The UK Modern Slavery Act 2015 (the Act) addresses slavery and human trafficking and imposes obligations on companies to increase accountability on the practices in their supply chains. Modern slavery is defined in the Act as slavery, servitude, forced or compulsory labour and human trafficking.
The legislation puts the onus on transparency, requiring companies to be open about what they are doing to tackle modern slavery and human trafficking.
Which companies does the Act apply to?
The Act requires companies to publish certain information regarding modern slavery. The obligation is imposed on companies/partnerships having a global annual turnover of £36m or more which do business in the UK. Note that this is not limited to companies that are incorporated in the UK; it applies to all businesses providing goods or services within the UK. As such, overseas parent companies having a subsidiary in the UK will also be subject to the Act, unless the subsidiary is acting completely independently of the parent or other organisations within the group.
Section 54 of the Act requires companies to publish a statement on their website (the homepage must have a prominent link to such statement) which must be approved by the Board and signed by a Director. The aim of the statement is for companies to state what steps, if any, they have taken to ensure that slavery and human trafficking do not take place in its business or any part of its supply chain. This could be a statement to the effect that no steps have been taken in this respect, however, the damage to a company's brand would be such that this is not advisable.
What should the statement cover?
The statement should be in plain English and reader-friendly – the idea being that consumers, suppliers and employees can make informed decisions about the companies they choose to buy from or work with. The statement should be updated every financial year and should highlight:
- the company's structure and business model;
- risks of slavery in the supply chain and the parts of the business to which those risks relate;
- any steps taken by the company to manage the risk of slavery and human trafficking;
- the business's due diligence regarding its supply chain;
- policies in place relating to slavery and human trafficking; and
- any training undertaken by staff.
The statement should be a clear risk assessment of the sector in which the company operates and the complexity of its structure and supply chain. The more countries a company operates out of, the more comprehensive the work leading up to the statement will have to be.
What if the company doesn't publish a statement?
Whilst there are no direct financial penalties for failing to comply, the Act enables the Secretary of State to seek an injunction against any company or partnership that fails to comply with the Act. Failure to comply with the injunction can lead to a fine. More generally, failure to comply will also have reputational implications. It is useful to bear in mind that as part of a commercial contract, you may be required to provide an anti-slavery policy – particularly if your business is operating in countries at risk.
Whilst publishing a statement on a company's website will ensure compliance with the Act, it is rather meaningless without companies taking positive steps to eradicate all forms of modern slavery in their supply chains.
Modern Slavery checklist:
- Carry out a risk assessment.As part of the assessment, consider your supply chains and at-risk countries in which your business is present. Tools such as the Global Slavery Index (https://www.globalslaveryindex.org/) will assist in identifying these.
- Consider whether a statement is required under the Act. Remember to take into account your global turnover, including that of all subsidiaries.
- Liaise with suppliers to understand the information they provide about the goods or product supplied and request further information about modern slavery and trafficking – such as whether they have any policies or procedures themselves to tackle the issue.
- Implement anti-slavery policies, or review existing policies within your company and ensure copies are readily available for members of staff, suppliers and other companies you may contract with. Ensure you take appropriate action towards members of staff who do not comply with your policies.
- Amend your contracts, or review existing ones, to include appropriate provisions and impose an obligation on the supplier to comply with the requirements of the Act, and a possibility for you to audit suppliers to check compliance.
- Train your staff to check for warning signs of modern slavery and human trafficking, particularly those members of staff who deal with procurement.
- Review your procurement policies and practice to ensure regard is had to suppliers' compliance with the Act; and include a due diligence exercise on suppliers as a standard procedure.
- Have procedures in place to review all the above and update the company's modern slavery statement every financial year. Government guidance suggests this should be published within 6 months of the end of the financial year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.