3 May 2016

Under the Modern Slavery Act, there is now a requirement for certain employers to publish… Read more

Under the Modern Slavery Act, there is now a requirement for certain employers to publish an annual ‘Slavery and Human Trafficking Statement’.

Q: To whom does the obligation to publish a statement apply?

A: The obligation applies to any organisation with an annual turnover of £36 million or more which operates any part of its business in the UK.

Q: Does the £36 million threshold apply only to revenue generated in the UK?

A: No – it is global annual turnover. So if a multi-national corporation supplies goods or services in the UK and meets the £36 million threshold (even if the size of the UK operation is relatively small), it is likely that the obligation will bite. In this sense, the legislation has international reach, in much the same way as the UK Bribery Act applies to overseas businesses.

Q: Are there any exceptions to this rule?

A: Possibly – if, for example, an international corporation can demonstrate that the UK subsidiary acts completely independently of the wider group and, of itself, does not hit £36 million turnover. However, the statutory guidance is not clear on what, for example, constitutes ‘complete independence’.

Q: What does the statement need to say?

A: The statement must explain the steps that an organisation has taken in the previous financial year to ensure that slavery and human trafficking are not taking place within its own business or its supply chains.

This information may include the following:

  • the company’s structure, business and supply chains;
  • any policies or staff training on slavery and human trafficking;
  • any due diligence processes on slavery and human trafficking in its business and supply chains; and
  • the steps it has taken to assess and manage the risk of slavery and human trafficking in supply chains or areas of the business where there is an identifiable risk.

The Home Office has published a practical guide for businesses – which is available here.

Q: What happens if a company has not taken any steps along these lines?

A: It is required to say so in its statement (although this may not show the business in the best light). Similarly, if the business took steps only part way through the year, the statement should note the time periods in which steps were taken. It is an annual obligation, reflecting an ongoing duty to keep an eye on areas of risk each year.

Q: When does the obligation come into force?

A: The requirement is to publish an updated statement for each financial year ending on or after 31 March 2016. It must be published as soon as practicably possible after the end of the financial year (no more than 6 months after the year end).

It must be approved at a senior level within the business – so, for example, for companies, the statement must be signed by a director and approved by the board. Similar rules apply for other types of organisation.

Q: Where must the statement be published?

A: The statement must be published on the company’s website, with a link available in a prominent place on the homepage. This could mean it is visible directly on the homepage or accessible via a drop-down menu.

Q: What are the sanctions for non-compliance?

A: There are no financial or other sanctions for not publishing a statement – although there is the risk of reputational damage or being ‘named and shamed’. The Secretary of State also has the power to enforce the duty by obtaining a court injunction (which, if not complied with, may then have further punitive implications).

Q: What are businesses doing in practice? Is there a standard approach?

A: No – some businesses are choosing to prepare very concise statements, whilst others take a more detailed approach. If an organisation has been particularly proactive in tackling slavery and human trafficking, it is likely to want to reflect that with a longer statement, perhaps as part of a broader CSR strategy or to assist in promoting an ethical brand. Others will want to do the bare minimum to jump through the hoops and comply with the legislation. But there is no standard approach as such.

In our view, it is an obligation that all businesses should be taking seriously, even if the actual risk of slavery or human trafficking within their sector or supply chains is relatively low.