The UK Modern Slavery Act 2015
The UK Modern Slavery Act 2015 (“the Act”) enters into force today. If you are a supplier of goods or services with a turnover of over £36m in the UK, the mandatory annual reporting requirements in the Act apply to you.
The Act requires commercial organisations to publish an annual slavery and human trafficking statement. This must set out the steps that the organisation has taken in that financial year to ensure slavery and human trafficking is not taking place in any part of its supply chain or own business, or state that it has taken no such steps.
The definition of slavery includes forced or compulsory labour, and human trafficking involves securing or facilitating travel for another person for the purposes of exploitation, which includes securing services by force, threats or deception, or securing services from children and vulnerable persons.
The reporting requirement applies to all suppliers of goods and services, wherever incorporated or formed, who carry on business, or part of a business, in any part of the UK. While the associated Regulations have yet to be adopted, the government has confirmed that this provision will apply to companies with a turnover of over £36m.1
There are no set criteria for what a slavery and human trafficking statement must contain, but the Act sets out six suggested areas of information that may be covered:
a) The organisation's structure, its business and its supply chains;
b) Its policies in relation to slavery and human trafficking;
c) Its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
d) 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;
e) 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;
f) The training about slavery and human trafficking available to its staff.
Whilst not mandatory, the Explanatory Notes to the Act make it clear that the Government expects businesses to address these specific areas.
Companies must have their statement approved by the Board of Directors, signed by a Director and published on their website, with the link prominently advertised.
The only legal sanction for not publishing a slavery and human trafficking statement is civil proceedings taken by the Secretary of State for an injunction to require a company to publish a statement, or order for specific performance of a statutory duty in Scotland.
Failing to take any steps to prevent slavery or human trafficking is not an offence: companies are free to say in their annual statement that they have taken no action. But it is clear that the Government expects that the serious reputational risks of doing so will translate into effective pressure on companies not only to comply but eventually to use the annual statements as an integral part of their branding as socially-responsible organisations. As Kevin Hyland, the former head of the Metropolitan Police human trafficking unit and the first Independent Anti-Slavery Commissioner, recently said “no company in the world wants to be shown as employing slaves.”2
What do companies need to do?
If not in place already, companies should urgently develop, implement and publish robust policies and due diligence procedures to prevent slavery and human trafficking in their supply chains and their own business, including training for staff. This demands a determined and comprehensive commitment, from the highest levels of each company to whom the provision applies.
How Dechert can help
Dechert has a unique depth of expertise in helping clients to achieve full compliance with international trade regulations (US as well as UK/EU) in ways which are proportionate to their level of risk, integrated with other trade compliance requirements (including sanctions, AML, ABC, customs, import, anti-dumping and export control) and which minimise the impact on their business. This includes policies and procedures for managing compliance across supply chains.
We benefit from a global network of both top-ranked international trade lawyers and senior former negotiators and regulators with practical experience of designing and implementing the regulations, including those related to the UN Guiding Principles on Business and Human Rights on which this Act is in part founded. Our extensive experience advising clients on international trade regulation includes:
- Auditing existing compliance programmes to identify gaps and carrying out risk assessments to understand the business’ potential areas of exposure;
- Developing efficient policies and procedures tailored to the business’ structure, resources and risk profile;
- Conducting pre-contract due diligence, including preparing appropriate warranties and indemnities in contracts or terms and conditions;
- Bespoke training programmes and helpdesk advisory services.
1) ‘PM seeks stronger co-operation with Vietnam to stop modern slavery as new measures come into force’ (GOV.UK Announcements, 29 July 2015) accessed 30 July 2015.
2) Peggy Hollinger ‘UK anti-slavery watchdog tells business to clean up supply chains’ Financial Times (London, 17 November 2014) accessed 30 July 2015.