The Modern Slavery Act 2015 (the Act) received royal asset in March of this year and came into force in October 2015. The purpose of the Act is to consolidate and strengthen UK legislation in order to stamp out modern slavery and human trafficking worldwide. One of the ways in which the Government is seeking to achieve this is by forcing businesses operating within the UK to be transparent about the steps they have taken to ensure that their businesses and supply chains are slavery free, including when they operating outside the UK.

What is slavery and human trafficking?

This is conduct that constitutes various offences such as slavery, servitude and forced or compulsory labour and human trafficking. The Act applies to conduct which would constitute an offence if it took place within the UK, even if such conduct is not an offence extraterritorially.

What must companies do?

Section 54 of the Act includes the “transparency in supply chains provisions” which require commercial organisations to provide a disclosure statement for each financial year setting out the steps they have taken to ensure there is no slavery or human trafficking within their businesses or supply chains. Alternatively, an organisation may disclose that it has not taken any such steps.

These transparency and supply chain provisions have been approved but are not yet in force. The Government has recently confirmed that, once in force, the Government will include a transition provision so that the first organizations required to comply will be those whose financial year ends on or after 31 March 2016. This will ensure that all organisations have sufficient time to consider the new provision and the statutory guidance before publishing their first statement.

Whilst section 54 of the Act does not specify precisely what information the statement must include, it does suggest that a 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 in relation to 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.

If the organisation is a body corporate, then the statement must be approved by the board of directors (or equivalent managing body), and be signed by a director (or equivalent). If it is a partnership, the statement must be approved by the partners or members.

The statement must be published on the organisation’s website, with a link to the anti-slavery statement on the organisation’s homepage.

Which organisations are affected?

The Act applies to both incorporated companies and partnerships which supply goods or services and have a minimum global turnover of £36 million per year. In order to be caught by the Act, an organisation must carry out all or some part of its business within the UK but need not be incorporated within the UK.

The Act does not define what it means to “carry on a business“ within the UK but given the intended long arm jurisdiction of the Act, carrying on any business activity within the UK even without a physical presence within the jurisdiction is likely to be sufficient.

Failure to comply

There are currently no financial penalties for a failure to comply with the Act. However, the Secretary of State can bring civil proceedings in the High Court to force an organisation to comply. Such enforcement proceedings are likely to have significant cost and reputational consequences for the organisation involved.

An organisation disclosing that it has not taken any steps to prevent slavery and human trafficking is also likely to have a damaging effect on the organisation’s reputation from a PR and corporate social responsibility perspective.

Comment

The inclusion of the suggestions within section 54 of the Act as to what the statement may include would appear to indicate that an organisation is expected to carry out due-diligence processes and risk assessments of its organisational structure, business and supply chains in order to identify risks of slavery and human trafficking and subsequently, to take steps to manage those risk. Such steps would appear to include adopting appropriate policies and providing relevant training for staff. Whilst many companies will already have an extensive range of due diligence processes and compliance policies in place to comply with, amongst others, the Bribery Act 2010 and Money Laundering Regulations 2007, it is likely that these will now need to be supplemented to ensure that the organisation and its third party suppliers are each taking steps to prevent slavery and human trafficking.

Whilst organisations are unlikely to be required to provide such a statement prior to March 2016, organisations should now be considering whether they are caught by the Act and if so, whether their processes and policies currently in place are sufficient to prevent slavery and human trafficking.