Since 31 March 2016, certain commercial organisations have been required to publish a statement giving details of what they are doing to ensure modern slavery and human trafficking are not taking place in their businesses or supply chains (statement). The statement is to be published annually in the financial years ending on or after 31 March 2016 (with the Government encouraging the statements to appear no later than six months after financial year end).

Are you required to produce a transparency statement?

Any organisation that engages in commercial activities in the UK (it should be noted that the purpose of profits does not matter here so this can include large charities, public bodies or educational institutions as well as corporate bodies or partnerships) could be caught by the MSA. Organisations with the following characteristics will be required to produce a transparency statement:

  • the organisation carries out business in the UK and supplies goods or services. Guidance suggests that the organisation must have a ‘demonstrable business presence’ in the UK in order to be caught by the MSA
  • the organisation has an aggregate global turnover of not less than £36 million.

Preparation of the transparency statement

Organisations are afforded a certain amount of discretion in the preparation and content of the statement and the MSA does not prescribe what the statement must include. However, it requires that the statement must give details of steps the organisation has taken during the financial year to ensure that there is no slavery or trafficking activity within the business or its supply chains and provides a list of recommended issues to be covered within the statement:

  • 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
  • the training about slavery and human trafficking available to its staff

The MSA states that a link to the statement must be displayed in a prominent place on an organisation’s website

Approval of the statement

The MSA requires that the statement is approved by the board of directors of a company and signed by a director (or the equivalent approval requirements in the case of other organisations).

Consequences of non-compliance

There are currently no penalties imposed for non-compliance with the reporting requirements under the MSA. The secretary of state may enforce the duty to prepare a statement in civil proceedings by way of injunction but aside from this, the key consequence of failure to comply with these requirements is the potential damage to the organisation's reputation and brand.

Other considerations

Going forward, companies should be alive to the implications of the MSA in any acquisitions they look to carry out. Due attention should be given to the MSA requirements in any due diligence process and care should be exercised in including appropriate warranties in any purchase agreement.

Companies will also want to bear in mind that they can include warranties and undertakings for compliance with the MSA, and with the company’s anti-slavery and human trafficking policy, within the company’s supply agreements and companies should look to ensure that appropriate contractual provisions are included in supply agreements to cover compliance by suppliers and sub-suppliers.