Peters & Peters

British standard on modern slavery: key expectations for legal, compliance and senior management

At the end of September 2022, almost seven years after the introduction of the Modern Slavery Act 2015, standard 25700:2022 of the British Standards Institution (BSI) came into effect, offering guidance and recommendations on organisational responses to modern slavery.

As explained in the first part of our four-part series on the standard, the standard provides a practical roadmap for businesses seeking to navigate the complex modern slavery landscape. Although not legally binding, the courts are likely to have to regard to it in relevant cases.

As such, senior managers and legal and compliance teams should familiarise themselves with the standard and its approach to their responsibilities to help them manage risk relating to modern slavery.

This second article offers a whistle-stop tour of some of the standard’s key expectations for legal and compliance teams and senior management.

Part 1 dealt with the standard’s approach to contextual risk management and introduced the standard and its legal status. Part 3 will set out further detail on some key measures, systems and controls set out in the standard. Finally, the last part will consider the standard’s approach to responding to incidents of potential modern slavery.

Key roles within business

Internal allocation of compliance obligations

The standard expects businesses to identify key workers responsible for managing and implementing compliance obligations, and to ensure that they understand their responsibilities.

Specific allocation of responsibilities varies depending on the business, but the standard appears to envisage that a number of obligations relating to systems and controls will largely be allocated among legal counsel, compliance managers or the company secretary.

It notes that legal and compliance teams may be given responsibility for:

– ensuring that legal and other obligations are met;
– establishing a schedule to review incoming mandatory obligations, and identifying/documenting mandatory obligations related to modern slavery mitigation and emerging modern slavery legislation applicable to business activities, products and services;
– helping to set ethical standards beyond legal requirements (which in our experience, may be challenging for some businesses if there is less active senior executive buy in);
– advising the board on human rights and modern slavery risks;
– ensuring contractual terms and conditions and tender documents contain appropriate clauses and provisions in relation to modern slavery risk (where possible, the standard appears to envisage review of both new and existing contracts/documents in this regard), and understanding how to address default provisions in contract clauses where modern slavery has been uncovered (in our experience, this is often more easily said than done, depending on the level of leverage available to the business);
– ensuring that an annual review is carried out in relation to modern slavery policy developments, and that there is a “suitable and sufficient” audit programme; and
–  devising internal accountability for compliance risk management (something which in our view, might benefit from outside assistance due to the obvious potential issues relating to independence when designing systems relating to own role incentives/accountability).

Legal counsel’s obligations

The standard suggests that legal counsel’s role, in addition to managing the business’ legal function, includes:

– providing effective advice to senior management on organisational strategies/implementation;
– influencing the business on issues relating to ethics, governance and risk;
– overseeing external legal counsel’s work in relation to modern slavery issues and the publication of external statements and policies; and
– following up on the annual review of contracts and agreements.

In addition, in relation to compliance obligations their role also includes:

– devising a system of internal accountability for managing legal compliance risks (which as noted above, in our view may particularly benefit from external input due to potential issues with independence);
– identifying and documenting mandatory modern slavery legal mitigation obligations and emerging legislation applicable to business activities, products and services, and establishing a review schedule for incoming obligations;
– ensuring the business publicly commits to upholding compliance obligations in its modern slavery policy/statement and that this is communicated to relevant parties, as well as clarifying whether it relates solely to the business’ own activities or incorporates expectations of other entities;
– involving both internal and external consultative processes and senior management and/or the board in the process of creating the policy or statement; and
– specifying how public policy will be communicated to the different parties.

Leadership and senior management’s obligations

The standard instructs oversight bodies and senior managers to integrate modern slavery risk management into all business activities and processes. This also includes communicating accountability for relevant roles relating to managing modern slavery risk management at each level of the business.

Further, the standard instructs oversight bodies and senior managers to demonstrate commitment and leadership by:

– developing and approving business values/principles to reflect commitment against unethical actions, as well as policies and reporting mechanisms related to modern slavery;
– directing/supporting workers to contribute to addressing modern slavery, and supporting other managers to demonstrate modern slavery leadership as applicable to their areas of responsibility;
– establishing, implementing, maintaining and reviewing modern slavery policies/objectives and aligning business strategy and processes with them, overseeing the implementation of modern slavery risk management, and measuring its effectiveness, including ensuring that approaches to tacking risk are appropriately designed and implemented;
– allocating adequate, appropriate and effective resources for timely and effective modern slavery risk management and intervention (including for example investigators, legal expertise and training). This also includes implementing mandatory modern slavery training for all employees, in line with their roles, at appropriate points;
– receiving and reviewing information at planned intervals in connection with modern slavery risk management, and potentially, reporting to the governing body at planned intervals on modern slavery risk management processes (including allegations and identified cases);
– preparing, approving and publishing reporting mechanisms, encouraging the use of reporting procedures including whistleblowing for suspected and actual modern slavery across the supply chain, and ensuring there are no barriers to reporting;
– providing appropriate board training on modern slavery and issues such as occupational health and safety and human rights.
– communicating modern slavery policies internally and externally, including the importance of effective modern slavery risk management, and of course, conforming to relevant policies and processes, and promoting awareness and zero tolerance within the business, as well as its associates and other stakeholders;
– taking account of relevant laws and conventions on issues such as human rights, labour rights, and child labour as well as how they apply to the organization; and
– promoting continual improvement.

Appropriate distribution of responsibilities and resources

Going forward, legal, compliance and executive teams should ensure that they understand their obligations regarding modern slavery risk management, and are comfortable that the distribution of responsibilities and resources across the business are allocated appropriately for effective delivery. In practice, what is needed will vary depending on the business’ activities, scale, culture and specific risk landscape.

We hope that this series of articles will assist businesses seeking to stay up to date and get to grips with these challenging issues.

Also in this series

– Part 1: New British standard gives guidance on organisational responses to modern slavery

– Part 3: British standard on modern slavery: key systems and controls

– Part 4: British standard on modern slavery: incidents and remediation