The Modern Slavery Act - its HR impact on the construction sector

Construction firms face a higher risk of modern slavery taking place due to the way they source labour. Use of contractors, sub-contractors and agencies distance the organisation from the sourcing process, leaving them open to risk.

The Home Office estimates there are between 10,000 and 13,000 victims of modern slavery in the UK. With the construction sector making up around 6.5 per cent of the UK workforce, it’s likely to be a sector that will come under additional scrutiny.

All commercial organisations with a global turnover of £36m or more must prepare a slavery and human trafficking statement each financial year. The purpose of this statement is to set out how the organisation is going to prevent modern slavery within its own business and supply chain.

A number of the larger commercial organisations have already been proactive in this area and produce comprehensive documents, such as guidelines for their supply chain. However there are a significant number of the smaller organisations in this sector that have yet to take positive action.

The penalties for failure to comply with the requirement to publish a statement are currently limited. The implications are more likely to be reputational, particularly as the Government has said it may name and shame organisations.

Smaller construction organisations, those with turnover of less than £36m, as well as agencies supplying workers are likely to also come under scrutiny.

To prepare for this they need to develop new internal policies around:

  • recruitment;
  • equal opportunities;
  • grievance; and
  • whistle blowing.

We also recommend producing a statement and provide proof they’ve addressed:

  • immigration;
  • paying their employees minimum wage;
  • no groups of employees are mistreated; and
  • no oddities around pay - such as a group of workers being paid into one bank account.

These smaller construction organisations, such as contractors or sub-contractors, are unlikely to have the internal infrastructure to respond and this could impact on their ability to maintain current contracts or win new work.

While complying with the requirements of the Modern Slavery Act 2015 is an organisation wide responsibility, HR has a significant role to play. HR’s role is to support the organisation to ensure it complies with all relevant labour laws, so while Modern Slavery is not a piece of employment legislation per se, the link into how labour is resourced, managed and remunerated sits within the HR function.

HR are therefore part of the team and should already be risk assessing their employment policies, practices and procedures. It is likely that actions will arise from the risk assessments and these should become imbedded into good HR practices

Pro-active organisations will require the principles to be applied in training, key performance indicators and in performance management, all areas which HR is responsible for.

Organisations and their HR teams should consider if they are best placed to risk assess themselves. An audit/risk review could provide extra neutrality and independence if conducted by a third party. It could highlight areas an organisation may miss and/or offer support so polices are robust and strengthen the organisations commitment.

For more information please get in touch with Nita Hutchinson.