Modern Slavery statements

Posted on
From this Autumn, a new law will oblige commercial organisations with a turnover of £36 million or more to publish a 'slavery and human trafficking statement' on their website each financial year. Although no official implementation date has been set, it is due to be brought in this October (2015), with transitional provisions for organisations whose financial year ends soon afterwards.

In our previous article published in August we set out the Government's headline proposals as published in its consultation Response this summer. Draft regulations have now been laid before Parliament which give us a few further details, and many employers may not even yet realise that they are affected.

Whilst most of the Modern Slavery Act 2015 is concerned with the criminal offences of slavery and human trafficking, the 'transparency in supply chains' provision affects commercial organisations with a turnover of £36 million or more. Importantly, it is not just turnover in the UK that counts – a commercial organisation operating mostly overseas with a turnover of more than £36 million could be caught, if it carries on business in the UK, even if its UK arm has a turnover of less than £36 million.

The draft regulations confirm that 'turnover' is the total turnover of a business, including the turnover of any of its subsidiary undertakings. 'Turnover' is defined as the amount derived from the provision of goods and services, less trade discounts, VAT and any other taxes based on that amount.

Affected businesses will need to prepare a slavery and human trafficking statement, and publish it on their website (with a link to it from a prominent place on the homepage). This can be either:

  • a statement setting out the steps 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 and in a part of its own business; or
  • a statement that the organisation has taken no such steps.

So, in theory, businesses could comply by saying they have taken no such steps. In practice, the Government and commentators suggest that this will not be a palatable option for businesses of this size, which will want to produce a full statement for the benefit of all stakeholders including investors, suppliers and customers.

The Modern Slavery Act 2015 sets out some of the information that businesses might include in the statement, but further statutory guidance is due to be published when the provision is brought into force.

Whilst compliance with this new law may be down to risk and compliance teams, it is likely that HR teams and other support functions could well be involved in the auditing and reporting processes as well as potentially introducing policies and providing training, particularly for those involved in a business' supply chain or procurement team. Rather like an organisation's response to the Bribery Act 2010, the duty is likely to require a cross-team approach, and businesses should act now to assess supply chains, engage with suppliers and consider the policies and training to be implemented.

Blake Morgan will be providing training on the new provision in its latest in-house lawyers' forums in Oxford and Reading. If you require further information on the new provision and how to comply, please contact Lisa Parsons, contact details below.