What are the ramifications if your firm does not comply?
The modern slavery act whilst relatively new, should not be underestimated. Non-compliance will have considerable and negative impact across an entire organisation and potentially the supply chain.
If a company fails to comply, the Secretary of State could start civil proceedings for an injunction from the High Court requiring them to comply with this obligation. Failure to comply following injunction could then lead to a contempt of court order and an unlimited fine. Not only will this have inevitable ( and at the moment unlimited) financial consequences, but could also impact:
Reputation: clients, suppliers and local communities are increasingly looking at statements and information around what action firms are taking in this space. By not complying, firms risk damage to established brand identities and values that is hard to regain.
Further to this, a firm’s reputation as an ethical employer could also come into question. If a current and prospective workforce do not want to work for you, how will you continue to operate in increasingly competitive markets? We are beginning to see criticism of certain organisations without statements, but also, and more critically, if the statements already produced are not compliant or useful. A lack of investment in this socially sensitive arena can be devastating to a firm’s reputation.
Legal: there is not just a risk of litigation, but complaints to regulatory bodies and breach of specific ethical terms.
Financial: turnover and profits will likely be negatively impacted. This will include investor confidence. If investors are not engaging with an organisation, can it continue to operate? This could include bidding for new contracts and work, if an organisation’s own clients are prioritising this as a must, how can they not comply?
Operational: Non-compliance will inevitably not just disrupt an organisation’s own operations, but also that of their supply chain.
For more information please get in touch with your usual RSM contact.