Achieving Modern Slavery Act Compliance with Vendor and Contract Automation

The Modern Slavery Act is legislation aimed at combating modern slavery, forced labour, and human trafficking within businesses and their supply chains.

This Act places a legal obligation on large companies operating in the UK to be transparent about their efforts to identify and address modern slavery risks. Failure to comply can result in severe penalties, including unlimited fines and reputational damage.

Ethical practices aren't just limited to the UK, though - especially when businesses have a globalised supply chain. This piece of legislation has recently been mirrored in Canada, where Bill S-211 (Fighting Against Forced Labour and Child Labour in Supply Chains Act), came into force on 1 January 2024.

By centralising vendor information, automating due diligence processes, and using powerful risk assessment tools, procurement teams can maintain transparency across their supply chains, demonstrate their commitment to ethical business practices and comply with the legislation.

In this article, we'll take a look at:

• An overview of the Modern Slavery Act
• Key compliance requirements and consequences
• Challenges in achieving Modern Slavery Act compliance
• The role of automated vendor and contract management processes
  
  

What is the Modern Slavery Act?

The Modern Slavery Act act aims to hold organisations accountable for identifying and preventing exploitative practices that deprive individuals of their freedom and dignity.

The Act defines modern slavery as encompassing various forms of exploitation, including slavery, servitude, forced or compulsory labour, and human trafficking.

It recognises that these practices can manifest in various sectors, from manufacturing and agriculture to hospitality and construction, and can occur both domestically and internationally.

Who does it apply to?

The Modern Slavery Act applies to organisations operating in the UK with an annual turnover of £36 million or more. These organisations are required to publish an annual statement outlining the steps they have taken to ensure that their operations and supply chains are free from modern slavery practices.

However, the UK government has been actively reviewing the Modern Slavery Act, with particular focus on its applicability and enforcement. One of the key discussions revolves around expanding the due diligence requirements to cover all sectors and businesses, regardless of size.

By mandating detailed due diligence for all businesses, the government seeks to ensure that every organisation, regardless of scale, takes responsibility for identifying and mitigating risks of forced labour, human trafficking, and exploitative practices.

Such a change would mean that businesses across industries - large and small - would need to adopt comprehensive measures, including supply chain mapping, vendor risk assessments, and regular reporting.

Key Compliance Requirements

To comply with the Modern Slavery Act, your organisation must fulfil several key requirements:

1. Annual Slavery and Human Trafficking Statement: Your organisation must publish an annual statement detailing its efforts to identify and mitigate modern slavery risks within its operations and supply chains. This statement should be approved at the highest level of your organisation and made publicly available on your company's website
2. Due Diligence on Supply Chains: Your organisation is expected to conduct thorough due diligence on its supply chains to identify and assess potential modern slavery risks. This includes mapping supply chains, evaluating suppliers, and implementing risk management strategies.
3. Risk Assessment and Management: Your organisation must implement robust processes to assess and manage modern slavery risks within its operations and supply chains. This may involve conducting risk assessments, implementing policies and procedures, and providing training to employees and suppliers.
4. Implementation of Anti-Slavery Policies: Your organisation is required to develop and implement policies and procedures that outline its commitment to combating modern slavery. These policies should be communicated to all employees, suppliers, and stakeholders.
5. Staff Training on Modern Slavery Issues: Your organisation must ensure that its employees, particularly those involved in procurement and supply chain management, receive adequate training on identifying and addressing modern slavery risks.

Consequences of Non-Compliance

Failure to comply with the Modern Slavery Act can result in severe consequences for organisations:

1. Legal Action and Financial Penalties: Non-compliance with the act can lead to legal action, including injunctions and unlimited fines imposed by the UK government.
2. Reputational Damage: Organisations found to be linked to modern slavery practices can suffer significant reputational damage, leading to loss of consumer trust, stakeholder confidence, and business opportunities.
3. Loss of Business and Consumer Trust: As consumers become increasingly aware of modern slavery issues, they are more likely to boycott organisations associated with exploitative practices, leading to a decline in sales and revenue.

By understanding the Modern Slavery Act, its applicability, key compliance requirements, and the consequences of non-compliance, your organisation can take proactive steps to address modern slavery risks and demonstrate its commitment to ethical business practices.

Challenges in Achieving Compliance

Achieving and maintaining compliance with the Modern Slavery Act can be a daunting task for businesses, particularly those with complex and extensive supply chains. Here are some of the key challenges they may face:

Complexity of Supply Chains

Many businesses today have intricate and global supply chains, with multiple tiers of vendors and suppliers spread across different countries and regions.

Gaining visibility into these extended supply chains and ensuring that every link adheres to ethical labour practices can be an arduous undertaking.

Mapping out the entire supply chain, identifying potential risks, and implementing effective due diligence measures can be resource-intensive and challenging.

Difficulty in Obtaining Updated Compliance Documents

Ensuring compliance with the Modern Slavery Act requires businesses to obtain and maintain up-to-date compliance documents from their vendors and suppliers.

As supply chains evolve, businesses must continually request and collect new or updated compliance documents from vendors.

This process can be time-consuming and prone to delays, as vendors may not prioritise providing these documents. They may also have their own internal processes that slow down the exchange of information.

Regular Re-evaluation and Reconfirmation of Compliance Obligations

Compliance with the Modern Slavery Act is not a one-time exercise; it requires ongoing vigilance and regular re-evaluation.

Businesses must continuously monitor their supply chains for any changes or potential risks that may arise, and they must reconfirm their vendors' compliance status at regular intervals.

This ongoing process can be resource-intensive and challenging to manage, especially for businesses with a large and dynamic supply chain.

The role of automated vendor and contract management processes

Achieving compliance is a critical responsibility for your business, but relying on manual processes for vendor and contract management can significantly undermine these efforts.

Manual approaches are often slow, error-prone, and difficult to scale, leaving your organisation vulnerable to compliance risks.

It becomes challenging to consistently track vendor practices, verify supply chain transparency, or ensure all necessary checks are completed on time. Missing documentation, inconsistent record-keeping, and a lack of centralised oversight can lead to blind spots that expose your business to ethical and legal vulnerabilities. Automating those processes is essential for staying ahead of these challenges.

By implementing automation, your organisation can streamline due diligence workflows, maintain real-time visibility over its supply chains, and create reliable audit trails. Automated systems also enable proactive compliance by setting alerts for missing certifications, contract renewals, and key regulatory milestones - ensuring your team can focus on mitigating risks rather than managing paperwork.