure they are compliant with the law, and do not mistreat workers. In England and Wales it is able to investigate the offences of forced labour directly. Whilst it does not currently have a similar power in Scotland it works closely with Police Scotland, and advises their investigations on the manner in which deceptive recruitment and employment practices can manifest themselves as forced labour. The GLAA uses its expertise to educate and encourage business on how to spot and prevent forced labour.