Human Rights and Business 2017: Promoting responsibility and ensuring accountability Contents

Conclusions and recommendations

The UK’s Government’s approach to human rights and business

1.The UK was the first state to implement the United Nations Guiding Principles on Business and Human Rights by publishing a National Action Plan, and by updating that Plan. The Government has also introduced some welcome legislation, including the Modern Slavery Act 2015. Additionally, the UK has supported a number of other countries to develop National Action Plans and implement the UN Guiding Principles. We commend the Government for the work that it has already undertaken to build its agenda on human rights and business. (Paragraph 50)

2.While acknowledging the leadership the Government has shown in producing the updated National Action Plan, we share the disappointment of many of our witnesses over its modest scope and lack of new commitments. It is difficult to evaluate progress on the older commitments in the absence of a baseline study or a timetable for meeting objectives. (Paragraph 59)

3.We call on the Government, when producing the next update to the National Action Plan, to consult widely with a range of stakeholders, to develop more ambitious and specific targets, and to implement measures to allow for these targets to be evaluated. (Paragraph 60)

4.Issues relating to human rights and business cut across at least six different Government departments. The Government must do more to help relevant stakeholders understand the various departmental responsibilities and must guard against prioritising business concerns over human rights. We also recommend that the Cabinet Office plays a role in coordinating activity across departments. (Paragraph 71)

5.The current Government guidance on the application of human rights considerations to public sector procurement is confusing, and may deter procurement officers from factoring in human rights. (Paragraph 85)

6.If the Government expects businesses to take human rights issues in their supply chains seriously, it must demonstrate at least the same level of commitment in its own procurement supply chains. (Paragraph 86)

7.The Government should exclude companies that have not undertaken appropriate and effective human rights due diligence from all public sector contracts, including contracts with local authorities, which could be over a specified threshold. This should also apply to export credit and other government financial incentives for companies to operate overseas. (Paragraph 87)

8.Companies that have been found to have been responsible for abuses, either by the courts or by the National Contact Point, or where a settlement indicates that there have been human rights abuses, should also be excluded from public sector contracts for a defined and meaningful period. (Paragraph 88)

Preventing human rights abuse by business

9.The Government is to be applauded for the passing of the Modern Slavery Act 2015, which built on the previous Government’s creation of the Gangmasters Licensing Authority, under the Gangmasters (Licensing) Act 2004. The Government has shown genuine leadership, and the issue of modern slavery has been raised in the boardrooms of large companies. (Paragraph 111)

10.However, the legislation has shortcomings. In particular, here is no central list of companies required to report. This, coupled with the fact that the reporting requirements on transparency in supply chains are weak, makes it very difficult to hold companies to account. (Paragraph 112)

11.We therefore urge the Government to facilitate the passage of Baroness Young of Hornsey’s Modern Slavery (Transparency in Supply Chains) Bill, which would rectify some of these problems, and which is supported by a number of large UK companies. If that bill fails to be enacted in the present parliamentary session, we recommend that the Government bring forward its own legislation in the next session to achieve a similar objective. (Paragraph 113)

12.We also recommend that the Government bring forward legislative proposals to make reporting on due diligence for all other relevant human rights, not just the prohibition of modern slavery, compulsory for large businesses, with a monitoring mechanism and an enforcement procedure. (Paragraph 114)

13.Our witnesses acknowledged the improvements the Gangmasters Licensing Authority has made in its sectors. While we welcome the extended powers that will be given to the Gangmasters and Labour Abuse Authority, we urge the Government to ensure that the new body is properly resourced. (Paragraph 128)

14.Further consideration should be given to extending the Authority’s licensing powers to other sectors. In particular, we see merit in introducing a licensing system for the construction industry. UK businesses selling clothes have also expressed support for licensing in the garment sector, which would help them to have confidence in their UK supply chains, and we support this proposal. (Paragraph 129)

15.Engagement with the business sector must be a priority for the Anti-Slavery Commissioner if he is to reduce labour exploitation. We encourage the Commissioner to make this his top priority, and we urge the Government to provide further resources to enable this. (Paragraph 135)

16.We recommend that the Government should bring forward legislative proposals to grant powers to local authorities to close down premises which are found to exploit workers through underpayment of wages, lack of employment contracts or significant disregard of health and safety regulations. These new powers must be fully resourced and should be drawn up in consultation with the Gangmasters & Labour Abuse Authority, the Local Government Association and HMRC. In the event of a closure order, the local authority should also be given powers to compel the employer to compensate workers in the premises. (Paragraph 137)

17.The companies that gave evidence to this inquiry have recognised some of the issues in their supply chains and have shown a willingness to improve standards. These companies would also welcome more regulation by the Government, so as to improve the practices of all companies. (Paragraph 148)

18.There is still a tendency by many companies to rely on audits, which, the evidence suggests, are not always effective. The Government must provide clearer and more specific guidance to companies about the risks that may present themselves in different supply chains. It should also oblige UK-owned companies to require the recognition of trade union membership of employees as a condition of contracts with suppliers. (Paragraph 149)

19.We support the introduction of the Corporate Human Rights Benchmark, which recognises businesses who are taking human rights due diligence seriously. (Paragraph 150)

