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The issue of slavery is on the radar of many corporations, not merely for ethical reasons but as a potential reputational risk given the frequent media exposés of the inhumane conditions in which people are forced to work.

SAFEGUARDS | Labor Standards NO. 201/15

According to the International Labour Organisation, 21 million men, women and children globally are in some form of slavery, generating a profit of $150 billion a year to unscrupulous operators and criminal gangs.

The Modern Slavery Act 2015 which received Royal Assent on Thursday 26 March 2015 consolidates the existing slavery and human trafficking offences into one Act and increases the maximum possible sentence from 14 years to life imprisonment for anyone found to be committing an offence of slavery or human trafficking. Under the Act, 'slavery or human trafficking' includes amongst other things, forced compulsory labour, servitude and trafficking of people for exploitation. The Act also introduces new civil orders in England, so that law enforcement can effectively manage those who pose a risk of causing slavery related harm and also creates a new independent Anti Slavery Commissioner for the UK.

The Act requires UK commercial organisations that supply goods or services to prepare a slavery and human trafficking statement each financial year, under the Transparency In Supply Chains provisions. The financial threshold for companies to fall under the requirements was announced by the UK government at £36 million to come into effect from October 2015. This will capture 12,000 companies directly but importantly also their supply chains. This covers both UK-based and non UK-based companies which carry on all or part of their business in the UK.

It is worth noting that where the requirements apply to businesses, it applies not just to the supply chains involved in the goods or services being supplied but to all parts of the business, including their own direct activities and ancillary services including warehouse and distribution operations and the use of contracted services such as cleaning and maintenance, Companies should therefore ensure that these areas are covered by the scope of their statement.

The Government has also now clarified implementation such that any company with a financial year end prior to 31 March 2015 will only be required to publish their slavery and human trafficking statement in relation to their 2016 financial year, i.e. in 2017. Furthermore there is an expectation that the statement will be published within 6 months of the financial year end. Therefore, for a company with a year end of February 2015 this would allow for a publication date of August 2017. Those companies with a financial year end from March 31st 2016 onwards will be expected to publish within 6 months of their year end and therefore are affected by the changes much sooner.

The anti-slavery disclosure statement is intended to be a prominent document, easily accessible from the business’s website homepage.

The Act does not prescribe what is to be included in the slavery and human trafficking statement. However, it does provide some pointers on what might be covered. For example, the statement might include the following information on the organisation:

  • its structure, its business and its 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 how 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, including appropriate KPIs, and
  • its staff training on slavery and human trafficking.

The Act states that if the organisation has a website, it must—

(a) publish the slavery and human trafficking statement on that website and requires sign off from those responsible for the organisation

(b) include a link to the slavery and human trafficking statement in a prominent place on that website’s homepage.

If the organisation does not have a website, it must provide a copy of the slavery and human trafficking statement to anyone who makes a written request for one within a 30 day period.

At this point, it appears to be permitted to make a statement that the organisation has taken no steps to ensure slavery and human trafficking is not taking place. If no such steps have been taken, a statement to that effect will suffice for the purposes of complying with the law.

The government is relying on concern about the potential reaction of shareholders and the public to ensure that the “no steps statement” option is limited by the potential for reputation damage.

A forward-looking business, particularly one that is subject to human rights disclosure requirements under the Companies Act 2006, might want consider taking an integrated approach and address its stance on slavery and modern trafficking at a strategic level.

At the simplest level in the first year the expectation would be for businesses to have conducted an assessment to identify where potential risks may arise and to document their approach to tackle these with plans for improvement and risk mitigation over time.

Guidance on the requirements for the statement were published at the end of October, available via the following link: [1].

For enquiries, please contact:

Karen Murray
UK Supply Chain Assessment and Solutions Manager
t: + 44 (0)7872 816565

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