New anti-slavery laws: do you have a part to play?

New anti-slavery legislation has since 29 October imposed disclosure obligations on large companies. There are also implications for smaller…

New anti-slavery legislation has since 29 October imposed disclosure obligations on large companies and partnerships. There are also implications for smaller businesses.

According to the Prime Minister, the Modern Slavery Act (the “Act”) will “tackle the worst exploitation” and will place the UK in the top ten countries taking action against slavery worldwide. The Act adds to, and consolidates, existing slavery legislation, following reports from the UK and overseas that modern slavery is still prevalent.

The Act enlists the support of large “commercial organisations” in tackling modern slavery and human trafficking, by imposing a new disclosure obligation. The Government hopes that reporting organisations will (i) serve as a lookout for offenders both within their own business and in their supply chains; and (ii) use their buying power to influence their suppliers to refrain from the offences of slavery, servitude and forced or compulsory labour and human trafficking.

An affected organisation must, as soon as reasonably practicable but by no later than six months after financial year end, publish an annual report of steps taken to ensure that there is no modern slavery either in its business or its supply chains. In practice, steps taken by an organisation will comprise an interrogation of its own business and that of each of its suppliers. The aim of this due diligence exercise will be to flush out any practices that could constitute modern slavery offences.

The obligation is to publish an annual report. If you have taken no steps during the financial year, your report should say so. Although there is no sanction for taking no steps, you should be aware that this may cause reputational issues that could, in some cases, damage your business.

Does this apply to my business?

A commercial organisation is required to produce and publish a statement if it has a global turnover of at least £36 million, a level set by The Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015 by reference to the SME threshold prescribed by the Companies Act. Although global turnover is relevant, the organisation must carry on at least some business in the UK.

Turnover is determined on a consolidated basis and must take into account the turnover of any of the organisation’s “subsidiary undertakings”. This threshold allows for deduction of any trade discounts, VAT and any other tax based on amounts derived from the provision of goods or services.

If your business is smaller than this, you may still be affected if you supply an organisation that meets the turnover criterion. If you have such a customer:

  • it may ask you questions to ascertain whether your own business practices and those of your suppliers give rise to modern slavery concerns. On receipt of a questionnaire, you may feel compelled to carry out your own modern slavery checks, a chain reaction which is doubtless an aim of the legislation
  • you may also be asked to agree to certain anti-slavery clauses in your supply contracts. These may not be particularly onerous, but you cannot be compelled to accept changes. A refusal to do so, however, may put your business at a competitive disadvantage.

When do I have to start publishing statements?

The legislation has allowed time for affected organisations to consider what they must do to comply. Accordingly, the first organisations required to produce a statement will be those with a year end of 31 March, and their first statement must be produced as soon as reasonably practicable after 31 March 2016. An organisation with a year end of 31 December, for example, will not be required to produce its first statement until after 31 December 2016.

In practice, it is expected that organisations will publish their statement simultaneously with publication of their annual financial statements. Publication should be made on the organisation’s website (or on each website, if more than one), and there should be a link to the slavery and human trafficking statement in a prominent place on the/each website’s homepage. The Home Office suggests a link entitled “Modern Slavery Act Transparency Statement”.

What must the statement say?

The first point to make is that there is no prescribed form of statement. It is however expected to include a report on the organisation’s policies, training, due diligence processes and the effectiveness of the measures in place to tackle modern slavery and human trafficking. Each report will relate to the financial year just ended and must be approved and signed by the highest tier within the business. For a company, board approval will be required and a director must sign it.

According to the Act, the statement should list the steps that the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in its own business.

If no steps have been taken, the statement must say so.

What do I do if I suspect that an offence is happening here?

If you suspect that a case of modern slavery is ongoing here in the UK:

  • report it to the police on 101 or, if potential victims are in immediate danger, on 999
  • if you are less certain that an offence is in process, call the Modern Slavery Helpline on 0800 0121 700.

If you suspect that an offence is being committed abroad, it will be more appropriate to contact law enforcement bodies local to the suspected offence. In some cases, it may be preferable to engage with local industry bodies, trade unions or other support organisations to attempt to remedy the situation. The approach taken may depend on the organisation’s buying power but should always take account of the safety of the potential victim.

What should I do now?

The Government does not expect all affected organisations to be instantly compliant, but you may wish to consider the following initial steps:

  • decide whether your business is sufficiently large to be subject to the disclosure obligation
  • if it is, map out your supply chains, to determine the extent of your due diligence exercise
  • take legal advice, if in doubt or if you need guidance as to what to do next.

In the meantime, the Home Office has produced a useful guide, which you will find at: https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide

If you are interested in finding out more about your modern slavery disclosure obligations, please contact Mark Leach or Phil Allen, Partners in the Employment department, on respectively 0161 233 7372 or 0161 214 0504, or by email to mark.leach@weightmans.com or phil.allen@weightmans.com.

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