Navigating Modern Slavery Risks: Lessons from Recent Cases

Recent reports have underscored the difficulties businesses face in identifying and preventing modern slavery within their operations. High-profile cases involving workers at McDonald’s and several supermarkets have highlighted how challenging it can be to detect exploitation, even within well-established and reputable companies.
 

These incidents serve as a reminder that modern slavery risks are often hidden and can infiltrate legitimate business operations, making it essential for companies to adopt robust risk-based policies, conduct comprehensive risk assessments and implement ongoing monitoring to safeguard against such risks.

Modern Slavery in the UK: A Growing Concern

Recent statistics from the UK government have highlighted the increasing scale of modern slavery. Between April and June 2024, 4,239 potential victims of modern slavery were referred to the National Referral Mechanism (NRM), a significant increase over previous years. Labour exploitation remains the most common form of abuse, especially in sectors such as hospitality, agriculture, and manufacturing, where large workforces are often employed.

This growing number of victims underscores the need for businesses to reconsider its modern slavery risk profile and assess how it can better protect its staff. In the McDonald’s case, the supermarkets and McDonald’s did have in place at the time due diligence processes and procedures. However, they were found to be insufficiently robust to identify the slavery before the whistleblower call of 2019. 

The McDonald’s case

A recently concluded investigation revealed that a human trafficking gang, led by two brothers, forced sixteen men to work at a McDonald’s franchise and Speciality Flatbread Ltd, a bread-making factory supplying Asda, Co-op, M&S, Sainsbury’s, Tesco and Waitrose. The victims were enticed from the Czech Republic with false promises of work, accommodation and a better life in the UK. However, between 2015 and 2019, the men were exploited by being forced to work for excessive hours; having their wages stripped from them; being housed in incredibly overcrowded and/or unsanitary conditions and, when not working, being forced to carry out domestic chores for the trafficking gang. The victims’ passports were also confiscated. Following a tip-off in 2019 to the Czech Republic police, the UK police were alerted and a referral to the NRM was made. After a lengthy investigation and prosecution delayed by COVID-19, the traffickers were found guilty of various modern slavery and fraud offences and sentenced to lengthy periods of imprisonment.

Legal Obligations for Companies

Section 54 of the Modern Slavery Act 2015 requires commercial organisations (supplying goods or services with a turnover equal to or greater than £36m) to prepare and publish a Slavery and Human Trafficking Statement. The Statement must be published on their website with a link to it on their homepage. As per statutory guidance, the statement must outline the steps taken during the financial year to combat modern slavery. If no actions were taken, the organisation is still required to publish a statement reflecting that fact (see our previous blogs here and here for additional commentary on the Modern Slavery Act and Slavery Statements).

If a business fails to produce a Slavery and Human Trafficking Statement for a given financial year, under section 54(11) of the same Act the Secretary of State may seek an injunction through the High Court to compel the organisation to comply. If the business continues to disregard the injunction, it could be found in contempt of court, which is punishable by an unlimited fine.

In practice, non-compliance occurs when a business fails to produce the required statement, fails to publish it on their website (if applicable), or does not adequately describe the steps taken during the financial year to combat modern slavery. Organisations are expected to enhance their Slavery and Human Trafficking Statements over time, demonstrating ongoing progress. Failure to comply or stating that no actions were taken can damage a business's reputation, prompting scrutiny from consumers, investors, and NGOs.

The Modern Slavery Statement registry was set up in 2021 to boost transparency. It allows UK companies to upload their annual Slavery and Human Trafficking Statements, outlining the steps they are taking to address the risks of forced labour in their supply chains. In April 2024, updates to the Registry added automatic email reminders for timely submissions and enhanced summary and search pages, showing how many recommended sections each company has completed. This helps consumers gauge how effectively businesses address modern slavery risks.

The guidance states that although smaller organisations (with an annual turnover below £36 million) are not legally required to produce a Slavery and Human Trafficking Statement, they may choose to do so voluntarily. Demonstrating transparency around recruitment and anti-slavery measures is encouraged for all businesses, as it reflects a commitment to ethical practices. This can also be commercially advantageous for smaller companies when competing for contracts with larger organisations.

Mitigating Risk – Policies, Controls and Procedures

This all demonstrates that implementing policies, controls, and procedures (“PCPs”) to combat modern slavery risks must be specific to the challenges faced by each industry and business. Enforcement agencies frequently stress that a company’s risk analysis cannot be a simple tick-box exercise and a risk-based approach must be adopted. PCPs must be living documents, proactively identifying new risk areas and reactively and robustly responding when weaknesses in its operation is identified. These measures not only help businesses protect vulnerable workers, but also reduce the risk of reputational damage and ensure compliance with modern slavery legislation.

As a preliminary step, businesses should undertake a business-wide risk assessment. This assessment will help corporates identify vulnerabilities particular to its operations. It will then allow the company to ensure its anti-slavery procedures are proportionate, effective, and based on actual risk levels.

Companies should then ensure their PCPs are recorded in a clear, accessible form. These should cover:

• Due diligence: Due diligence measures being deployed, throughout a company’s supply chain, should be identified and explained. Decisions on the due diligence to be applied to employees, contractors and those in the company’s supply chain should be detailed. Red flags found in the McDonald’s case included: wages being paid into bank accounts not in the employees’ names; employees being unable to speak English (when the application form required submission in English); the presence of interpreters in interviews (who were not appointed by McDonald’s) and employees having the same registered home address;
• Reporting Structure: A clear internal process for employees to report concerns should be set out, with designated points of contact who can escalate concerns if necessary.
• Ongoing Risk Monitoring: Businesses need to ensure that modern slavery risks are continuously monitored, with the policy updated regularly to reflect changes in the risk environment.
• Policy: The policy should be reviewed at set intervals to ensure risk assessments continue to reflect the actual risks posed. Review dates must be recorded.
• Training: There should be a clear approach to training employees on modern slavery risks. This should specify which staff members require training, how often it is provided, and how training completion is logged. Ongoing training ensures that staff are aware of the signs of modern slavery and the process for reporting concerns.

Finally, it is essential that the ‘tone from the top’ is pitched correctly. If a company wants its staff to understand and implement the controls, it needs to ensure its senior staff are properly role-modelling.   

Conclusion

Addressing modern slavery within business operations is not an easy task, but it is an essential one. By adopting a risk-based approach, businesses can ensure that their procedures are both proportionate and effective in combating modern slavery and identify red flags early on. This not only demonstrates a company’s genuine commitment to combating modern slavery and building a safe and respectful place to work, but it is also essential for litigation and reputation-proofing a company.

Further Information

If you have any questions or concerns about the topics raised in this blog, please contact Sophie Wood, Antonia Szapary or any member of our criminal litigation team.

About the Authors

Sophie Wood is a Legal Director in the Criminal Litigation team with extensive experience in advising corporate and individual clients involved in a wide range of internal, criminal and regulatory investigations. Sophie has acted for individuals and companies involved in investigations brought by the Environment Agency, Health and Safety Executive and local authorities, and is a member of the firm’s cross-practice Health, Safety and Environment Group.

Antonia Szapary joined Kingsley Napley in September 2023 as a Trainee Solicitor and is currently completing her third seat with the criminal litigation team. Antonia is assisting with matters including criminal defence and police investigations, white collar and financial crime, international crime and extradition, and internal corporate investigations.