The Modern Slavery Act: What you need to do about it?

Businesses in the UK will soon have to publish an annual slavery and human trafficking statement

If your organisation supplies goods or services and carries on (part of) a business in the UK it will soon have to publish an annual slavery and human trafficking statement (a Statement) for each financial year ending on or after 31 March 2016 if its global turnover exceeds £36 million. This threshold includes the turnover of subsidiary undertakings too, so it’s not as huge a number as it first sounds.

Even if you’re below the turnover threshold, your bigger customers and suppliers may well be above it. As part of their supply chain, they’ll be looking to you for assurances about your practices, procedures and supply chains.

If you know about the new requirements and take steps to ensure that your organisation voluntarily complies with them, you’ll be one step ahead when it comes submitting tenders, being selected for preferred supplier lists, or more generally dealing with larger suppliers or customers. Follow our 10 point plan below to get you started.

1. Be aware of the bigger slavery problem
There were between 10,000 and 13,000 potential victims of modern slavery in the UK in 2013 according to official estimates. Launching its Modern Slavery Strategy, the UK Government said: “The scale of modern slavery in the UK is significant. Modern slavery crimes are being committed across the country.” Acknowledging the problem is a first step in addressing it. The Modern Slavery Act 2015 (the MSA) aims to combat slavery and support its victims. If you’re mindful of slavery (in whatever form: forced labour; domestic servitude; sexual exploitation; debt bondage) you’ll be more likely to spot, avoid, and hopefully report it.

2. Consider whether you need to produce and publish a Statement
As explained above, for businesses the key new requirement brought in by (section 54 of) the MSA is the necessity for a Statement if certain criteria are met. Commercial organisations supplying goods or services and carrying on (part of) a business in the UK must publish an annual slavery and human trafficking statement (a Statement) for each
financial year ending on or after 31 March 2016 if their global turnover exceeds £36 million. As a first step, you’ll therefore need to identify whether or not the duty in section 54 of the MSA to produce and publish a Statement applies to you. The threshold is relatively low – £36m global (i.e. not just UK) turnover – especially given that this includes not only the global turnover of an organisation, but also that of its subsidiary undertakings.

3. Get started soon (even if you don’t need to)
If you don’t have to produce a Statement but your turnover is close to the threshold, it’s probably worth starting to put procedures and policies in place now. There’s nothing to stop you from producing a Statement voluntarily. Even if you’re nowhere near big enough to be obliged to produce a Statement, it may make commercial sense to understand what this would entail, particularly given the potential up- and down-stream impacts (see point 9, below).

4. Know when your businesses deadlines are
A transitional provision provides that the requirement to produce a Statement only applies in respect of financial years ending on or after 31 March 2016. Organisations whose current financial year ends before this (i.e. those whose FY ends between 29 October 2015, when section 54 came into force, and 30 March 2016) won’t have to publish a Statement for this financial year.

Those required to comply immediately may include wording in the Statement explaining that it only covers part of the year.

Organisations have up to six months from the end of their financial year to publish the Statement.

5. Know what things to include
The Statement must disclose what steps the organisation has taken to ensure that human trafficking is not taking place in any of its supply chains or its business; or state that it has taken no such steps (with the latter approach being a potential PR disaster!). Home Office guidance – Transparency in Supply Chains etc. A Practical Guide – outlines what should be included in the Statement (see point 6, below).

6. Cover the recommended areas
These include:

• the organisation’s structure, business and supply chains;
• its policies and due diligence processes re slavery and human trafficking;
• areas where there’s a risk of slavery and human trafficking taking place and steps taken
to assess and manage those risks;
• some measure of the organisation’s effectiveness in ensuring that slavery and human
trafficking is not taking place in its business or supply chains; and
• what training’s made available to the organisation’s staff about these issues.
HRC Law would be happy to help by drafting your Statement and/or policy; reviewing your supply-chain contracts; or providing staff training. We’re also running a free seminar in Manchester in April.

7. Tighten up those terms!
Look at your contractual terms with suppliers and tighten these up wherever necessary and possible. Insert new anti-slavery provisions into template agreements, standard terms, tender requirements and supplier Codes of Conduct. HRC Law LLP could provide suggesting wording.

8. Approve and publish your Statement
Once the Statement is finalised, it must be approved at a high level within your organisation. The appropriate approval varies depending on your organisation’s structure e.g. where it’s a company, the Statement must be approved by its board of directors and signed by a director. The Statement must then be published on your organisation’s website (if it has one), with prominent links to it from the homepage. If your organisation has no website, you must send a copy of the Statement to anyone requesting it within 30 days.

9. Stay ahead of the game
Even if you’re below the turnover threshold, it’s probable that (some of) your customers and suppliers will be caught by the requirement to produce and publish a Statement. As you’re part of their supply chain, they’ll be looking to you for assurances about your practices, procedures and supply chains. Thinking about the requirements above, and takings steps to comply with them wherever feasible, could help you to outshine your competitors and stay ahead of the game.

10. Do it properly
If an organisation fails to publish a Statement for a particular year, the Secretary of State has power to seek an injunction or an order of specific performance. Whilst this doesn’t seem likely to happen, failing to publish a Statement (or publishing something which is exposed as untrue) wouldn’t look good from a consumer, PR or investor-relations standpoint. In time, others may require a Statement as a pre-requisite e.g. before submitting a tender, or before becoming a preferred supplier. It therefore makes sense to produce and publish a robust Statement ASAP.

By Simon Whitehead, Partner at HRC Law

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