Business and human rights: Spotlight on supply chains as UK authorities investigate lockdown working conditions

The UK National Crime Agency and other law enforcement agencies are considering whether to take action in respect of allegations of modern slavery and unsuitable working conditions in textile factories in Leicester. It has been suggested that these conditions have contributed to a spike in rates of transmission of COVID-19 in the city. At least one major UK clothing retailer has commenced an internal investigation in connection with apparent links to the factories identified.

As we highlighted in our alert in May, the pandemic has brought new and heightened modern slavery risks for businesses. UK and Australian authorities have confirmed that businesses need to take account of the particular ways in which COVID-19 may have exposed them to greater levels of risk, for example through relationships with new or different suppliers to ensure continuity of provision of materials or to satisfy higher than usual demand, restrictions on the ability thoroughly to audit suppliers and changes to governance arrangements in relation to supply chain compliance.

Earlier this year, a British think tank suggested the possible introduction of a new offence of failure to prevent human rights breaches (albeit without criminal sanctions attached to it). For full details, see our alert. 

The focus on working conditions in UK factories during the COVID-19 lockdown will reignite debate about whether or how to expand the scope of the Modern Slavery Act 2015 (MSA) and to replicate its requirements in other countries. There is significant political impetus for legislative change in many jurisdictions to introduce additional mandatory reporting human rights due diligence requirements (see summaries in our alerts on proposals in Norway and Switzerland and at EU level).

Discussions about possible changes to legislation will continue. In the meantime, it is likely that various UK enforcement authorities will remain focused on working conditions in manufacturing settings in particular. This is important not only for those manufacturers, but also for those they supply. Section 54 of MSA requires that boards of all commercial organisations with annual revenues of more than £36 million sign off an annual statement about steps taken to ensure that slavery and human trafficking is not occurring in their supply chains or businesses. If investigations reveal that modern slavery, health and safety or other offences have been committed in the factories of manufacturers, questions will follow about how much those in charge of the companies they supply knew or ought to have known about those breaches.