By Alistair Drummond, Partner and Gavin Deeprose, Senior Professional Support Lawyer, Litigation & Regulatory Group, DLA Piper Scotland

THE Scottish Government has recently published new guidance for businesses on their responsibilities in relation to slavery and human trafficking. This has been prompted by official research which suggests many Scottish businesses are not currently complying with their legal obligations.

The idea that slavery still exists in modern Scotland may seem far-fetched but some 207 potential victims of slavery were referred to Police Scotland in 2017. Half of those cases related to labour exploitation in sectors such as construction, hospitality and agriculture. On a global scale slavery and trafficking are still widespread. The International Labour Organisation estimates that more than 24 million people are currently in some form of forced labour, mostly because of debt bondage or the manipulation of wages.

To help tackle these problems the UK and Scottish Parliaments passed legislation in 2015. This legislation requires businesses to take action to eliminate slavery and human trafficking across their operations.

The main legal obligation is in the Modern Slavery Act 2015. This requires UK businesses with a turnover of £36m or more to publish an annual slavery and human trafficking statement. This statement must set out the steps taken by the business within the financial year to prevent modern slavery within their organisation and supply chain. It must be approved by the board, signed by a director and published on the company’s website.

The aim of this provision is to encourage large businesses to be transparent about the steps they are taking to prevent slavery across their networks in order to increase competition between companies and drive up standards. However, research undertaken by the Scottish Government suggests that a “significant minority” of large businesses have not yet published the required statement on their website.

To promote greater compliance with the law the Scottish Government have published practical guidance for businesses in Scotland. The guidance sets out the steps organisations should take to prevent exploitation across their operations. These recommendations include:

Conducting regular risk assessments to identify slavery risks, focusing on the supply chain, procurement and recruitment of labour; training staff to help them identify signs of potential victims; requiring labour providers and suppliers to conduct diligence checks on workers; interrogating low-cost bids to ensure labour is properly paid; raising awareness of exploitation issues with smaller suppliers and encouraging employees to report any concerns to Police Scotland.

At present there are no direct sanctions for failure to publish a modern slavery statement under the Act, although the Secretary of State can compel performance through the courts. However, this may be may be about to change – the Justice Secretary, Humza Yousaf, has pledged to write to every major company in Scotland which appears not yet to have met its statutory obligations. A review of the Modern Slavery Act has also been commissioned by the UK Government which will consider financial penalties and exclusion from public tenders as tools to promote greater compliance.

The biggest risk to business though is a growing public awareness of modern slavery and a greater expectation that large businesses will take action to eliminate it. Scottish companies should reflect on whether they currently operate in compliance with the law and take action quickly to remedy the situation if it is required.