Many manufacturers who trade with US companies and other international organisations will be accustomed to seeing human trafficking and slavery policies in contracts. New legislation is about to create similar requirements for UK manufacturers.

The Modern Slavery Act 2015 (the Act) is intended to tackle modern slavery by consolidating various offences relating to human trafficking and slavery.

From October 2015, commercial organisations with a turnover of £36 million or more carrying on business in the UK will have to prepare a slavery and human trafficking statement each financial year, stating the steps they have taken to ensure their business and supply chains are slavery free. The statement will have to be published on the organisation’s website and a failure to comply can lead to an injunction.

Which businesses will be covered?

Commercial organisations that supply goods or services and have a minimum total turnover of £36 million. The threshold of £36 million applies to global turnover, not just UK turnover, and is expected to include subsidiaries.

“Commercial organisations” means companies (both listed and private) and partnerships, wherever they are incorporated or formed, that carry on a business or part of a business in any part of the UK and will therefore include foreign businesses.

The Act will impact many UK manufacturers.

What is meant by slavery and human trafficking?

Conduct that constitutes the offences of slavery, servitude, forced or compulsory labour and human trafficking, or would constitute an offence if the conduct took place in the UK.

Slavery is where ownership is exercised over a person; servitude involves the obligation to provide services imposed by coercion; forced or compulsory labour involves work or service exacted from any person under the menace of a penalty and for which the person has not offered himself voluntarily; and human trafficking concerns arranging or facilitating the travel of another with a view to exploiting them.

Content of the statement

The statement will have to include an account of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its business. Alternatively, the organisation can state that it has taken no such steps. Most businesses are unlikely to use the second option, as it may lead to scrutiny and public pressure, which could impact on their reputation and profit.

The Act provides that the statement may include information about:

  • The organisation’s structure, business and supply chains;
  • Its policies in relation to slavery and human trafficking;
  • Its due diligence processes regarding slavery and human trafficking in its business and supply chains;
  • The parts of its business and supply chains where there is a risk of slavery and human trafficking taking place and the steps it has taken to assess and manage that risk;
  • Its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
  • The training about slavery and human trafficking available to its staff.

Due diligence will be required in relation to suppliers, both in the UK and overseas.

Approval and publication of the statement

The statement must be approved by the board of directors and signed by a director.

It must be published on the organisation’s website and a link to it must appear in a prominent place on the homepage. Subsidiaries which exceed the turnover threshold will have to prepare a statement in their own right and publish it on their own website.

Timing

This provision of the Act is not yet in force, although the Government has indicated that it will commence in October 2015 subject to parliamentary scrutiny.

The draft regulations and Home Office guidance on the new duty are yet to be published.

Action points

If your business will be subject to the Act, start preparing by taking these steps:

  • Appoint someone senior to be responsible for compliance;
  • Consider who to consult about the statement, such as PR advisors, the Board, trade unions and employee representatives;
  • Decide which parts of the business will be covered;
  • Decide how much information will be given in the statement;
  • Ensure that procurement teams are aware of the new law and are asking the right questions of potential suppliers;
  • Review contractual provisions within the supply chain so as to ensure that its suppliers have sufficient procedures in place to avoid falling foul of the Act;
  • Assess the risk to the business – this will involve identifying potential areas and jurisdictions that pose a risk and identifying appropriate control measures and “triggers” that should lead to a review of the adequacy of those control measures;
  • Consider introducing a slavery and human trafficking policy if you do not already have one; and If you need any advice on compliance with the Act, please contact Jon Cooper.
  • Think about making training available to those in supply chain management and procurement teams, as well as the rest of the organisation.