Modern Slavery Act 2015 - are you affected?

OVERVIEW

  • The goal of the Modern Slavery Act 2015 (MSA) is to prevent slavery and human trafficking, and businesses have a key role in achieving this.
  • The Act came into force on 29 October 2015 and applies to businesses who exceed annual turnover of £36 million globally. These businesses must publish a MSA statement in respect of each financial year.
  • Smaller organisations and consultants may be asked for reassurance regarding their own practices by end users who are required to produce a MSA statement.

WHICH BUSINESSES MUST PUBLISH A MSA STATEMENT?

  • Businesses carrying on all or part of their business in the UK with a total annual turnover of £36 million or more globally must produce a MSA statement.
  • Total turnover is defined in the Companies Act 2006 and means the net turnover of the business, including all global sources and subsidiary entities, after deduction of trade discounts, VAT and any other taxes based on the amounts.
  • Group companies with UK subsidiaries or nominal UK presence must assess whether the parent company and/or its subsidiaries satisfy the turnover and UK presence requirements. If the parent company satisfies the requirements, then the parent company must produce the statement in relation to both itself and its subsidiaries whose activities form part of its supply chain or business.

WHAT MUST THE MSA STATEMENT INCLUDE?

  • The MSA statement must: 
    • state the steps taken during the relevant financial year to prevent slavery and human trafficking within its supply chain or business or alternatively, that no such steps have been taken
    • say the statement has been approved by the board of directors, and
    • be signed by a named director
  • It is recommended but not mandatory to include details about the business’ structure, business and supply chain, your policies regarding anti-slavery, the parts of your business which are at risk of human trafficking and slavery, and how your business has sought to alleviate that risk.
  • You could also include: 
    • metrics to measure and record your successes, for example, a goal that all employees are provided with a copy of your MSA policy within X months of beginning employment or that suppliers will be required to confirm a MSA compliance statement
    • graphics mapping your supply chain

What does this mean in practice?

  • First identify your supply chain. Every business is in a supply chain, whether that is a long convoluted one or a very short one, e.g. you supply services directly to an end client.
  • A typical manufacturing supply chain might look like this: 
    • source of raw materials → supplier of raw materials → the manufacturer → you, the retailer → end customer
  • Secondly: 
    • Identify the relevant parties in that chain. Check you have their contact details and whether you contract directly with them. In most cases you will only be able to ask questions of the entities you contract directly with and then encourage or require them (e.g. through contractual obligations) to ask their sub-contractors for information about their supply chain and attempts to prevent slavery and human trafficking.
    • Identify the labour-intensive parts of your supply chain, and whether there are any potential slavery and human trafficking issues within your own business and the supply chain. You may need to break it down into geographical area, sector or product area.
    • Check whether there are already metrics or systems in place with the companies in your chain to prevent slavery and human trafficking.
    • Ask the relevant teams internally and also at your supplier about (a) any slavery and human trafficking issues, and (b) steps they have taken or could or will take to prevent this.
  • Based on the information before you now, decide whether you need to take steps to prevent slavery and human trafficking. Can you set any targets or goals for the business to hit regarding this, e.g. all contracts to require suppliers to use only licensed gang masters?
  • Ensure that all supply contracts, whether for new suppliers or renewals, contain obligations on the supplier to comply with your requests for information about slavery and human trafficking prevention. You could also ask that they take appropriate steps to prevent these where possible.

Format and publication of the statement

  • The statement should in English and be in a prominent position on the company’s website.
  • No time limit for publication has been set although the government recommends the statement is published as soon as reasonably practicable after the financial year end and ideally within six months of that date. Logistically it is probably easiest to publish at the same time as your annual report and accounts.

WHAT ARE THE PENALTIES FOR NOT COMPLYING WITH THE MSA?

  • The Secretary of State can seek an injunction against the business requiring publication of the information but this is unlikely to happen.
  •  It is more likely that the real issue for businesses will be the potential damage to reputation and brand, particularly if your competitors or clients are publishing statements.

POTENTIAL ISSUES

The board does not want to include information about our structure because it is commercially sensitive.

  • You are not required legally to include this information but there may be some reputational value in being transparent and being able to identify potential issues and remedies within its supply chain and/or the business.

I am a contractor and my client has asked me to provide a modern slavery statement to them. My own company doesn’t need to publish a statement so do I have to do this?

  • No, unless your contract with the client requires you to do so. Even if your client agreement is silent about this, it would be prudent to agree to this request to demonstrate transparency and your awareness of the client’s needs, and it could mean your business is viewed more positively than competitors.