The Modern Slavery Act and the Construction Sector

Unfortunately this is not just a story, the construction industry is well known for unlawful employment practices including modern slavery whether directly on construction sites or indirectly in the extraction of the raw materials used on site. But what should the construction sector be doing to comply with the MSA?

The MSA did not create a new offence of ‘modern slavery’ as slavery was and still is a crime but it did introduce a new requirement for some commercial organisations to prepare and publish an annual Section 54 ‘Transparency in Supply Chains’ Statement. This is intended to set out the risk of modern slavery occurring in a business and its supply chains and the action taken to combat this. The idea is that if you know where slavery might be then you can take action to stop it. It also means that customers, employees, investors and others can judge you by your actions and vote with their feet if you are found to be wanting.

Many construction companies are caught by the MSA and so should be asking all their suppliers (wherever they are based) whether there is any risk of slavery in their operations and how they are or are intending to mitigate it. These suppliers should also be holding their suppliers to account in a similar way. Suppliers include the use of subcontractors to recruit temporary workers.

Unfortunately many of those caught by the MSA pay lip service to the reporting requirements so much so that the government has promised to strengthen the MSA.

Review your workforce

On construction sites the greatest risk is that workers are in fact slaves and so the starting point is to understand what slavery is. Put simply it is coercing another person to undertake labour. Coercion is not just physical force or the restriction of movement but includes the retention of identity documents, retention of wages and threats to the victim’s family. All of these make it very difficult for the victim to leave the employment.

Other indicators are a lack of proper equipment or protection for the task in hand, an unkempt appearance or appearing to be under the control of another.

If you suspect modern slavery do not turn a blind eye but report it to the authorities. Do not confront the victims themselves as this may put them and you in danger. ICAEW’s Modern Slavery Hub has more advice on spotting and reporting victims.

Review your suppliers

Slavery occurs all across the world but particularly in dangerous jobs that require minimal skill levels. The extraction of raw materials for use on site or in the production of plant to use on site are high risk activities. Construction companies should ask all their suppliers if they are aware the MSA applies to them – wherever they are based in the world – and what they are doing to assess the risk. If they are unaware or not doing anything the company should work with them to resolve any issues. Cancelling the contract will only push the problem elsewhere not solve it.

Modern Slavery is as much a financial crime as a social crime and so accountants and business advisors are uniquely placed to spot the signs. The ‘red flags’ for modern slavery are very similar to those for money laundering and other economic crimes including benefit and tax fraud. The accounting records and business practices of an organisation often contain vital clues. Examples include aggressive sales targets and supplier contracts that can only be met by cutting corners, a turnover level that seems unlikely given the number of staff on the payroll, over reliance on one recruitment agent, excessive use of cash and strange payment practices. For more examples see ICAEW’s Modern Slavery Hub.

To help members and their business or clients comply with the MSA the Business and Management Faculty has developed a Modern Slavery Hub. It includes guides and webinars on the legal requirements in the UK and elsewhere, how to spot modern slavery and what to do if you do.

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