Engineers beware: The Modern Slavery Act impacts consultants too

Chris Syder, partner at Pennington Manches on why consulting engineers need to take heed of the legislation

Modern slavery encompasses the crimes of slavery, servitude, forced and compulsory labour and human trafficking. The International Labour Organization (ILO) estimates that there are 10.7 million victims of labour exploitation generating billions of dollars in illegal profits each year in private enterprise in, amongst others, the construction, engineering, mining and utilities sectors.

Annual statement required

The Modern Slavery Act was passed into law last year to tackle this business and human rights issue in the United Kingdom. Section 54 of the Act now requires commercial organisations with a global turnover of at least £36 million that carry on a business or part of a business in the UK to produce a slavery and human trafficking statement for each financial year.

This must be approved by the board of directors (or equivalent management body) and posted in a prominent place on the company’s website. 

Given the turnover threshold requirement, section 54 will not apply to many small and medium sized consulting engineering companies. However, this would ignore the Act’s focus on supply chain due diligence for the larger consulting engineering companies. 

New focus on supply chain transparency

The Government’s guidance states that: “Organisations have a legal duty to drive out poor labour practices in their business and a moral duty to influence and incentivise continuous improvements in supply chains”. Consulting engineering organisations providing independent expertise in, say, engineering, science and related areas to industrial, development and, especially, construction firms, will need to co-operate with their larger clients’ requirement  to produce an annual slavery and human trafficking statement.  

As these larger organisations come to grips with their new obligations, they will be advised that the Government’s expectation is that their statement will contain transparent details of the steps taken to identify and, if identified, eradicate modern slavery from not only their own business but also their supply chain. Statements can simply state that no steps have been taken but, for many, that will not be either morally or socially acceptable, especially as the statement needs to be visible on their website. 


Do the due diligence

In addition, those caught by the turnover threshold will have to consider what due diligence they will need to carry out on their own supply chains. Some organisations go to great lengths to hide the fact that they are in some way involved in using, say, forced migrant labour. Audits and compliance-driven approaches are now recognised as being unlikely to identify or uncover hidden cases of slavery or human trafficking. 

The advice to businesses on due diligence is that they should work with expert independent, third parties and listen to workers themselves about their working conditions when investigating working conditions, especially in high risk areas such as Africa, the Middle East and parts of Asia.

As it follows that many consulting engineering companies can expect their existing supplier codes of conduct or supplier terms to be reviewed, serious consideration must be given to whether future contracts should include appropriate contractual provisions to shoulder some of their clients’ modern slavery due diligence obligations.  

Review your existing policies

Consulting engineering companies will also need to be ready to respond to requests to review their policies on slavery and human trafficking, and their assessments of their effectiveness in ensuring that slavery and human trafficking is not taking place in their own business or their wider supply chains. A response that the annual statement obligation does not apply due to the turnover threshold is unlikely to help win new business opportunities from larger turnover clients. 

At a minimum, smaller consulting engineering companies can expect questions about its level of support for whistleblowers who identify breaches of policy and contractual provisions. Systems will need to be in place to ensure that whistleblowers’ identities are protected and that they receive senior level support.  

A one size fits all approach is unlikely, however, as risk profiles will vary. For example, an organisation undertaking a construction project in Surrey will have a lower risk profile for modern slavery than an organisation undertaking public works in the Middle East. Enhanced due diligence will undoubtedly be required  for those working with organisations operating in higher risk jurisdictions, not least because of the adverse reputation and brand risks associated with being associated with modern slavery in your own business or supply chain.