The Home Office has now released the transitional provisions, Regulations and statutory guidance regarding modern slavery and human trafficking statements.
The statements are a requirement for relevant businesses under section 54 of the Modern Slavery Act. See our earlier Law-Now article regarding businesses’ obligations under section 54 here.
For many businesses, it was the timing of the statement which gave the most cause for concern. The Government has now confirmed that businesses with a financial year end between 29 October 2015 and 30 March 2016 will not be required to produce a statement for their current financial year. Relevant businesses with a financial year-end on or after 31 March 2016 will however need to produce a statement within six months of their current financial year-end.
Regulations and statutory guidance
To briefly recap, a business is caught by the section 54 transparency provisions if it:
- is a body corporate or partnership;
- is carrying on business or part of its business in the UK;
- is supplying goods or services; and
- has an annual turnover of £36 million or more.
The new statutory guidance provides extra context and explanatory notes to assist relevant businesses that meet the above criteria in complying with their section 54 obligations.
Both the Regulations and statutory guidance make clear that whether or not a business reaches the turnover threshold is calculated by the revenue derived from the provision of goods and services afterthe deduction of all trade discounts, value added tax and any other applicable taxes.
Turnover includes the turnover of that body corporate or partnership and those of its subsidiaries.
When calculating the turnover of a franchiser, only the revenue of that franchiser will be taken into account and not the revenue of any franchisee. Any franchisee that independently meets the section 54 criteria will, however, also be required to publish its own statement.
The Government has reiterated that legal compliance does not depend on how well the statement is written, presented or indeed upon the content (provided that it sets out the steps taken to ensure modern slavery is not occurring in the business or supply chains, or that no steps have in fact been taken). This will come as a relief to many businesses which have expressed concern regarding whether a specific form will apply to the statement. The guidance further states that the statement should be in English, but may be published in additional other languages as appropriate.
A link to the statement must be displayed in a prominent place on the organisation’s homepage. The guidance suggests the link could, for example, be directly visible on the homepage or otherwise part of an obvious drop-down menu on that page. Where a business has more than one outward-facing website, the statement should be published on the most appropriate website relating to the organisation’s business in the UK. The other website should then include a link to the statement.
Among the most helpful aspects of the guidance relate to the content of the statement, however. Relevant businesses are required to set out the steps the organisation has taken during the financial year to ensure modern slavery is not taking place anywhere in its business or supply chains. Aspects of the statement relating to organisational structure and supply chains could include, for example, details of the business’ operating model and relationships with suppliers. Information to consider for due diligence processes, meanwhile, could include details regarding impact assessments undertaken and evidence of stakeholder engagement. The suggestions for each aspect of the statement are numerous and provide ample inspiration for a comprehensive statement.
Going forward businesses will need to:
- assess whether they still meet the relevant turnover thresholds after the deduction of all relevant taxes and trade discounts;
- determine the timescale for publishing their statement with respect to the transitional provisions; and
- begin assessing what steps have been taken and what still needs to be implemented, as these actions will form the basis of the content for the statement.