Modern Slavery Bill

Written evidence submitted by EEF (MS 30)

Overview

1. EEF, the manufacturers’ organisation, is the voice of manufacturing in the UK, representing all aspects of the manufacturing sector including engineering, aviation, defence, oil and gas, food and chemicals. With 6,000 members employing almost one million workers, EEF members operate in the UK, Europe and throughout the world in a dynamic and highly competitive environment.

Government should keep the Bill in its current form

2. EEF fully supports the government’s efforts to tackle modern slavery and believes the Modern Slavery Bill, in its current form, strikes the right balance between mitigating modern slavery practices in the UK and beyond and ensuring that any new legislation does not have disproportionate impacts on UK businesses competing globally. As an employer organisation our comments on the Bill are focused on any impacts the Bill may have on UK manufacturing businesses. In particular, we urge government not to amend the Bill further in ways that could place disproportionate additional burdens upon SMEs.

3. We welcome the government’s commitment to work with business to eliminate modern slavery, including from within global supply chains. The government has already put in place reporting requirements for business to report on human rights, which includes modern slavery in the supply chain, through the amendment to the Companies Act, which requires listed companies to include information about human rights issues (including modern slavery). To ensure that these reporting obligations prove to be effective, government needs to work closely with employers and business organisations to highlight this issue and demonstrate that action is being taken when required.

4. We understand that some stakeholders are concerned that relatively few companies have commenced reporting under the new framework and therefore want to see this strengthened. However, new reporting provisions need to have time to become embedded, and with sufficient time, and profile-raising of this issue, it is likely that more companies will report under this framework.

5. Since the publication of the Modern Slavery Bill, many parliamentarians have called for reporting to be strengthened. Again, we believe that this will to an extent be overcome as greater numbers of companies report upon human rights issues within their strategic reports under the Companies Act. Moreover, 2016 will see an EU directive on non-financial reporting come into force, which will require public interest entities, including listed companies, to include additional information on their policies relating to human rights and corporate social responsibility within their annual strategic reports, including information on their supply chains. We would urge the Modern Slavery Bill Committee not to introduce additional legislation at this time, but instead allow the EU directive to be introduced and for it this change to have sufficient time to achieve its objectives of greater focus and transparency upon the issue of modern slavery.

6. Some have called upon government to introduce clauses to replicate the Californian Transparency in Supply Chains Act. We do not believe that such clauses need be added to the Bill, or will result in any greater positive change for the same reasons as we have outlined above. In addition, government has already stated that the evidence of the positive impact of the Californian Transparency in Supply Chains Act is mixed, with the scope of the regulation limited to retailers and manufacturers whose gross annual worldwide receipts/turnover exceed $100m.

Government must work more closely with businesses from all sectors

7. What government should now focus upon is ensuring that the new reporting requirements result in positive change. This does not require additional legislation but behavioural change. Legislation can achieve this, but given that the very nature of some the issues under consideration occur far from the UK, government needs business itself to embrace and embed effective practice as it is unlikely that the UK can effectively and uniformly enforce legislation with global jurisdiction on issues of modern slavery. We therefore believe that effective change can only be achieved by government working closely with business, potentially on a sectoral basis, to understand the most effective, and efficient ways to tackle modern slavery in the UK and worldwide. The government has already hosted a limited number of workshops on how to take this agenda forward, however, this has generally been focused on those within the retail sector and we are concerned that visibility of this agenda across all groups is limited. We would now like to see government replicate these discussions with other sectors, such as manufacturing.

8. We believe that approaches to reporting modern slavery, including within supply chains will differ by sector. The issue of supply chains for example will differ extensively across varying industry sectors. EEF’s own research has shown that the average manufacturer has almost 190 suppliers and with virtually the entire supply base located overseas. Indeed, one in five report that at least half of their suppliers are outside the UK. Moreover, this is not just an issue for larger businesses; even smaller manufacturers can be reliant on in excess of 100 suppliers of parts, components and other services. [1] Whilst then considerable effort has been made to work collaboratively with the retail sector, this has not been mirrored in others.

9. We support government’s approach to avoid repeated changes in the regulatory regime which would increase compliance costs and create uncertainty for business. We also support government’s decision not to ‘gold-plate’ the Companies Act through additional reporting requirements beyond that required by EU law which would add unnecessary, additional burdens on business.

Government should look at existing initiatives such as Think, Act, Report to strengthen voluntary reporting of Modern Slavery

10. Moving forward, government now needs to work with the wider business community to adopt further, voluntary reporting. Voluntary reporting can be extremely effective when such a model is developed in collaboration with industry. For example, the government’s Think, Act, Report [2] framework gives businesses the opportunity to publish information on equal pay. The framework is entirely voluntary and it is left to the business to decide what information is published – instead the framework steers companies towards information that could be made publicly available and provides a framework and guidance. A number of our larger members have already signed up to Think, Act, Report and we continue to work with EEF’s wider membership to encourage participation. The launch of the scheme was supported by a wide range and large number of employers and the framework itself was developed in partnership with employers and employer organisations from across many differing industry sectors. This we believe is a blueprint for successful change.

Government must act cautiously and not widen the scope of the Bill

11. Government must also be cautious in its definition of ‘exploitation’. If defined too widely, for example to include abuse of a position of trust or taking advantage of a vulnerable worker, then this significantly extends its scope. Of itself, this may be seen as desirable; however, given that these traits may be difficult or impossible for businesses to ascertain within the bounds of what is possible, we question how effective their inclusion will be. Also, we would not want to see any potential liability for UK employers for the national law of other jurisdictions. Whilst it is entirely appropriate for businesses to inspect and make responsible enquiries of their supply chain, they are very unlikely to know what local laws apply. We believe therefore that whilst it may be seen as desirable for UK legislation to oblige UK businesses to ensure that local legislation is complied with, this is in practice impossible. There is for example no current accessible system for UK employers to even know what the applicable legislation is governing EU workers, let alone workers in other parts of the world.

12. Widening the scope of the Bill would therefore mean companies in breach would face serve penalties, as outlined in the Bill, including civil prevention orders, criminal liability and asset seizer powers where they may have no practical way of ensuring compliance with the legislation and no applicable corporate defence. Companies breaching the new laws would therefore face losing all or some of their assets which following a conviction could then be forfeited. We therefore believe that before any additional obligations are included within the Bill, considerable should be given to how businesses will be expected to comply and what standard of good practice will be required in order for a business to establish a corporate defence. We do not believe that the final bill should impose absolute liability upon employers.

13. An recent example of how effective business practice can be introduced is that of the Bribery Act, where the Secretary of State produced a Code of Practice to assist employers in understanding the requirements of the legislation and provide a safe harbour within which they can operate. This provided business with some guidance on what they should be doing, and what they were required to do. In addition the Code of Practice offered businesses some form of safeguard, which we would like a similar model introduced in the area of modern slavery.

October 2014

Prepared 15th October 2014