The Modern Slavery Act 2015 deals with a variety of matters relating to slavery and human trafficking. The most relevant issue for business is the obligation on commercial organisations over a certain size to disclose what activities they have undertaken to eliminate slavery and human trafficking from their supply chains and their own business.
The terms "slavery" and "human trafficking" cover a number of specific offences under the act, but in general terms slavery is where ownership is exercised over a person, where individuals are coerced into providing their services or do so under threat. Human trafficking covers arranging or facilitating the travel of individuals with a view to exploiting them.
Those sectors most likely to be affected are textiles, food processing and packaging, construction, agriculture and hospitality and tourism. Businesses are affected by the new disclosure obligations if they meet all of the following criteria:
- Are a commercial organisation i.e. a business or partnership (whether or not incorporated or formed in the UK) which carries on a business or part of a business in the UK
- Supply goods or services
- Have a total annual turnover of not less than 36 million this is determined by taking into account the turnover of the whole group
The government is targeting large businesses because it believes they have the resources to undertake the necessary due diligence and sufficient purchasing power and influence to create effective change within a supply chain.
What Do Businesses Need to Do?
Affected businesses are required to produce a "slavery and human trafficking statement" every financial year that sets out the steps they have taken during that year to ensure slavery and human trafficking is not taking place in any of their supply chains or in any part of their own business. If they have not taken any steps, this must be expressly stated. Businesses are required to publish the statement on their website. If a business does not have a website, it must provide a copy of the statement to anyone who requests one.
Although it is entirely possible for businesses to comply with this new duty by simply stating that they have taken no steps to ensure that their business and supply chains are slavery free, the UK government hopes that the risk of negative publicity (from consumers, the public, investors, etc.) will be sufficient to ensure that affected businesses take a more proactive approach to dealing with the risk of slavery and human trafficking in their businesses and supply chain. There is no prescribed format for the statement, but the act sets out six suggestions as to what information could be included:
1. The organisation's structure, business and its supply chains
2. Its policies in relation to slavery and human trafficking (so creating an implicit pressure on businesses to produce such policies)
3. Its due diligence processes
4. The parts of its business and supply chain where there is a risk of slavery and human trafficking, and the steps it has taken to assess and manage that risk
5. Its effectiveness in ensuring that slavery and human trafficking is not taking place measured against such KPIs as appropriate
6. The training about slavery and human trafficking available to its staff
The statement must have the appropriate support and approval from senior management so the board of directors must approve the statement and it must be signed by a director.
There are no financial or criminal penalties for failing to comply with this new disclosure obligation. The government could, however, apply for an injunction in the High Court for requiring an organisation to comply.
What Practical Steps Can Businesses Take?
It is still relatively early days, as the act has only been in force for 12 months, but recent criminal prosecutions involving slavery and human trafficking have had significant publicity and a number of well-known and highly respected UK companies have been identified in the news media as customers of those businesses.
Businesses should not, therefore, see the new obligations as a compliance issue and should take proactive steps to protect their businesses by:
- Deciding which senior individual within the business is responsible for ensuring that the business is aware of and complies with its obligations
- Auditing the business and supply chains to help determine the level of exposure for the business and where the potential exposure is greatest
- Developing or updating supplier codes of conduct, tender requirements and supplier contracts
- Putting in place policies and codes of conduct to combat slavery and human trafficking in the business and supply chains
- Publishing the statement on its website
- Identifying who will require training on the new obligations
- Ensuring there are effective grievance and whistleblowing mechanisms in place so that employee concerns over slavery and human trafficking may be raised appropriately within the business.