We have previously highlighted how from October the Modern Slavery Act will require large businesses to annually disclose the steps they have taken to ensure that there is no slavery in their own businesses or in their supply chains. We now know that a large business will mean any business in the UK which has a total turnover of £36 million per annum or more. Does this mean that businesses turning over less than the £36 million threshold will not be impacted by the Act? Far from it. The steps that large businesses may take will include:
- showing that they have incorporated modern slavery due diligence as part of their procurement process; and
- implementing an "ethical working practices" policy which they require suppliers to comply with as part of their contract with the large business.
As a result, where a smaller business forms part of the supply chain of a large business, the large business is likely to want contractual assurances in relation to slavery in both the smaller business itself and the supply chain below that smaller business. This will, in turn, require the smaller business to both know the supply chain beneath it and to seek similar contractual assurances from its own supply chain.
Research by the Chartered Institute of Procurement and Supply indicates that four out of five British SMEs are struggling to gain end-to-end visibility of their own supply chains. The message for businesses of all sizes is that the Act will result in them having to gain a better understanding of their supply chain than they are likely to have at present.
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