When Unpaid Wages Amounts to Slavery

Slavery is a matter for history, not for the oil and gas industry. Or is it?

Only last month, an offshore supply vessel, the MV Malaviya Seven, and her sister ship, the Malaviya Twenty, both owned by GOL Offshore, were detained in Scotland and Great Yarmouth respectively after it was alleged that Indian crew members on board the Malaviya Seven had not received any wages for at least two months. 

It is understood that the vessel was providing offshore services to a number of companies operating in the North Sea. The vessels are now likely to be detained for weeks, if not months, whilst the situation is resolved. At best, the vessels’ clients are deprived of the services the vessels were contracted for; at worst, those companies may also find themselves in a slavery investigation.

In addition, on 10 June 2016, the High Court handed down its first ever judgment under the Modern Slavery Act 2015. In its judgment, the High Court found a gangmaster company liable to compensate victims of modern slavery, although the level of compensation has yet to be determined. The workers in question were from Lithuania and had been trafficked to the U.K. and were working in supply chains producing premium free range eggs for McDonalds and leading British supermarket chains.

These cases highlight the need for all companies to take adequate steps to ensure that they are not unwittingly participating in modern slavery.

Why is this important?

The Modern Slavery Act 2015 (MSA) was introduced to the House of Commons as a bill in October 2013, received Royal Assent on 26 March 2015 and came into force on 31 July 2015.

The purpose of the Act is to consolidate existing slavery and human trafficking offences whilst increasing the maximum penalties for such offences. It also establishes an independent Anti-Slavery Commissioner, introduces new restrictions on those convicted, or not yet convicted, of offences under the Act and introduces new compensatory measures and protections for victims of trafficking.

Under the Act, a person commits an offence if it holds another person in slavery or servitude, or requires or forces another person to perform compulsory labor. There is also a further offence where a person “arranges or facilitates the travel of another person” with a view to that person being exploited.

These offences are applicable to any U.K. national regardless of where in the world the offence takes place, or to any non-U.K. national if any part of the arrangements or facilitation takes place in the U.K., or if the travel consists of arriving into, departing, or travelling within the U.K.

Both civil and criminal penalties can attach to any offence under the Act and, in some circumstances, the Act provides for the forfeiture of vessels that have been used (or were intended to be used) for trafficking.

Obligations on companies

Under Part 6 of the Act, commercial organizations caught by the Act must prepare a slavery and human trafficking statement for each financial year. This is a statement of the steps the organization has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its own business. Alternatively, a statement can be filed stating that no steps have been taken.

Companies that will need to fulfil this obligation are any that carry on a business or part of a business in any part of the U.K., supply goods and services and have a total turnover of not less than an amount prescribed by the Secretary of State. Following a consultation process, the relevant turnover figure is currently £36 million, and this includes turnover from a company’s subsidiaries.

Summary

As set out above, it is early days for the Act and many issues of interpretation of the Act remain outstanding before the full extent of its reach and impact is known. However, contractors and shipowners need to be aware that there are potentially far reaching consequences of failure to adequately assess the risk of slavery occurring in their supply chains, or indeed their business, including possible detention or forfeiture of their vessels or vessels that are involved in providing offshore services to them.

Source: Ince & Co