The Modern Slavery Act 2015 requires commercial organisations operating in the UK to produce statements outlining the steps taken to ensure that no slavery exists in businesses or supply chains.

The Modern Slavery Act 2015 (the Act) requires any commercial organisation that supplies goods or services, carries on a business (or part of a business) in the United Kingdom, and has a net annual turnover of at least £36 million to produce a Slavery and Human Trafficking Statement (Statement) setting out the steps it has taken to ensure that there is no slavery occurring in its own business or its supply chains during the relevant financial year.

Our October 2015 LawFlash “The Modern Slavery Act 2015” summarised the Act’s objective to achieve transparency of labour practices in supply chains and the requirement on organisations that meet the relevant criteria to produce Statements. The UK government has now published guidance on preparing a Statement in the guide “Transparency in Supply Chains etc. — A practical guide”.

The requirement on organisations to publish a Statement now applies to organisations with a financial year ending on or after 31 March 2016. The guide states that organisations are expected to publish a Statement as soon as is reasonably practicable (within six months) after the end of each financial year. Although organisations must, under the Act, publish a Statement for each financial year in which they exceed the specified net annual turnover threshold of £36 million, the UK government strongly recommends that organisations continue to publish Statements in subsequent years even if their turnover falls below that threshold.

Content of Statements

While the guide from the government is not prescriptive, it does contains suggestions on what to include in a Statement. The guide suggests that an organisation include the following information in its Statement:

  • The organisation’s structure—i.e., its business(es) and supply chain(s)
  • Any policies that deal with slavery and human trafficking issues (this could include  business ethics policies)
  • Its due diligence processes
  • Identified risks of slavery and human trafficking in its business(es) and supply chain(s) and the steps taken to manage such risks
  • The effectiveness of the steps taken to manage slavery and human trafficking risks and any performance indicators measuring such effectiveness
  • Any training given to staff in the organisation’s business(es) and/or supply chain(s) regarding slavery and human trafficking

Organisations should note that even if they have taken no steps during the financial year to identify, prevent, or mitigate slavery and human trafficking, this information must be included on the Statement.

The Statement is required to be approved and signed by a director, member, or partner of the organisation to ensure senior accountability for preventing modern slavery and human trafficking issues.

Penalties

If an organisation fails to comply with its obligation to publish a Statement, the Secretary of State may seek an injunction that requires the organisation to do so. As a practical matter, failing to comply with the requirement to produce a Statement (or producing a Statement indicating that no steps have been taken to reduce labour exploitation and achieve transparency in supply chains) is likely to be damaging to the reputation of an organisation.