Out-Law / Your Daily Need-To-Know

Retailers must monitor supply chains, says expert, as first company found liable for modern slavery

Out-Law Analysis | 01 Jul 2016 | 9:51 am | 2 min. read

FOCUS: Retailers and other organisations must be conscious of the potential conditions endured by workers in their supply chains, whether those supply chains are located in overseas jurisdictions or here in the UK.

The legal consequences of failing to comply with the reporting requirements set out in the Modern Slavery Act are limited, but a recent ruling against a British company for compensation in respect of modern slavery illustrates that those who choose to adopt a cowboy approach to this requirement do so at their peril. Reputational and consequent financial damage aside, if slavery is found there will undoubtedly be question marks over the management's competence to carry on too.

In June, the High Court in London found in favour of six Lithuanian workers forced to work in conditions of modern slavery on chicken farms, many of which produce eggs for some of the UK's leading supermarkets. The six, who were all previously found to have been trafficked to the UK, claimed compensation from gangmaster company DJ Houghton Chicken Catching Ltd and two of its directors for, among other things, breach of contract, failure to pay them in accordance with the 1948 Agricultural Wages Act, negligence, harassment and assault. They also alleged that they have suffered loss and damage, including personal injury, distress and unpaid wages, as a result of the wrongful acts.

High Court judge Mr Justice Supperstone found that the six were owed compensation for:

  • failure to pay the agricultural minimum wage;
  • charging of prohibited work-finding fees;
  • unlawfully withholding wages; and
  • depriving the workers of facilities to wash, rest, eat and drink.

This is the first time that a British company has been found liable to compensate the victims of modern slavery and, in the words of the victims' legal team, should be seen as a "warning shot to businesses that they need to make sure modern slavery is eradicated from their supply chains".

The Modern Slavery Act introduced the requirement for relevant commercial organisations to produce a statement each year outlining the steps they have taken to ensure that their business and supply chain are slavery free, beginning with financial years ending on or after 31 March 2016. Many food retailers supplied by the business in which the Lithuanian men worked are subject to these requirements, underlining the fact that companies should not focus only on their operations and supply contracts in overseas jurisdictions more prone to slavery risk as they prepare their first statements.

All this comes just after the introduction of a private members' bill to the House of Lords by Baroness Young of Hornsey, through which she seeks to extend the requirement to produce an annual slavery and human trafficking statement to public bodies in England and Wales. The bill also proposes requiring contracting authorities in England and Wales to exclude from procurement procedures economic operators that have not provided such a statement. The bill is due to have its second reading in the House of Lords in July.

Whether or not Baroness Young's bill becomes law remains to be seen - however, what is clear is that there appears to be an increasing appetite to stamp out such practices.

For more information on the reporting requirements under the Modern Slavery Act, see our separate Out-Law guide.

Neil Carslaw is a regulatory and compliance law expert at Pinsent Masons, the law firm behind Out-Law.com.