Modern Slavery Act
The Modern Slavery Act 2015 (the Act) was introduced in March 2015.
The Act seeks to amalgamate existing criminal offences relating to modern slavery (including slavery, servitude, forced and compulsory labour and human trafficking), increase the measures available to law enforcement agencies to address the matter of modern slavery and increase protection afforded to victims.
This note summarises the changes in English law. It is intended to comment on the potential impact upon commercial organisations.
The Act requires ‘commercial organisations’ who carry on a business or part of a business in the UK supplying goods or services with a minimum annual turnover of £36 million to publish a slavery and human trafficking statement each financial year on their website (if they have one).
A commercial organisation is a body corporate (wherever incorporated) or partnership (wherever formed) carrying on a business or part of a business in any part of the UK. There is no minimum level of ‘business’ required in the UK to trigger the reporting requirement and no requirement for an organisation to be physically located in the UK.
Statutory guidance notes that, in applying a common sense approach to the disclosure requirement, an organisation that does not have a demonstrable business presence in the UK will not be caught by the provisions.
The requirement to publish a statement commenced on 29 October 2015, but the obligation does not have effect in respect of organisations with a financial year ending before 31 March 2016. Organisations with a year-end of 31 March 2016 will be required to publish their statement for the 2015-2016 financial year. The government’s expectation is that statements will be published within six months of the organisation’s financial year-end.
There is the option to take a group approach. Where, for example, a parent company and a subsidiary are both required to produce a statement, one statement may be produced and published on each website, as long as it covers the business and supply chains of both entities.
Home Office guidance says it is good practice for parent companies to include their foreign subsidiary companies in their statement to show they are serious about eradicating modern slavery.
The Act neither states what a statement must contain, nor suggests any particular format. However, statutory guidance provides advice on what may be included in a statement. For instance, organisations may:
- include details of its structure, business and supply chains
- include information on its policies in relation to modern slavery
- include a summary of the due diligence processes adopted regarding slavery and human trafficking within in its business and supply chains
- identify the parts of its business and supply chains where there is a risk of slavery and human trafficking, focussing particularly on jurisdictions within which modern slavery is prevalent. In addition, identify the steps taken to assess and manage such risk
- include details of Its effectiveness in eliminating or otherwise reducing slavery and human trafficking within its business and/or supply chains (measuring such effectiveness against such performance indicators as it considers appropriate)
- including details of the training provided and available to its staff on slavery and human trafficking.
The government has also published statutory guidance on:
- reporting requirements
- what may be included in a statement in respect of each of the above criteria
- how to respond to modern slavery if it is identified in the UK and abroad.
If you have already taken steps in relation to modern slavery, the statement does not require you to start from scratch. Rather, you should include your present policies in the statement.
There are also statutory requirements regarding approval and publication of the statement.
HEALTH WARNING – Failure to produce a statement
Organisations should be aware that the Secretary of State might seek an injunction requiring a non-compliant organisation to comply. Failure to comply with the terms of an injunction could result in a non-compliant organisation incurring an unlimited fine by way of punishment for contempt of court.
From a commercial perspective, the risk of negative publicity, reputational damage and the potential adverse impact they can have on an organisation’s value are likely to be the main drivers to encourage compliance.
Preparing your business
- Determine which member of your senior management team will be responsible for producing the statement, keeping it under review and updating it and ensure they have access to the information they need to steer your organisation’s approach to modern slavery through the statutory framework.
- Ascertain which entities within your group are required to produce a statement.
- Carry out a risk assessment of the various supply chains within and of which your business is a part to identify any potential exposure to modern slavery.
- Bearing in mind the statutory guidance, consider and agree what information is appropriate to include in the statement, obtaining legal advice as required and taking into account your organisation’s business, the degree of the supply chain of which it is a part, its location and the industry sector in which it operates.
- Check whether your organisation is already taking any current action to address the issue of modern slavery. If it is, this may be the starting point in the preparation of the statement.
- Undertake a review of all your organisation’s existing processes, policies and guidance, which relate to modern slavery, update as appropriate and keep them under review.
- Adopt a policy that addresses how employees and other associated persons (agents, suppliers and other service providers) are required to act to minimise the risk of modern slavery occurring in your business and your supply chains.
- Undertake a review of all existing supplier arrangements, paying particular attention to those within sectors or jurisdictions with exposure to modern slavery. Once identified, liaise with such suppliers to ascertain whether they are under similar obligations to those imposed on your organisation under the Act and in its statement. If any supplier doesn’t have such obligations and doesn’t have policies and procedures in place to comply with the Act and the statement, obtain legal advice to understand the risks and implications of seeking to amend any existing commercial arrangements and (following consideration of such advice) determine the form of approach your organisation should take with such supplier to address such matters.
- Work with your legal advisers to formulate a set of wording to insert into new commercial agreements addressing the matter of compliance with the Act and the statement.
- Be consistent with your organisation’s modern slavery policy and ensure that it is distributed throughout the supply chain.
- Review the group’s whistleblowing policies and amend if necessary to ensure they adequately accommodate the reporting of modern slavery issues in the business and its supply chain.
- Identify the extent and implement any training required to ensure that those within your organisation are familiar with the obligations under the Act and the terms of the statement, paying particular attention to those within procurement and/or with responsibility for managing a supply chain.
- Following review of all the above, determine and allocate the budget required to enable your organisation to comply with its obligations under the Act and implement the policies, procedures and strategies to be implemented to achieve such compliance.
- Be prepared and ensure you have enough resources to be able to respond to any enquiries once your organisation’s statement is published.
If you require any further advice, please contact:
T. 020 7227 7254
T. 020 7227 7040
 The £36m turnover threshold includes the turnover of ‘subsidiary undertakings’ and is calculated on the basis of total net turnover (that is, total amount of revenue derived from the provision of goods and services falling within the ordinary activities of the organisation or subsidiary after deduction of trade discounts, value added tax and any other taxes based on the amounts so derived). ‘Subsidiary undertakings’ has the meaning given by s1162 of the Companies Act 2006.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.