The UK has been leading the way in the battle to combat modern slavery in Europe. New rules have been in force since October 2015, which require businesses to report what they are doing to tackle slavery and human trafficking. The rules are based on Californian legislation that has been in place for several years (the California Transparency in Supply Chains Act).

The rules apply to commercial organisations (companies or partnerships) that "supply goods or services" and that have a turnover of more than £36 million. They apply to all businesses that carry on any part of their business in the UK so foreign companies may be caught, as well as UK-incorporated entities.

In addition, although the rules only apply directly to entities with turnovers of more than £36 million, the effects will be much wider than this. The requirement to report on slavery in an organisation's supply chain means many smaller companies will be asked by their customers to provide information about their own organisations. While there are no automatic consequences arising from any information provided, suppliers will need to be aware of any possible ramifications. For example, a company that has significant high-risk providers in its business (or, indeed, its supply chain) may become a less attractive supplier to a customer that has to report on slavery and human trafficking. This means that the ripple-down effect of the new rules may well be substantial.

Businesses that are in scope must publish an annual statement that (1) details the steps taken by their organisation to ensure that slavery and human trafficking are not taking place in any part of their business or supply chain; or (2) states that no such action was taken. Statements must be published annually for financial years ending on or after 31 March 2016.

Businesses have a lot of flexibility in how they report as there is no prescribed format for a statement. However, the rules suggest that the statement may include information about:

  • the organisation's structure, business and supply chains
  • its policies and due diligence process on slavery and human trafficking
  • the areas where risks related to slavery and human trafficking exist and how these have been assessed and managed
  • its effectiveness in ensuring slavery and human trafficking are not taking place and any relevant performance indicators and
  • the training available to staff on these issues.

The statement must be published on the company's website and there must be a link to the statement in a prominent place on the homepage. It must be approved by the board and signed by a director (or equivalent).

There is currently no formal enforcement regime in place. We expect that most "enforcement" will be by NGO investigations and "name and shame" campaigns in the press.

Any business that is caught by the new regime should assess when and how it will comply with the new rules, if it has not already done so. Smaller organisations should also be ready to respond to requests for information from their customers. In some areas, such as staff training, it is relatively straightforward to put in place suitable measures. In other areas capturing and assessing the relevant information will be more complex. Nevertheless, this is a topic that is increasingly prevalent in the press and any business would be wise to assess its own risk areas and consider what steps may be appropriate to combat these.