The Modern Slavery Act 2015, which came into force in October 2015, is the latest step in eliminating modern slavery (constituting the offences of slavery, servitude and forced or compulsory labour and human trafficking) in the UK.

For organisations carrying on a business, or part of a business, in the UK (wherever incorporated) with an annual turnover of £36million or more this new legislation means that they will have to produce a slavery and human trafficking statement for each financial year.  This annual report must set out the steps taken to ensure that slavery and trafficking is not taking place in its own organisation or any part of its supply chains.  The annual report must include information on policies, training, due diligence and the effectiveness of measures taken to combat modern slavery.  It must be approved by the board or equivalent management body, signed by a director or equivalent (e.g. the general partner in a limited partnership) and published prominently on the organisation’s website.

Organisations with a financial year-end of 31 March 2016 onwards are required to publish a statement for their 2015-16 financial year.  Those with a year-end falling between 29 October 2015 and 30 March 2016 are not required to publish a statement for that financial year. 

It is important to note that the new Act makes it clear that the consent of the victim is not an automatic defence. There are limited penalties for non-compliance in practice (the disclosure duty is subject to enforcement by the Secretary of State by injunction, which seems unlikely), the assumption is that pressure groups will target businesses, particularly consumer brands, in vulnerable sectors and subject them to reputational campaigns to force annual disclosure.  The government may also be tempted to ‘name and shame’ key businesses which drag their heels.  The ultimate aim is that, by driving up transparency, modern slavery will be tackled with greater urgency, creating a virtuous circle of improvement.

Historically, the construction industry has received negative press for its perceived role in modern slavery.  According to the government, in 2013, 52 potential victims of modern slavery were identified as coming from the construction industry, though it is believed that this figure may in fact be higher.  The Act it is likely to impact the industry more than other industries due to the level of staffing, the scope of supply chains and the number of affiliated projects with a multitude of companies involved.  It is important that businesses in the construction industry are aware of, and begin to implement procedures to enable it to comply with the Modern Slavery Act.  The largest risk aside from criminal prosecution or monetary fines of not following up on this, whether within one’s own supply chain, a client’s supply chain or a project partner’s supply chain, is that of possible brand or reputational damage. This damage may be quite significant and thus is to be avoided through appropriate implementation.