Section 54 of the Modern Slavery Act 2015 introduces the requirement for certain commercial organisations to produce an annual statement which sets our their position in terms of the steps the organisation has taken that year to ensure that slavery and human trafficking is not taking place within the organisation or within any of its supply chains.
Does this apply to your commercial organisation?
This requirement is only applicable to commercial organisations that receive a turnover equal to or greater than £36 million (including any subsidiary undertakings and after deduction of trade discounts, VAT and any other taxes) derived from supplying goods or services, who have a demonstrable business presence or engage in commercial activities within the United Kingdom.
The statement produced by your commercial organisation must reflect the steps that are currently being taken to prevent modern slavery taking place. The steps being taken should reflect the level of risk within the organisation and its supply chains.
The Act does not give strict guidelines about what must be included, however it does put forward what may be included. Although the points below are not compulsory, they do provide a good starting point to cover all issues related. The statement may include information about:-
- the organisation’s structure, its business and its supply chains
- its policies in relation to human trafficking and slavery
- its due diligence processes in relation to slavery and human trafficking in its business and its supply chains
- the parts of the business and supply chains where there is a risk of slavery and human trafficking in its businesses and supply chains,
- 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
For those just starting to tackle the issue, it is best to accept that no action has yet been taken and report accordingly, than to rush and produce an unfocused compliance statement. It is recommended that to produce the first statement a person with sufficient authority is appointed to take responsibility for the compliance programme and overseeing the preparation of the statement. They could be supported by a multidisciplinary support team. They could also conduct an audit of what the organisation is already doing to tackle slavery and human trafficking and then conduct a risk assessment of the organisations supply chains.
Ways to manage the risks
In addition to the strategic report, other practices can be put in place to ensure compliance.
Risk management systems, such as supply chain mapping, provide a visual aid to help with compliance. This can be challenging as supply chains may change regularly. However, a starting point is to identify the first tier suppliers. These will be those who your business deals with directly. The importance of this mapping is to gain visibility of who is in your supply chain. Once a clear view of those who are involved in your business/service is gained, it will be easier to identify what risks each tier may create.
Your organisation may introduce contractual provisions into agreements to ensure that suppliers adhere to the organisation’s slavery policy, applicable codes of conduct, and other measures to prevent modern slavery taking place in supply chains. The clauses will need to be tailored to different suppliers and the level of risk they bring to the organisation. Contractual provisions may include; termination rights where labour exploitation issues are identified, obligation to provide reports on steps taken to ensure modern slavery is not taking place in their supply chains and audit rights with obligations to co-operate.
An organisation may already have in place corporate social responsibility (CSR) training. This training is a fundamental way to raise awareness of and implement the organisations policies in this area. The training should be accessible to all employees, and explain to employees what signs may suggest slavery or human trafficking are taking place, and who they are able to report their concerns to. It is suggested that a whistleblowing policy is also put in place to support and protect the employees.
Section 54(6) requires that the statement to be approved as detailed in the table below.
|Organisation Structure||Approval Required|
|Corporate body other than a limited liability partnership||Approved by the board of directors (or equivalent) and signed by a director (or equivalent)|
|Limited liability partnership||Approved by the members and signed by the designated member|
|Limited partnership registered under the Limited Partnerships Act 1907||Signed by a general partner|
|Any other kind of partnership||Signed by a partner|
The Act requires the statement to be prepared for each financial year. If your organisation has a website, the statement must be published on this website. Also the organisation must include a link to the slavery and human trafficking statement in a prominent place on that website’s homepage.
If your organisation does not have a website, you must provide a copy of the slavery and human trafficking statement to anyone who makes a written request for one, and must do so before the end of the period of 30 days, beginning with the day on which the request is received.
Your organisations reputation is put at risk from non-compliance or inaccurate reporting.
Legal sanctions for non compliance of the reporting obligations are limited to an injunction forcing the organisation to compose and publish the report. Failure to comply with this injunction would result in the organisation being found in contempt of court, and therefore punishable with an unlimited fine.
Other sanctions include damage to your organisations reputation. In a consumer poll conducted by Walk Free Foundation in December 2014, it was concluded that 66% of UK consumers would switch products if they learnt their favourite product was made using modern slavery. Pressure from the press, consumers, trade unions, civil society and activist shareholders, should drive an organisation to comply.
Here at Wilson Browne, we are able to assist in drafting employment and whistleblowing policies, as well as contracts/contractual provisions to help ensure slavery and human trafficking are not taking place within your business or any of its supply chains.