The Modern Slavery Act came into force on 31 July 2015. It is the first of its kind in Europe and marks the UK's attempt to combat modern slavery. The Act will require retailers to ensure that slavery and human trafficking are not taking place in their supply chain. Retailers with a global turnover of £36 million or more will have to prepare an annual "slavery and human trafficking statement". Importantly, it does not matter where the retailer has its head office – if they carry on any business in the UK, they will have to comply. The Act will therefore apply to foreign retailers who have stores in the UK.
What are the key obligations on retailers caught by the Modern Slavery Act?
The key legal obligations now placed on retailers who are caught by the Act are set out below.
- Retailers must produce a "statement of the steps the organisation has taken to ensure that slavery and human trafficking are not taking place any part of their business or supply chain" ("Anti Slavery Statement"). This requirement commenced on 29 October 2015. Alternatively, retailers may produce an Anti Slavery Statement that it has taken no such steps – although that type of negative public statement is unlikely to be viewed favourably by the public. Anti Slavery Statements will gain prominence in any event as the link to it must be on the retailer's website in a prominent position and a copy of the anti Slavery Statement must be sent to anyone who requests it.
- The Anti Slavery Statement must include detailed information about the retailer's structure, its supply chain and its policies in relation to slavery and human trafficking, including its due diligence processes for the prevention of slavery and human trafficking. The information should detail the parts of the supply chain where there are risks of slavery and human trafficking taking place and the steps that have been taken by the retailer to assess and manage those risks.
- The Anti Slavery Statement should be signed by one of the retailer's senior management for accountability and to drive a focus on the risks of modern slavery.
- Companies with a financial year end of 31 March 2016 will be the first companies required to publish their Anti Slavery Statement for the 2015/2016 financial year.
Guidance on Your Company's Statement
The UK government has recently released guidance on compiling Anti Slavery Statements. This recommends the following.
- Anti Slavery Statements should be short and succinct.
- Including in the Anti Slavery Statements an explanation of the retailer's actions in relation to each country in which its international business in engaged will assist the understanding of the context and risk avoidance measures taken by the retailer.
- Providing the Anti Slavery Statement in additional languages to English should be considered if relevant to the retailer's business and supply chain.
- Providing links to the retailer's policies or documents relevant to the slavery and human trafficking issues and its assessments is encouraged (although there is no need to replicate entire policies in the Anti Slavery Statement itself).
- The guidance recommends that retailers provide information about their retail business, the sectors they operate in, operating models and complexity of their supply chain in the Anti Slavery Statement to improve the efficacy of the Statement.
- Disclosure of the retailer's due diligence processes in the Anti Slavery Statement itself is encouraged and due diligence processes should be proportionate to the risks of modern slavery and human trafficking and the influence on that risk of the retailer in question.
It goes without saying that any Anti Slavery Statement should be accurate and refer only to actions implemented or undertaken (rather than be aspirational). The Statement must be published on the home page of the retailer's website to ensure its prominence and accessibility by the public. The timing of the publication should be as soon as reasonably practicable after the end of the financial year end (but at least within 6 months after this date).
What should retailers do now?
Retailers should establish as a matter of urgency whether the fall within the financial threshold of the Act. If they do, then a policy decision needs to be taken regarding the retailer's position on the Anti Slavery Statement and preparations made for publication soon after financial year end. Most retailers will want to be recognised as addressing the risk of modern slavery and human trafficking in their supply chain and so will wish to ensure that their compliance program is effective.