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The UK Modern Slavery Act 2015

Monday 17 October 2016

Background
One year on from the introduction of the Modern Slavery Act, the issue of slavery and human trafficking remains high on the agenda for Government and businesses alike. NHS Supply Chain has had an ethical procurement work-stream since 2007 but we felt it would be useful to provide an update on how our work on labour standards relates to the Modern Slavery Act and what we are doing to respond to the new requirements of the Act.

Global code of conduct
Underpinning how we do business is our Global Code of Conduct which guides NHS Supply Chain's business practices. The Code of Conduct is part of the cultural fabric of our organisation and is the responsibility of the Compliance function. Training is given to all our employees. Our Code of Conduct sets out that;

"We are clearly committed to the elimination of all forms of forced or compulsory labour and to the effective abolition of child labour."

Supplier code of conduct
NHS Supply Chain has a Supplier Code of Conduct which outlines our main principles for suppliers in the area of labour standards and worker welfare. All suppliers are expected to adhere to these principles which address issues such as child labour, forced labour, wages, working hours as well as health and safety. The Supplier Code of Conduct is a contractual requirement and has been part of all NHS Supply Chain Framework Agreements since 2009. It is based on the principles of the UN Global Compact.

Managing labour standards risks (including risks of modern slavery) – our due diligence processes
NHS Supply Chain has taken steps to reinforce the principles of the supplier code of conduct through the introduction of requirements for suppliers to implement and maintain an effective Labour Standards Assurance System (LSAS). Developed in conjunction with the Department of Health back in 2012, the Labour Standards Assurance System covers the range of policies, procedures and practices that an organisation employs to identify labour standards issues, mitigate risk and drive improvements. It builds on the principles of due diligence, extending this to routine consideration of labour standards – particularly important for suppliers doing business in countries where there is evidence of non-compliances and abuses such as forced or bonded labour.

A planned programme of work is well underway at NHS Supply Chain which incorporates the Labour Standards Assurance System into the contract conditions for product areas where there are known and documented labour standards risks or high predictors.

The LSAS is a toolkit for labour standards management and NHS Supply Chain requires suppliers to commission an external third party audit to assess how they are managing these issues in their organisation and also importantly in their supply chain

The LSAS sets out staged milestones for suppliers to meet throughout the duration of the agreement, at six months, 12 months and annually thereafter, with the emphasis on continual improvement.

NHS Supply Chain supports its suppliers going through the LSAS journey with webinars giving them access to expert support and capability building material. We are acutely aware that our supply base is diverse and includes multinationals, SMEs and micro companies. Guidance and support is provided to help all suppliers to get to grips with the key issues and to embed a responsibility down their supply chain.

Assessing our contract portfolio.
The product areas which have been incorporated into the Labour Standards Assurance System (LSAS) have been determined by conducting a risk assessment across NHS Supply Chain’s contract portfolio and by working closely with stakeholder groups such as The Medical Fair and Ethical Trade Group at the BMA, experts in ethical trade, bodies such as ETI (Ethical Trading Initiative) and colleagues active in public procurement elsewhere in Europe.

NHS Supply Chain continually review the areas assigned for LSAS inclusion and its wider portfolio and new areas may be added if risks emerge or abuses are uncovered. The LSAS have now been incorporated into the contract conditions of the Woundcare, Polymer and School Fruit and Veg Scheme Framework Agreements.

Supply chain visibility and mapping
Modern Slavery, or forced labour and bonded labour as defined by the ILO can occur at any stage of the supply chain, however, the greatest risks exist at the stages of the supply chain where there is least visibility, and where regulatory enforcement is weak or non-existent.

As part of our due diligence in this area, we have started mapping the global supply chains for those product areas where there are well documented labour standards issues or where industry practice and societal factors converge to create an environment where exploitation can gain a foothold.

Meeting challenges and tackling issues through collaboration
Poor labour standards in some healthcare supply chains continue to be a focus for NGOs and the media. Where issues have been highlighted and linked to products supplied through NHS Supply Chain, we have a responsibility to investigate. In 2015 we worked with a specialist agency with expertise in investigating labour rights issues, following publication of reports alleging labour standards issues within the production facilities of two suppliers contracted by NHS Supply Chain.

NHS Supply Chain worked with partners to commission verification audits of the suppliers' facilities. While no evidence of slavery or human trafficking was found, at either supplier, the audits did reveal some differences in practice between local and migrant workers and identified where procedures could be improved to mitigate risks further up the supply chain. These findings are now being addressed under improvement action plans, agreed and monitored with both suppliers.

Supplier engagement on modern slavery
Supplier engagement on this issue is essential to ensure our awarded suppliers and business partners are committed to working with us on this issue.

Since the passing of the UK Modern Slavery Act in 2015, NHS Supply Chain has taken steps to raise awareness of the issues of human trafficking and forced labour with our suppliers.

On areas where we have incorporated the Labour Standards Assurance System, we have conducted webinars for the supply base covering the practical issues of embedding effective labour standards management but also obligations under the UK Modern Slavery Act.

Over the last 18 months, we have provided updates for our suppliers on the passing of the UK Modern Slavery Act and the requirements of the legislation in our supplier newsletter. Building on this we have recently written to all awarded suppliers that we know exceed the £36m threshold for reporting under the UK Modern Slavery Act. In this communication, we signposted the Home Office guidance as well as the Modern Slavery and Human Trafficking assessment available on the Single Supplier Registration Portal for Government (formally SID4GOV). We are focussing on encouraging suppliers to complete this online evaluation and upload their own Slavery and Human Trafficking Statements when they become available.


Forward view
Moving forward, we will include specific clauses on the UK Modern Slavery Act into our Terms and Conditions. Our Supplier Code of Conduct already includes a forced labour provision but we are taking the opportunity to review this to align with the requirements of the Act.

Over the past year we have trained over 50% of our procurement team on the UK Modern Slavery Act. This is on-going and our aim is to bring this up to 100% in parallel with our focus on supply chain mapping and labour standards risk assessment.

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