Modern Slavery Act 2015

06 June

The Act consolidates offences relating to “slavery and human trafficking”.

“Modern slavery” refers to the exploitation of people or the coercion of people to work (there are an estimated 21 million people in the latter category).

If you are a company or partnership that carries on a business in the UK that has a turnover of £36 million, then under Section 54 of the Modern Slavery Act 2015 you will be required to publicly state the action that you have taken to ensure that your business and supply chain are slavery free. This must take place each year.

Section 54 came into force on 29^th October 2015. However, transitional provisions exempted entities with a financial year ending before 31^st March 2016 from the need to report on their current year. The requirement currently applies for financial years ending on or after 31^st March 2016.

Content of the Slavery and Human Trafficking Statement

The slavery and human trafficking statement must include either a statement:

Of the steps the organisation 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; or
That the organisation has taken no such steps.

The slavery and human trafficking statement may including information about:

The organisation structure, business and its supply chains;
Its policies in relation to slavery and human trafficking;
Its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
The parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
Its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate.
The training about slavery and human trafficking available to its staff.

There is no prescribed form or length requirements for the statement, but further guidance is expected during the course of October.

In the case of a company, the statement must be approved by the board and signed by a director.
If the organisation has a website, it must publish the statement on that website and include a link to the slavery and human trafficking statement in a prominent place on the homepage. If the organisation does not have a website, it must provide a copy of the statement to anyone who makes a written request for one within 30 days of the company receiving the request.

Key Implications

As the slavery and human trafficking statement is a new requirement, key areas to consider include:

Additional to strategic report. The statement is additional to the existing requirement for quoted companies’ strategic reports to disclose information about social, community and human rights issues.
Risk management systems. The organisation will need to develop risk assessment and due diligence processes for preparing the statement and integrate those processes into existing risk management systems.
Policies and contractual processes. The organisation may already have relevant staff and supplier policies and contractual processes that will need to be developed to address slavery and human trafficking for the purposes of the statement.

Key action points for commercial organisations

The slavery and human trafficking statement requirements may require significant development of the organisation’s risk management processes. Organisations will need to consider the following:

Who should prepare at statement? Identify the organisations in the group structure that satisfy the turnover threshold and must prepare a statement.
Manage the process. Decide on the co-ordination of teams to be involved in gathering the information for the statement, the wording of the statement and the approval and publication procedures. Appoint a co-ordinator responsible for compliance.
Risk Assessment. Carry out a risk assessment (using appropriate metrics) and report on those of those parts of its business and supply chain where there is a risk of slavery and human trafficking. If risk is identified, assess the level of risk and take steps to prevent, monitor and mitigate the risk.
Policies and contractual provisions. Develop, disseminate and monitor policies and contractual provisions on slavery and human trafficking for staff and suppliers. Check whether suppliers are contractually obliged to audit their own supply chains and report on the findings. Develop adequate systems to ensure compliance with policies and contractual procedures, investigation of potential breaches and the further steps to be taken.
Training. Provide appropriate training to staff and suppliers on how to identify slavery and human trafficking and the procedures to follow if it is suspected.
Whistleblowing procedures. Ensure that the organisation has appropriate whistleblowing procedures for persons to raise slavery and human trafficking issues.
Retain documents. Retain documentary evidence to support conclusions in the slavery and human trafficking statement.

Failure to Comply:

Failure to comply has the potential to result in civil proceedings and an injunction. These would require the business to fulfil reporting requirements. If a business does not comply with an injunction, it could be found in contempt of court and be given an unlimited fine. Legal sanctions aside, non-compliance or even inaccurate reporting could seriously damage a company’s reputation.