Tackling modern slavery in the construction sector

Earlier this month, the new prime minister Theresa May announced a further crackdown on modern slavery, revealing that a new taskforce will be established to tackle what she calls ‘the great human rights issue of our time’. The announcement comes less than 12 months after the Modern Slavery Act 2015 became law, which covers the offences of slavery, human trafficking, servitude and forced or compulsory labour.

So far, much of the attention around modern slavery in the construction industry has focused on labour practices overseas, including in Qatar and Brazil. Examples of modern slavery in this sector include:

  • employers withholding wages or forcing staff to work at rates lower than those previously agreed;
  • labour agents confiscating the passports of migrant workers, often with little grasp of English, forcing them to work and live in squalid conditions; and
  • workers operating within unsafe conditions or with inadequate Personal Protective Equipment (PPE) resulting in significant injury or even fatality.

But the recent crackdown on modern slavery also has implications for companies in the UK. Following the implementation of the Modern Slavery Act 2015, certain organisations have to produce an annual slavery and human trafficking statement that sets out what action has been taken to ensure modern slavery does not exist within either their own business or their supply chains.

Although a lot has been written about the content of these statements, there is less guidance on the information that should be used and where to find it. We have designed the following questions to help organisations within the construction sector undertake this process.

  • What internal policies and procedures exist that may make reference, or contribute to the prevention of, modern slavery? This may include corporate policies, such as a code of conduct, ethical and corporate social responsibility (CSR) policies, as well as operational procedures, such as procurement and sourcing.
  • How do you ensure your organisation, suppliers and subcontractors comply with these policies and procedures? Are formal declarations confirming compliance regularly required or are self-assessment questionnaires completed?
  • Have any risk assessments been carried out to identify areas of higher risk within your supply chain (both in respect of the supply of materials and labour)?
  • What due diligence is performed on new suppliers and subcontractors? Does this consider aspects such as human rights and labour conditions? How is this information used to inform award criteria for supplier selection?
  • Do formal contracts with suppliers and subcontractors include obligations to comply with modern slavery rules or other related policies?
  • Do performance targets and reward structures incentivise suppliers and subcontractors to comply with ethical policies and requirements?
  • Have audits and/or on-site assessments been conducted at construction sites or supplier premises during the period? If so, what was the scope of these audits/visits and have any corrective actions arising been monitored to ensure they are adequately implemented?
  • Are there channels for concerns within your organisation or supply chain to be escalated and considered by appropriately senior staff?

The role of internal audit 

Internal audit is one of the few functions that interact with all aspects of an organisation’s operational, finance and compliance activities. It is therefore in a strong position to make a significant contribution to the development of the anti-slavery and human trafficking statement. Examples include:

  • facilitating the risk assessment to help an organisation identify higher risk areas and prioritise actions;
  • performing a programme of assurance activity that covers an organisation’s supply chain and internal processes.
  • identifying and utilising the work of other internal and external activities and assurance providers to establish the evidence base from which an anti-slavery and human trafficking statement can be developed; and
  • monitoring the effectiveness of mitigating actions designed to improve the control framework.

The reporting requirements arising from the Modern Slavery Act may create an unwelcome distraction, particularly for smaller organisations that do not have the systems or resources available to invest in this process. But ultimately better compliance can help increase transparency, enhance organisation’s brands and reputations, improve investor confidence and lead to more sustainable supply chains.