The requirement for commercial organisations to publish a ‘slavery and human trafficking statement’ under the Modern Slavery Act has come into force today (29 October 2015).

In tandem, the Government also published guidance for businesses on this obligation today.

The requirement to publish a statement extends to all organisations with a total turnover of £36 million or more and carrying on any part of their business in the UK. Transitional provisions mean that businesses with a 31 March 2016 year end will be the first to have to comply.

The new reporting requirement is part of a strategy to tackle modern slavery. The statement must set out the steps (if any) the organisation has taken to ensure that modern slavery is not taking place in any of its supply chains or in any part of its own business worldwide. The statement will be publicly available, in that it must be published on the organisation’s website.

What does the guidance tell us?

As expected, the guidance does not dictate the type of activities businesses should undertake or how they should carry them out. The Government’s view is that it is for individual organisations to determine what steps they consider reasonable and proportionate, having regard to the nature of their business.

The guidance stresses that the first statement may show how the organisation is starting to act on the issue and the planned actions to investigate or collaborate with others to effect change. The statement must cover the full financial year and should be published as soon as reasonably practicable after the financial year end. In practice the guidance encourages businesses to report within six months of the year end. In future, organisations need to build on what they are doing year-on-year.

The guidance does contain points of good practice for businesses to consider, including helpful case studies and detailed suggestions covering the information that may be included, such as:

  • organisational structure and supply chains;
  • organisational policies;
  • due diligence;
  • assessing and managing risk;
  • performance indicators; and
  • training.

How significant is this requirement for UK businesses?

At first glance, this requirement seems onerous yet toothless. There is no sanction for failing to comply, although the Government may, in theory, seek an injunction to compel compliance.

While enforcement action may be unlikely, the Government’s stated aim is to encourage businesses to ‘race to the top’ by harnessing consumer and wider stakeholder pressure. The importance of reputation and brand may ultimately be the main incentives for compliance with both the letter and spirit of this new law.

Businesses that are already required to publish other reports on human rights issues will not be approaching this new reporting obligation from scratch, and may be able to demonstrate at least to some extent the activities and action they are taking in their slavery and human trafficking statement by drawing on those existing relevant programmes of activity.