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Modern Slavery Act – is your business caught?

From October new obligations under section 54 of the Modern Slavery Act will apply to certain commercial organisations. Relevant organisations will be required to publish an annual anti-slavery and human trafficking statement, which may require significant auditing of their global supply chains and business.

From October new obligations under section 54 of the Modern Slavery Act will apply to certain commercial organisations. Relevant organisations will be required to publish an annual anti-slavery and human trafficking statement, which may require significant auditing of their global supply chains and business. 

Is my organisation caught?

The obligations apply to ‘commercial organisations’ above a certain turnover threshold which are carrying on business or part of their business in the UK. Article by Sarah Ozanne, Employment Partner, CMS. The Government has confirmed its intention that the turnover threshold will be set at £36 million. Turnover is determined on a global scale, and not just revenue generated within the UK. Both UK and non-UK incorporated commercial organisations may be caught by section 54. It is estimated that the total number of UK active organisations falling within the scope of the legislation may be as high as 12,250.

What do organisations need to do to comply?

A relevant commercial organisation will need to publish either a statement of the steps it has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chain or any part of its business, or a statement that it has taken no such steps. Although the former is likely to require significant auditing of an organisation’s global supply chain and business the latter is likely to carry the risk of reputational damage. If an organisation has a website it must publish the statement on that website and include a link to the statement in a prominent place on the homepage of that website. If the organisation does not have a website it must provide a copy of the statement within 30 days of the company receiving a request.

The Government has indicated that while it will not be prescriptive with regard to the content of statements relating to the steps an organisation has taken, and that it expects the contents to vary from business to business, the core elements may include: an outline of the organisation’s business model, structure and supply chain relationships; the organisation’s policies relating to modern slavery, including the due diligence and auditing processes implemented; details of the training available and provided to members of the organisation; the principal risks related to slavery and human trafficking including how the organisation evaluates and manages those risks in their organisation and supply chain; and relevant performance indicators to gauge the organisation’s progress on the above from year to year. If an organisation fails to publish the annual statement they may be compelled to do so by the Secretary of State.

What next?

The Government will be publishing guidance in October for commercial organisations on how to comply with their obligations under section 54, including the kind of information that may be included in the statement and when and where the statement should be published. Though transitional provisions will apply where an organisation’s financial year end falls close to the section 54 duty coming into force, organisations should be considering now how they are going to respond to this requirement. Such consideration should include putting in place appropriate practices, policies and training relating to slavery and human trafficking.

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