Access to justice

20.Our evidence indicates that the Government’s approach is weakest in the area of access to remedy. There is a lack of engagement from the Ministry of Justice. This was particularly clear to us during our meeting with the Minister, whose answers demonstrated a measure of complacency when confronted with some of the issues we have considered. (Paragraph 170)

21.We heard substantial evidence on the range of obstacles that obstruct access to remedies for victims of human rights abuses by companies. These include the changes to limit legal aid provision, limits on the recovery of legal costs in these types of case, increases in court and tribunal fees, and the otherwise high costs of civil action, especially if the abuse has occurred overseas. In addition, court procedures have made it increasingly difficult to obtain access to corporate documents. (Paragraph 171)

22.We look forward to the results of the Government’s review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and will follow closely any changes made to that Act, in order to assess whether they are sufficient to mitigate these concerns. (Paragraph 172)

23.We join the Commons Justice and Women and Equalities Committees in calling on the Government to reduce employment tribunal fees. These, it is clear to us, are a barrier to victims seeking justice when they have suffered human rights abuses, including discrimination, at the hands of their employers and offer impunity for employers abusing human rights. (Paragraph 173)

24.We recommend that the Government should bring forward legislation to impose a duty on all companies to prevent human rights abuses, as well as an offence of failure to prevent human rights abuses for all companies, including parent companies, along the lines of the relevant provisions of the Bribery Act 2010. This would require all companies to put in place effective human rights due diligence processes (as recommended by the UN Guiding Principles), both for their subsidiaries and across their whole supply chain. The legislation should enable remedies against the parent company and other companies when abuses do occur, so civil remedies (as well as criminal remedies) must be provided. It should include a defence for companies where they had conducted effective human rights due diligence, and the burden of proof should fall on companies to demonstrate that this has been done. (Paragraph 193)

25.The current criminal law regime makes prosecuting a company for criminal offences, especially those with operations across the world, very difficult, as the focus is on the identification of the directing mind of one individual, which is highly unlikely in many large companies. We welcome the Ministry of Justice’s current consultation on a new ‘failure to prevent’ offence for economic crimes. We regret that a range of other corporate crimes, for example use of child labour, were excluded from the consultation, and we urge the Ministry of Justice to consider a further consultation with a wider remit. (Paragraph 194)

26.We have heard that criminal prosecuting authorities sometimes lack the skills and resources to investigate human rights abuses by companies, and that, where there has been some action, such as under the GLA, the penalties are too low to be an effective deterrent. The Committee recommends that the prosecuting authorities be better trained and resourced in investigating breaches of human rights which are criminalised, including for cross-border crimes. Sentencing guidelines for these crimes should be created, to ensure that the penalties are high enough to provide an effective deterrent. (Paragraph 199)

27.The UK National Contact Point for the OECD Guidelines has the potential to provide meaningful non-judicial access to justice, alongside the more traditional routes of civil and criminal law. The findings of the NCP also have the potential to feed into judicial cases. In its current form, however, the NCP is largely invisible, and lacks the resources and essential human rights expertise necessary to undertake such a role. (Paragraph 216)

28.We urge the Government to address concerns about the NCP as a matter of urgency. It should create an independent steering board for the NCP, with power to review decisions, to lend it greater expertise. (Paragraph 217)

29.In order for the Government to support, and not undermine, decisions of the NCP, we recommend that the Government gives clear guidance to procurement officers that large public sector contracts, export credit, and other financial benefits should not be awarded to companies who have received negative final statements from the NCP and who have not made effective and timely efforts to address any issues raised. (Paragraph 218)

30.We recommend that the Government provide extra resources for the NCP, so that it can raise its profile and be seen as a viable mechanism for victims to gain access justice in a non-legal forum. (Paragraph 219)

31.The Government should itself publicise adverse decisions by the NCP, for instance via written ministerial statements, to assist in raising the profile of decisions. (Paragraph 220)

32.We encourage the NCP to raise its profile by engaging more with parliamentarians, given that MPs in particular often advocate on their constituents’ behalf. (Paragraph 221)

The implications of Brexit

33.We heard evidence that EU workers are worried about their status within the UK and are less likely to report issues to the authorities, following the vote to leave the EU. This will leave them more vulnerable to labour exploitation. (Paragraph 228)

34.Against the backdrop of Brexit, the Government must urgently reassure workers that all victims of human rights abuses will be protected, without reference to nationality or immigration status, and ensure they have clarity regarding their status in the UK. (Paragraph 229)

35.We recommend that EU laws on reporting and procurement, as well as any relating to workers’ rights that are not already set out in primary legislation, should be transposed into UK law by means of the Great Repeal Bill. In the longer term, UK laws on reporting and procurement in relation to human rights should continue to set standards at least as high as those set by the EU. (Paragraph 230)

36.We welcome the Government’s commitment that new bilateral trade agreements will include human rights protections at least equal to those currently included in EU trade agreements. We look forward to seeing this adhered to and will monitor progress with interest. (Paragraph 238)

37.We encourage the Government to use the opportunity of Brexit to set higher human rights standards in future trade agreements, to include workable provisions on enforcement, and to undertake human rights impact assessments before agreeing trade agreements. (Paragraph 239)

4 April 2017