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How to avoid debt bondage happening in your supply chain

Posted by Len Simmons on Nov 15, 2016 9:20:08 AM

How to avoid debt bondage and modern slavery happening in your supply chain

The Modern Day Slavery Act implemented by the UK Government in 2015 was welcome news as global leaders fight to out-rule modern slavery. For business here in the UK since the Act was introduced, it has been a learning curve to first understand what is now required to meet legislation, and second to implement a code of conduct and procurement policy that safeguards the future of the business.

Within this learning curve, the nuances of what to look out for in susceptible supply chains have been identified by international groups and charities to help businesses stay compliant. The International Labour Organisation (ILO) has identified a number of indicators that constitute forced labour and all of which are covered in the Modern Slavery Act 2015. This includes:

  • Abuse of vulnerability
  • Deception
  • Restriction of movement
  • Isolation
  • Physical and sexual violence
  • Intimidation and threats
  • Retention of identity documents
  • Withholding of wages
  • Abusive working and living conditions
  • Debt bondage

Debt Bondage

While most of the above criteria is self-explanatory, thus making it easier to communicate the Act with your procurement team and suppliers, debt bondage is a relatively new phrase to the industry.

To aid the understanding of debt bondage, the following description from charity Walk Free Foundation should help to explain it further:

“Debt bondage is a worker pledging their labour or the labour of others under their control as security for a debt; when either the real value of the work undertaken is never applied to repayment of the debt, or the length and nature of the work that has to be undertaken is never fully defined or limited.”

To further explain Debt Bondage, the Walk Free Foundation in their report, Tackling Modern Day Slavery in Supply Chains, they used a real case study to explain how this practice works.

In South Asia, where caste-based stratifications still dominate the social landscape, many lower caste families working in the brick kilns are plagued for years, sometimes generations, by languishing debt.

"The initial debt is often incurred through loans from subcontractors which can never be repaid. The debt is then assigned to the entire family and is not nullified even in death. This means children are forced to work or take on the mounting debts of their deceased parents. Debt bondage subjugates entire families to inescapable cycles of poverty and a life of work in the brick kilns across the region."

What can you do?

This atrocious way of employing workers, of course, needs stamping out. But identifying whether this practice is already in your supply chain can be a hard task. To help businesses out-rule debt bondage and indeed any of the offences under the Modern Day Slavery Act, Corporate Responsibility (CORE) have outlined the key requirements businesses should have to protect themselves, and individuals that may be subjected to modern slavery in their supply chain.

Discover how UK businesses are rising to the modern slavery compliance challenge across their supply chain >

 

Develop policies

As a basic foundation, businesses should be complying with UN Guiding Principles that clearly the state that policies and processes should be in place to ensure human rights. On top of this, businesses need to map existing policies and codes of conduct and identify the coverage of risks related to modern slavery.

Whilst not every company may not have a specific policy on human rights or slavery, you are likely to have at least some policies in place which these relate to. Ensure the most vulnerable areas of your supply chain include policies where applicable on migrant labour, child labour and child protection policies.

Highlight right to work policies

As a minimum, businesses should adopt procedures and policies that cover the fundamentals as set out by the ILO and Rights at Work scheme. This includes respecting the freedom rights of individuals and allowing them to move in and out of employment freely, without the threat of a penalty.

Your policies should also include information on the intolerance of abusive recruitment practices. These not only increase worker vulnerability, but they have been found to lead to debt bondage and forced labour.

Publish, implement and understand

Policies should then be made publicly available and given to suppliers and contractors. This should be swiftly followed by follow-up communication to ensure your supply chain understands the policies, and that they are adhering to them.

The consequences your businesses supply chain could face, if they don’t comply, should be made very clear in your policies. The seriousness of losing a contract from your business, shows the importance of adhering to policy guidelines.

Reviewing and re-assessing

Following the implementation of the policies, procurement teams should be integrating issues the Modern Day Slavery Act holistically into their working practices. As well as asking new suppliers and contractors to comply to your modern day slavery policies, application forms such as pre-qualification questionnaires (PQQs), and updated information questionnaires from existing suppliers, should include questions on modern slavery.

For those suppliers or procurement professionals that have identified a vulnerability in your supply chain, a whistleblowing and complaints procedure should be put in place, and put in your policy too.

Becoming debt bondage free

This combination of contingency and crisis policies and procedures, as highlighted above, can help to negate the risk of you and your supply chain falling foul of the Modern Day Slavery Act.

Debt bondage, as one of part of the act, is something that we all agree shouldn’t have a place in our supply chains. By implementing this best practice around modern slavery policies, you can ensure that debt bondage is a thing of the past – and your business is assured of legislation compliance too.

New Modern Day Slavery Report released

Discover how UK businesses are rising to the compliance challenge across their supply chain by downloading the inaugural Modern Day Slavery Survey 2017 Report. Featuring key findings from procurement and supply chain professionals such as poor internal policies, failing supply chains, and best practice advice to assure long-term slavery compliance.

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Topics: Contractors