The Modern Slavery Act 2015 (MODSA) is the first of its kind in Europe. Its aim is to bring the laws on human trafficking and slavery into the 21st century. The Act was first passed in March 2015 and comes into force in October 2015.
A person commits an offence under MODSA if they knowingly hold another person in slavery or servitude or if they knowingly require another person to preform forced or compulsory labour. It is also an offence to arrange or facilitate the travel of a person with a view to them being exploited. MODSA makes clear that these are serious offences carrying a penalty of up to life imprisonment.
MODSA attempts to eliminate human trafficking and slavery from the top down by placing obligations on businesses to take a close look at their supply chains. This compliance note will set out these obligations and suggest ways to satisfy them.
What is to be complied with?
S.54 MODSA "Transparency in supply chains etc."
This turns slavery and human trafficking from a corporate and social responsibility to a statutory obligation for businesses.
Who has to comply?
A "commercial organisation" which is defined a body corporate or partnership which supplies goods and services and has a worldwide turnover of more than £36 million. This takes account of the definition on a large company in the Companies Act 2006. Any business which has any connection with the UK, however small, would be encompassed by the definition.
How to comply?
Businesses will have to issue a statement of the steps it has taken during the financial year to ensure slavery and human trafficking is not taking place in any part of its own business or at any level in its supply chain. Interestingly there is also an option to produce a statement that no steps have been taken. Either option is compliant with MODSA.
What should the statement include?
According to MODSA the statement may include information about the following:
- the organisation's structure, its business and supply chains;
- policies in relation to slavery and human trafficking;
- due diligence process in relation to slavery and human trafficking;
- identifying parts of the supply chain where there are risks and the steps taken to manage that risk;
- performance indicators; and
- training for staff about slavery and human trafficking.
The words "may include" are notable. The above are not mandatory requirements, just suggestions.
Other requirements
The statement should be signed by a director or similar. The statement should be published and a link provided to it on the company's website. If the company has no website it is required to provide a copy of the statement upon request.
What measures should businesses put in place?
It is important for business to start thinking about the implications of MODSA now. The following would be prudent:
- Consider what MODSA suggests the statement should include. Analyse each point against the background of your current business practices to identify areas for improvement.
- Appoint a risk assessment manager whose job it will be to ensure compliance.
- Prepare a draft statement.
- Adopt a zero tolerance policy towards slavery and human trafficking and train staff on it.
- Consider each organisation and prospective organisation involved in your business's supply chain. Do they meet the standards required in MODSA or are they a risk?
- Ensure any subcontractors have a compliance regime in place.
- If your business has a turnover of less than £36 million will a future acquisition, merger, expansion or, currency fluctuation push your business over the threshold and bring MODSA into play?
What are the consequences of non-compliance?
According to MODSA the Secretary of State can seek specific performance but no other penalty is outlined. The guidance provided by the UK Government submits that they are relying on industry and consumer pressure to ensure compliance. The Government hopes that S.54 will make transparent which actions businesses are or are not taking to comply with MODSA and in turn investors, consumers and the general public will be able to make an informed decision about who they will do business with. Time will tell whether this moral threat will be enough to persuade businesses to act within the law.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
