On 29th October 2015 the Modern Slavery Act (Act) implemented changes to UK law designed to reduce human trafficking and slavery which are likely to impact on businesses of all sizes across a variety of sectors. In particular, certain businesses must now disclose the steps they have taken to ensure that their business and supply chains are free from modern slavery which includes servitude, slavery, forced and compulsory labour and human trafficking.
The Act requires “commercial organisations” (partnerships or any other form of corporate body carrying on any part of their business in the UK) that supply goods or services and have a minimum turnover of £36 million to produce a “slavery and human trafficking statement” for each financial year ending on or after 31 March 2016. This is a statement of the steps that an organisation has taken to ensure that modern slavery is not taking place within its business and supply chains.
The statement must be approved by the organisation’s directors or equivalent senior management team. The statement must also be published in a prominent place on the organisation’s website, or be provided within 30 days of the organisation receiving a written request if it does not have a website.
There is no prescribed format or content for the statement, however the Act provides guidance on the information that the statement may include. Amongst other things the statement may identify parts of the organisation’s business and supply chains where there is a risk of slavery and human trafficking taking place, the steps taken to assess and manage that risk, and the organisation’s broader modern slavery policies.
Home Office guidance has now been published which provides further information on what may be included within the statement and how an organisation can comply with the Act.
There are no penalties under the Act for failing to publish a statement, although the Secretary of State can obtain an injunction requiring an organisation to do so. An organisation would however be able to comply with the Act by simply stating on its website that it has taken no steps to ensure that modern slavery is not taking place within its business and supply chains.
It should however be borne in mind that the making of such a statement or a failure to publish any statement at all may attract negative attention from shareholders, customers, trade unions, and other organisations, such as non-governmental organisations and human rights groups which affect the organisation’s reputation, share value and profitability.
The requirement for large businesses to have a degree of transparency within their supply chain will inevitably impact on businesses of all sizes looking to supply them with goods and services. Prospective contractors can therefore expect to find that their own policies and procedures are closely scrutinised in the course of procurement processes or other pre contract due diligence.
Contractors doing business with larger organisations can also expect the contractual arrangements to include provisions necessary to ensure the absence of slavery within the contractor’s own supply chain. Such measures may include requirements for contractors to comply with the larger organisation’s’ anti- slavery policy, provide reports to the larger organisation on the measures that they are taking to minimise modern slavery, or even to avoid conducting business in particular countries where there is a high risk of modern slavery occurring.
Such additional pre contractual and contractual requirements are likely to become as common place as the equality, anti bribery or safeguarding policies requirements that many large businesses impose when appointing contractors.
It will accordingly be crucial for businesses of all sizes to proactively review existing policies, procedures and approach to supply chain transparency and modern slavery to ensure that they have a suitable slavery and human trafficking policy in place underpinned by appropriate and proportionate policy and operational measures.