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Don’t turn a blind eye to modern slavery red flags

Author : Lyn Dario and Jim Wright, Shulmans LLP

25 March 2019

Modern slavery is now a real and prevalent issue in facilities and supply chain management. Following the introduction of the Modern Slavery Act 2015 (MSA) and the first investigations under the MSA, regulators are stepping up detection and enforcement of modern slavery and human trafficking – and the waste sector has been identified as of particular concern.

The problem of modern slavery appears to be becoming more acute and law enforcement bodies are gearing up accordingly.

The National Crime Agency’s figures for the first quarter of 2018 show an 11 per cent surge in modern slavery reports compared to 2017.

Awareness of the problem is arguably greater which could explain some of this increase, but it is also clear that the true scale of the problem is only just becoming more visible and reports are likely to continue to rise.

Businesses with an annual global turnover of more than £36m have to report to regulators on the actions they are taking to prevent modern slavery. However, the problem affects companies at all points in the supply chain, and not simply the businesses with significant turnover.

Larger companies may inadvertently work with businesses that are not under a formal reporting duty and whose compliance and monitoring systems are less effective.

So, even a business that has policies and systems in place for its own operations needs to be vigilant throughout its supply chain – including the disposal of its waste.

Although it is an issue which is a risk for all businesses, the greatest threat is in those sectors which are reliant on temporary (and frequently migrant) labour.

There is obviously a potential for agencies placing temporary workers with employers to become unwittingly - or sometimes deliberately – involved in modern slavery.

Whilst most agencies are reputable and will take the trouble to carry out appropriate due diligence, there will always be unscrupulous operators who will ‘turn a blind eye’ to obvious red flags, or even actively collude with those exploiting others.

The red flags are well-publicised, and those being trafficked and exploited can be identified as:

• individuals whose grasp of English is tenuous, and who are therefore vulnerable to exploitation as a result;

• juveniles;

Lyn Dario

• teams of workers arriving together, transported collectively, and apparently sharing the same accommodation.

The problem of modern slavery appears to be disproportionately severe in the waste industry. Recently, two of the five largest waste firms in the country have joined the Slave-Free Alliance, sponsored by the charity, Hope for Justice.

The Slave-Free Alliance, as its name suggests, is working towards a slave-free supply chain, and provides resources to its members to assist them in setting up appropriate systems; monitoring their employees; and raising awareness and education of the issues and red flags for modern slavery.

Hope for Justice has pinpointed the waste processing and recycling industry as one which has been specifically targeted by human traffickers.

It has estimated that between 70 and 80 per cent of forced labour victims have worked in this industry at some point, although precise estimates of the scale of the problem would be impossible.

A report last year from Hope for Justice concluded that two-thirds of modern slavery victims have been active in the waste sector. It reached this estimate based on interviews as well as cases of abuse that it has uncovered.

Although the evidence is anecdotal, it does make sense that industries reliant on temporary, lower-skilled labour will be attractive to criminals.

There have been reports recently of a number of recycling plants being raided by multi-disciplinary law enforcement teams including officers from the Gangmasters and Labour Abuse Authority (GLAA).

The GLAA originally regulated businesses in the fresh produce supply chain. It is now able to investigate across all industries in England and Wales and has been involved in some of the waste sector raids.

The GLAA’s director of operations recently identified that there are common themes in the abuse they uncover, such as:

• prolonged working hours;

• the minimum wage not being paid; and

Jim Wright

• abuse of the individuals involved.

Recognising that this is a particular problem for the waste industry, the Environment Agency (EA) has just announced that it will train more than 100 waste and regulation officers to be vigilant during site inspections.

As the EA already works in close co-operation with partner agencies, especially in the context of waste crime generally, it is likely that this will at the very least increase the eyes and ears “on the ground”, and perhaps aid greater detection of the crime.

It is therefore critical, that all businesses in the supply chain have appropriate systems in place. Companies should:

• have an appropriate modern slavery policy;

• back this up with training, and monitoring;

• educate employees to report concerns, not least by helping them understand the potential warning signs;

• ensure that they ask for information from their suppliers and contractors.

In particular, do those in higher-risk sectors carry out proper background checks on those they employ?

Two further obligations under the MSA are for organisations to have both a published slavery and human trafficking statement and to be able to evidence board level support, by way of board minutes or memorandum of the directors.

As the statement must be published on a company’s website, it provides an easy way for both regulators and those wishing to contract with waste companies to quickly and easily assess compliance.

Even those waste companies under the £36m turnover threshold may find that by not including such a statement they not only fail to secure contracts, but face enhanced regulatory scrutiny.

Lyn Dario is partner and head of Environmental & Regulatory and Jim Wright is partner in Employment & HR at Shulmans LLP.

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