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The Modern Slavery Act: is your business at risk of failing to comply?
The Home Office is currently issuing letters to organisations registered in the UK that have not yet published anti-slavery and human trafficking statements on their websites. Many businesses who have received these letters were unaware that they might be caught by the requirement under the Modern Slavery Act to publish such a statement.
This requirement applies to business supplying goods or services in the UK with a turnover of £36m or more per year. However, because the turnover test is based on a business’s total global turnover, even businesses with a relatively small UK presence can be caught by the Act.
Overseas-headquartered organisations, including employers with a London office, can be caught by the Act, but may not receive a helpful reminder to publish a statement in the form of a letter from the Home Office. From 31 March 2019, these employers risk being publically named and shamed on the Government’s list of organisations that have failed to publish a statement on their website detailing the actions they have taken to ensure that slavery and human trafficking is not taking place in their business and supply chains.
Even if your business has published a statement in the past, the Act requires a statement to be published each year. Therefore, all existing statements should be reviewed and updated as necessary to ensure compliance.
Research carried out by the Business & Human Rights Resource Centre indicates that only 19% of statements meet the minimum requirements set out in the Act, suggesting that even organisations who have published a statement are highly likely to get it wrong and be exposed to naming and shaming for non-compliance.
This article provides a quick-reference guide to the top things you need to know to ensure that your firm is complying with its obligations under the Modern Slavery Act.
- What is modern slavery?
- Do we need to publish a statement?
- What should the statement include?
- Where should the statement be published?
- What deadlines do I need to be aware of?
- What else do we need to do?
- What if we get it wrong?
- What if I have more questions?
Although the true extent of modern slavery is unknown, according to research by the International Labour Organisation, over 40 million people worldwide are victims of modern slavery. Modern slavery can take many forms. In addition to forced labour (where someone is forced to work against their will through threat of violence or other intimidation) modern slavery includes bonded labour (where someone is forced through coercive means to work to pay off a debt), human trafficking and prostitution, forced marriage and domestic servitude.
Every commercial organisation supplying goods or services in the UK, regardless of the sector it operates in, that has a total global turnover of £36m or more per annum is required to produce a slavery and human trafficking statement for each financial year.
The reporting requirements apply irrespective of where the organisation is based and how much of its global revenue is generated from business in the UK. This means that overseas organisations doing business in the UK may well be subject to the reporting requirements, possibly without realising it.
Although there is little guidance on what constitutes “carrying on business in the UK”, given the Act’s objective and the deliberately wide drafting, the intention appears to be to capture a broad range of businesses and as such the general view is that the test should be interpreted widely. In fact, there is a similar concept of carrying on business in the UK in the Bribery Act and in that context the UK’s Serious Fraud Office has indicated that where there is any economic engagement and a business presence in the UK, however small, the overseas organisation is likely to be deemed to be carrying on business in the UK. In summary, unless an organisation’s UK business is contained with a separate entity that operates wholly independently of its overseas parent, if the parent meets the turnover threshold, then it is likely to be required to publish a modern slavery statement.
The statement can include anything relevant to the steps your company has taken in the past financial year to ensure that modern slavery is not occurring in its business or supply chain. Examples of what the statement can include are:
- Details of policies and procedures your company has established to reduce the risk of slavery occurring in its supply chains.
- A description of the training provided to staff in relation to identifying modern slavery and human trafficking issues.
- Any commercial agreements your company has in place regarding obligations on suppliers to comply with minimum standards and ethical practices.
All slavery and human trafficking statements must be approved by the organisation’s senior management. The exact requirements vary depending on the type of entity.
The annual statement must be published in a prominent position on your company’s website.
There’s currently no requirement to also upload the statement to a centralised Government website. However, the Business & Human Rights Resource Centre maintains a central register of statements. This makes it easier to compare the actions that organisations are taking to eliminate slavery from their supply chains and identify organisations that are not in compliance with their reporting requirements.
Organisations have until 31 March 2019 to make sure they have an up-to-date statement on their website. Statements must be updated on an annual basis “as soon as reasonably practicable” following the end of the organisation’s financial year. Although there’s no strict legal deadline, the Government expects statements to be published no later than six months after the end of the financial year.
The purpose of the statement is to record the actions taken to ensure that slavery and human trafficking is not taking place in the organisation’s business and supply chains. Therefore, actual steps need to be taken for the organisation to have something to report. Examples include:
- Ensuring there are appropriate polices in place to identify and address modern slavery risks.
- Providing staff training on modern slavery, particularly for senior staff involved in operations, procurement, managing the supply of staff and managing contracts with suppliers.
- Ensuring there are appropriate due diligence and procurement processes in place to identify modern slavery risks.
- Reviewing and updating supplier terms to protect against slavery and human trafficking risks.
Although there are no criminal sanctions for failure to produce a slavery and human trafficking statement, the Government can apply to the High Court for an injunction to force an organisation to publish a statement.
However, for most organisations, it is the commercial, rather than the legal, implications that will be the biggest reason for ensuring compliance. Now more than ever, maintaining a good reputation is critical to an organisation’s success. With viral news and social media, there is potential for significant reputational damage for organisations who do not take adequate steps to tackle modern slavery in their business. If gender pay reporting is anything to go by, we can expect considerable press interest in the list of non-compliant businesses.
Indeed, the rationale behind the Act is to create transparency around the ethical practices of organisations, thereby allowing customers, potential investors and the wider public to be informed about what organisations are actively doing to tackle modern slavery.
We are starting to see a “trickle-down” effect as larger organisations are demanding assurances from their smaller business partners (who are not themselves caught by the Act) to make sure that their own businesses are free from modern slavery. This means that there is a commercial – as well as a moral – imperative for organisations to get firmly behind the fight against modern slavery, or else face losing out on business.
Contact us today to discuss how we can help you to ensure that your company is complying with its obligations under the Act.