The Modern Slavery Act 2015: A quick guide to what it is and how to stay compliant
It is simply not acceptable for any organisation to say, in the 21st Century, that they did not know [about slavery in the supply chain]… By increasing supply chain accountability, more workers will be protected and consumers will have greater confidence in the foods and services they buy.
Theresa May, UK Home Secretary
On 29 October 2015 the Modern Slavery Act 2015 came in to force and with it new requirements for businesses to report on slavery and human trafficking. The purpose of this article is to give you a brief idea of what it is and how you and your organisation can stay on the right side of the law in following it.
What is it?
The Modern Slavery Act 2015 is a UK act of Parliament designed to tackle slavery and human trafficking through the consolidation of previous legislation and the introduction of new measures. Specifically it introduces new requirements for organisations in regards to their business and supply chains.
Does it apply to your organisation?
According to the Government’s issued guidance, any organisation in any part of a group structure will be required to comply with the provision and produce a statement if it:
- is a body corporate or a partnership, wherever incorporated
- carries on a business, or part of a business, in the UK
- supplies goods or services
- has an annual turnover of £36,000,000 or more
Furthermore, total turnover is calculated as:
- the turnover of that organisation
- the turnover of any of its subsidiary undertakings (including those operating wholly outside the UK)
Commercial (for profit) operations are clearly covered by the new rules but they may well apply as well even if your organisation is an incorporated charity, or pursuing a primarily charitable, educational or public role. The important point is whether your organisation ‘engages in commercial activities and has a total turnover of £36,000,000 – irrespective of the purpose for which profits are made’.
What does your organisation need to do?
If your organisation is covered by the legislation, you must produce an annual statement setting out the steps you have taken to ensure there is no slavery in your business and supply chains. If you have not taken any steps, you must say so.
While there is no prescribed format for the statement, it should be “written in simple language that is easily understood”. The statement must also include all the steps you have taken, if any, although it is up to you what you include. Some example information is summarised below:
- your organisation’s structure, its business and its supply chains
- your organisation’s policies in relation to slavery and human trafficking
- your organisation’s due diligence processes in relation to slavery and human trafficking in its business and supply chains
- the parts of the business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps taken to assess and manage that risk
- your organisation’s effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as considered appropriate
Publication on your Website
The statement must be published on your organisation’s website with a link in a prominent place on the homepage. If you do not have a website, then a copy must be provided, on request, within 30 days.
When will the statement need to be produced?
If your organisation had a year end of 31 March 2015, it will need to produce its first statement for the current financial year ending 31 March 2016. If your year end was after this date, then the first statement will need to be produced for the financial year ending in March 2017.
Once you have reached the relevant financial year end the statement must be published “as soon as reasonably practicable”. The Government’s guidance suggests that this should take no more than 6 months.
What happens if you do not comply?
The Government guidance is quite clear on what will happen if your organisation does not comply:
“If a business fails to produce a slavery and human trafficking statement for a particular financial year the Secretary of State may seek an injunction through the High Court… requiring the organisation to comply. If the organisation fails to comply with the injunction, they will be in contempt of a court order, which is punishable by an unlimited fine.”
Aside from legal penalties, failing to comply could cause reputational damage to your organisation. It is important to bear in mind that the Government is not simply asking organisations to produce statements but is actively looking to increase transparency on human rights issues in the hope that greater peer and consumer pressure will drive improvements in this area.
Ideally you should get the statement out sooner rather than later, especially if ethical supply is at the heart of your business. Showing that humanitarian issues are important to your organisation and that you are not falling behind could be the difference between consumers and other organisations dealing with you or not.
If you require further information on how the Act affects your organisation, the Government’s “Transparency in Supply Chains etc. A practical guide” can be found here.