Slavery and human trafficking has become a priority for many governments around the world. The UK Government passed the Modern Slavery Act 2015 to simplify and bring up to date the criminal law in relation to modern slavery and human trafficking. The Act (section 54) imposes a new obligation on UK businesses to publish an annual slavery and human trafficking statement setting out the steps it has taken to ensure slavery and human trafficking is not taking place in any part of its business or supply chain.
Which business are caught?
The requirement applies to all businesses that supply goods or services in the UK provided that it has an annual turnover of £36m. It does not need to be a UK registered entity. The turnover does not need to be UK turnover, provided it supplies some goods or services in the UK. The turnover of subsidiary entities (but not parent entities) is included in assessing whether the threshold is met. There is no requirement for the organisation to have a minimum number of employees, a minimum balance sheet total, or to be incorporated (or formed, if it is a partnership) in the UK. As a result, these rules will have extraterritorial effect and apply to a much wider range of organisations than just large companies under the UK Companies Act.
What is the requirement?
The business must prepare an annual statement setting out the steps it has taken to ensure slavery and human trafficking is not taking place in any part of its business or supply chain or that it has taken no steps. There is no set format for the statement and no legal requirements relating to the specific content. The legislation provides that the statement may include information about:
- the organisation's structure, business and its 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.
The statement must be approved by the Board and signed by a director. For LLPs and partnerships it must approved by the Members or partners. If the business has its own website there must be a link to the report in a prominent place on the home page: it can be located in a drop-down menu, but must be labelled Modern Slavery statement. Business that fail to prepare a statement can be compelled to do so by way of a High Court injunction. Some businesses already publish similar statements in respect of human rights, for example in their strategic reports or as part of their obligations as a signatory of the UN Global Compact or similar CSR commitments. Businesses already preparing disclosures may use those as a basis for compliance with the new requirements.
When does it need to be issued?
Businesses must prepare a statement that covers the relevant financial year. The statement should be prepared no later than 6 months folloring the end of the financial year. So busines should be considering now what steps it considers should be taken in order for them to be included in the next report.