Contrary to expectations SMEs are finding that they are affected by the Modern Slavery Transparency Supply Chain provisions because they are required to give assurances to those they supply that they comply with the Modern Slavery Act 2015.

Who is caught?

Under the Modern Slavery Act 2015 commercial organisations, supplying goods or services, with a turnover of £36 million or above must to publish an annual statement setting out what they are doing to ensure that there is no modern slavery both in their own organization and in any of their supply chains. The turnover calculation includes those organisations that are only carrying out part of their business in the UK, as well as including the turnover of foreign subsidiaries, so supply chains can be complex particularly as services are caught as well as goods.

Transitional provisions provide that organisations with a financial year-end from 29 October up to and including 30 March 2016 will not be required to make a slavery and human trafficking statement for the financial year 2015/16.

Organisations with a financial year-end of 31 March 2016 will be required to publish a slavery and human trafficking statement for the financial year 2015/16 within 6 months of their financial year-end.

We have previously reported on the provisions. Click here for more information.

Why does the Modern Slavery Act 2015 affect SMEs?

Enquiries from larger companies

SMEs are affected because they form part of the supply chain of larger companies who are caught by the provisions. SMEs are being asked to give assurances to the larger companies that their supply chains are free of modern slavery and human trafficking in order that the larger companies can complete their risk assessment and publish their statement

Tenders, new contracts and contract renewals

Tender documentation now routinely includes questions about Modern Slavery Act compliance and associated policies irrespective of the turnover of the company being invited to tender.

Similarly, when new contracts and contracts are being renewed, anti-slavery clauses are being included as part of Modern Slavery Act 2015 compliance.

SMEs must be able to point to relevant policies and procedures if they want to win the tender and/or be awarded the contract and continue doing business with the larger company. They risk losing business if they are unable to do so.

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