Following its implementation in October 2015, businesses should by now have become compliant with the Modern Slavery Act 2015's reporting provisions. However, even a cursory examination of many business websites demonstrates that full compliance remains scarce.
Section 54 of the Modern Slavery Act 2015 requires that an annual "Slavery and Human Trafficking Statement" be published by a body corporate (wherever incorporated) or partnership (ie, a partnership, limited partnership or non-UK entity or firm of similar character) which:
- has a financial year end which falls on or after March 31 2016;
- provides goods and services;
- has a total turnover not less than the amount prescribed by the secretary of state (currently £36 million); and
- carries on its business or a part of its business in the United Kingdom.
The statement must be published on the business's website with a link to it in a prominent place on the website's homepage. If the business does not have a webpage, it must provide the statement to anyone who asks within 30 days of receipt of the request.
The statement must set out the measures that the reporting business has taken to eliminate slavery and human trafficking in its business, including its supply chain. However, beyond this, the act is silent as to what the statement must include – although it does provide examples, such as details of a business's policies, monitoring procedure and due diligence measures.
A turnover threshold is included in Section 54 of the act to account for the fact that monitoring and ensuring compliance with supply chains which are complex or geographically diverse is a burdensome and costly exercise. The Department for Business Innovation and Skills has stated that the rationale behind Section 54 is to "ensure that large businesses cannot turn a blind eye to modern slavery simply because of their corporate status or domicile". However, the Chartered Institute of Procurement and Supply, among others, has argued that the turnover threshold should be lower.
While the act specifically provides that a business may comply with Section 54 by making a statement that it has taken no steps, this would likely expose the business to greater risk by representing a 'red flag' to law enforcement agencies, regulators and pressure groups, as well as making it unattractive to consumers, corporate peers and investors.
While criminal penalties are attached to breaches of other provisions of the act, the only direct penalty for non-compliance with Section 54 is civil. Section 54(11) provides that the secretary of state may bring civil proceedings in the High Court to seek an injunction requiring a non-compliant entity to act to meet the obligations imposed on it by Section 54. However, if a company were to be so uncooperative as to require the secretary of state to seek injunctive relief, this would suggest that the company had been non-compliant with other aspects of the Modern Slavery Act, and would likely attract more detailed investigation by law enforcement and regulatory bodies.
When it was passed, the Modern Slavery Act 2015 was criticised in some quarters as merely paying lip service to tackling big businesses' exploitation of slavery and indifference to human trafficking. The seeming indifference to the widespread lack of compliance to date supports such an assessment. Despite that, continued non-compliance presents a legal risk to any organisation caught by the act. For that reason – and given that compliance demonstrates a strong sense of corporate social responsibility – businesses are urged to conform with the requirements of the act.
For further information on this topic please contact Kathleen Harris, Sean Curran, Stuart Baker or Oliver Cooke at Arnold & Porter Kaye Scholer LLP by telephone (+44 20 7786 6100) or email ([email protected], [email protected], [email protected] or [email protected]). The Arnold & Porter Kaye Scholer LLP website can be accessed at www.apks.com.