Some commercial organisations may not be aware of the effect which the new Modern Slavery Act 2015 (the 'Act') will have on them. Section 54 of the Act now requires large organisations in the UK to produce a statement setting out what action they have taken to ensure that their business and supply chains are not supporting or implementing any form of slavery. Even if no action has been taken, an organisation will still be required to produce a statement setting this out.
The Act includes offences of 'slavery, servitude and forced or compulsory labour' and 'human trafficking'. The Government decided that further transparency and accountability should be enforced to tackle the issues where large organisations are exploiting workers around the world.
Commercial organisations, whether incorporated or not, that carry on a trade in the United Kingdom to supply goods or services, and have a minimum total turnover of £36 million per year, must produce an annual statement to be published on their website. The total turnover should include the turnover of any subsidiary companies including those operating entirely outside of the UK.
Businesses with a financial year-end date between 29th October and 30th March 2016 will not be required to publish a statement for that financial year of the organisation but will be required to do so for the financial year end 2016-2017. Those businesses with a year-end of 31st March 2016 onwards will be required to publish the statement for the financial year 2015-16.
Those companies who have to produce the financial statement have been advised to publish their statements as soon as reasonably practicable after the end of each financial year in which they are producing the statement. The Government guidance suggests that it would be 'reasonably practicable' to report within six months of the organisation’s financial year end.
The statement should set out what steps have been taken to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its business. If the organisation has not taken any steps then this should be put into the statement.
Failure to provide the statement could result in an injunction being taken out against the company and failure to comply with the terms of the injunction can lead to an unlimited fine. Even if the statement simply states that no steps have been taken, this must still be published on the organisation's website.
The statements should be updated annually and built upon each year to show progress. The guidance released by the Government has set out what should be included in the statement:
- Information about the organisation's structure, its business and 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 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 and capacity building about slavery and human trafficking available to staff.
The guidance also goes on to explain what steps should be taken where an incident of slavery has been reported to a company.
The Government's intention is to create more transparency and place pressure on large commercial businesses to take an active role in stopping modern slavery. The impact is that those organisations will now be publically scrutinised.
This is not legal advice; it is intended to provide information of general interest about current legal issues.