Whilst some businesses have been quick off the mark to publish their modern slavery and human trafficking statement already the official requirement to publish a statement took practical effect yesterday.
Relevant organisations with a financial year-end of 31 March 2016 or later will need to publish a statement, with Government guidance advising that such a statement be published within six months of the organisation’s financial year-end. As more statements are released, we anticipate an increasingly consistent approach to format as organisations assess the approach being taken by their peers. The Government’s hope is that this will lead to a ‘race to the top’ in the quality and content of statements.
In the run up to publishing a statement, we set out below some particular issues that businesses may need to grapple with:
- Deciding which group companies will be affected, either up or down the corporate structure. Section 54 of the Modern Slavery Act has global application, meaning that an organisation does not have to have a UK ‘footprint’ to be caught. One of the key questions is whether the organisation is carrying on business or part of its business in the UK. The Government has recommended that a ‘common sense’ approach be taken to this question and it may be that an organisation considers that because it has a de minimis business presence in the UK it is not within the scope of section 54.
- A more detailed assessment may need to be made of business structures such as holding companies, funds, trust structures and joint ventures.
- Complicated considerations of territorial jurisdiction may apply in relation to business operations located offshore, such as oil rigs and drilling platforms.
- Care should be taken to apply all of the necessary reductions for tax and trade discounts when calculating whether an organisation meets the turnover threshold of £36 million.
Contents of the statement
- Which companies within a group will the statement cover? Even though particular corporates may not fall within the scope of section 54 a decision may be taken to publish a statement covering all the corporates within the group.
- Whilst some businesses have voluntarily disclosed issues of modern slavery or human trafficking identified in their business or supply chain this is not required by section 54. The requirement is only to report on the steps an organisation has taken to ensure modern slavery and human trafficking are not taking place in their business or supply chains. An organisation may therefore wish to carefully consider how much it discloses in its statement.
Whilst the government has so far decided not to keep a central register of statements it is worth noting that the Business and Human Rights Resource Centre is keeping its own registry of statements.
See below for our previous updates on the Modern Slavery Act 2015: