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Modern slavery – first UK company ordered to pay compensation to victims

The Modern Slavery Act 2015 is in force and consolidates offences relating to slavery and human trafficking. The Act includes a requirement for large businesses (those with a turnover of £36million or more) to produce and publish a statement each year. The statement must set out the action that they have taken to ensure that not just their business, but also their supply chains, are free of slavery and human trafficking. This requirement applies to financial years ending 31 March 2016.

Galdikas & Others v DJ Houghton Catching Services Limited & Others

The claimants in this case were six men who alleged that they were trafficked from Lithuania and subjected to severe labour exploitation. They were all confirmed to be victims of trafficking by the relevant authorities, and alleged that they suffered loss and damage, including personal injury, distress and unpaid wages, as a result. The police had raided houses controlled by the company in 2012 and the Gangmasters Licensing Authority revoked the company’s licence.

DJ Houghton Catching Services Limited (“the company”) is a company engaged in the supply of labour to chicken farms in the UK. The company is run by Darrell Houghton and Jacqueline Judge, who were also joined as defendants personally. Mr Houghton and Ms Judge accepted that they were responsible for the company.

The claimants argued that they entered into contracts of employment with the company which were subject to the terms imposed by the Agricultural Wages Order which prescribes minimum hourly pay rates applicable to various grades of worker. The claimants claimed that they were not paid the prescribed rates for daytime work, overtime work or night work, and were not paid at all for travel time (even though journey time between jobs could sometimes take several hours). The defendants blamed their accountants and said that travel time was not classed as farm work.

Other claims included unlawful deductions from wages. It was argued that deductions were made for “spurious reasons”. It had previously been found by a Gangmasters Licensing Authority inspector that monies were deducted for accommodation charges and work finding fees, amounting to £90 per week, per worker.

It was also claimed that the workers were not given facilities to wash, rest, eat and drink. They said that they had to use travel time in minibuses to sleep; that working conditions were usually poor and that they were filthy because they had no protective clothing and there were no adequate washing facilities. This was denied, but it was accepted that the work was hard and took place in unpleasant conditions. They also claimed that the accommodation provided was not fit for human habitation. A previous inspection had found that the accommodation was overcrowded and was damp and mouldy.

Decision

The High Court ruled that the workers were entitled to compensation for:

  • Failure to pay the agricultural minimum wage;
  • Charging prohibited work finding fees;
  • Unlawfully withholding wages; and
  • Depriving workers of facilities to wash, eat, rest and drink.

The amount of damages has yet to be decided but is expected to be significant, and a further 10 Lithuanian workers who were employed by the company are known to have brought claims.

Comment

This is the first time that a UK company has been found to be civilly liable for victims of human trafficking and highlights the need for businesses which fall within the ambit of the Modern Slavery Act to take action to comply and ensure that modern slavery is not occurring in any of its supply chain.

Whilst on the face of it the new rules only apply to large organisations, in practice the effects will be far more wide-reaching due to the requirement for those organisations to scrutinise their supply chains and demonstrate that sufficient measures are in place to prevent modern slavery. Therefore smaller organisations which form part of a supply chain of a large organisation will, in many cases, asked to set out what steps they take.

It is likely that as part of this process, modern slavery will be referred to in commercial contracts between businesses and their suppliers, perhaps to warrant that no such practices are present in their business or supply chains, and/or to produce their own anti-slavery and human trafficking statement.  It is also highly likely that this information will be required and analysed during tendering processes.

The modern slavery statement should address (amongst other things) the structure of the business and supply chains, measures taken to eliminate and prevent modern slavery including risk assessments and staff training.

If businesses fail to prepare a statement, the Secretary of State could issue proceedings for an injunction requiring them to do so. However damage to reputation and brand by failing to prepare a statement (or saying that the organisation has taken no steps) is likely to be a more common concern.

If you have any queries on the requirements under the Modern Slavery Act, require assistance in preparing a slavery and human trafficking statement or if you have any other HR query please contact Joanne Holborn, Tom Scaife or Caroline Rayner on 01228 552600 or 01524548494

 

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