Need to know guide: The Modern Slavery Act

July 27, 2017

By now, nearly all large organisations conducting business in the UK (including overseas entities) should have published their first slavery and human trafficking statement. And for those with a 31 March year end, it is less than three months (30 September) until the statement is due to be updated for the 2016/17 financial year.

We are aware that busy HR professionals are grappling with a raft of new regulations – the gender pay gap reporting regulations, the Apprenticeship Levy and the General Data Protection Regulation, to name just a few.

With that in mind, we have put together a quick-reference guide to the top things you need to know to ensure that your organisation is complying with its obligations under the Modern Slavery Act 2015. 

What is modern slavery?

Although the true extent of modern slavery is unknown, according to research by the International Labour Organisation, almost 21 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.

What is the Modern Slavery Act 2015?

The Modern Slavery Act 2015 (the Act) is a law aimed at tackling modern slavery by requiring larger commercial organisations to produce an annual disclosure statement detailing the actions they have taken during the previous financial year to ensure that slavery and human trafficking is not taking place in their business and supply chains. If no such actions have been taken, then the organisation must publish a statement owning up to this.

Is my organisation required to produce a statement?

Every commercial organisation supplying goods or services in the UK, regardless of the sector it operates in, that has a total annual turnover of £36m or more 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. The test is based on whether the organisation is doing business in the UK and its total annual turnover.

This means that overseas organisations doing business in the UK may well be subject to the reporting requirements, possibly without realising it.

Whether the reporting requirements apply to an overseas organisation with a UK-based subsidiary as a result of the activities of the UK subsidiary is not clear cut and will require careful analysis.

What should the statement include?

The statement can include anything relevant to the steps your organisation 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 organisation 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 organisation 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 corporate entity.

Where should the statement be published?

The annual statement must be published in a prominent position on your organisation’s website.

There’s currently no requirement to also upload the statement to a centralised Government website. However, the Business & Human Rights Resource Centre is pulling together a central register of statements. This will make 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.

What deadlines do I need to be aware of?

Organisations are required to publish their annual statements “as soon as reasonably practicable” following the end of their 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. Therefore, organisations with a 31 March year-end should already be preparing their statements for publication by 30 September.

We recommend that organisations work on their statements throughout the financial year by keeping track of all the action taken throughout the year to address modern slavery so that by the time year-end arrives you have a full and accurate statement of all efforts made.

What if we get it wrong?

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.

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.

What if I have more questions?

Contact us today to discuss how we can help you to ensure that your organisation is complying with its obligations under the Act.


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Tom Pennington-Hare
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Direct dial: +44 (0)20 7614 2649
tpennington-hare@foxwilliams.com

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