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Slavery and Human Trafficking Statement

The Modern Slavery Act 2015 is aimed at combating crimes of slavery and human trafficking. Under section 54 of the Act, which came into force on 29 October, commercial organisations who supply goods or services and have a minimum total turnover of £36 million per year are to be required to prepare a slavery and human trafficking statement for each financial year that ends on or after 31 March 2016.

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A commercial organisation's turnover is the combined, global turnover of that organisation and any subsidiary undertakings. The £36 million turnover threshold corresponds with the Companies Act 2006 threshold for determining the size of a large company, so companies that qualify as small or medium under the Companies Act will not have to prepare a statement.

The Home Office has published guidance on the requirement to prepare a statement [https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide]. This includes case studies, suggestions on information to disclose and links to additional resources.

The government has indicated that any organisation that engages in commercial activities could be caught by section 54 regardless of their purpose or whether profits are made – so even organisations such as charities and educational institutions will be required to prepare a statement if they trade through limited companies or partnerships and achieve the turnover threshold.

The guidance suggests that the statement should be published as soon as possible after the financial year end to which it relates, and within 6 months of that date, to ensure that it is relevant and current.

Content of slavery and human trafficking statement

The statement must include either a statement:

  • Of 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 any part of its own business; or

  • That the organisation has taken no such steps.

  • Section 54 does not prescribe the content of the statement, but sets out content that may be included. The guidance recommends that the statement should be:

  • Written in simple language to ensure that it is easily accessible to everyone.

  • Be succinct but cover all the relevant points and link to relevant publications, documents or policies.

  • In English, but may be provided in other languages that are relevant to the supply chain. It suggests that specifying the actions by specific country will help readers understand the context of the steps taken.

The statement may include information about:

  • The organisation's structure, 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 the steps it has taken 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, measured against such performance indicators as it considers appropriate.

  • The training about slavery and human trafficking available to its staff.

Approval

The commercial organisation must approve the statement as follows:

  • Companies: The board of directors must approve the statement and it must be signed by a director.

  • Limited liability partnerships (LLPs): The members must approve the statement and it must be signed by a designated member.

  • Limited partnerships registered under the Limited Partnerships Act 1907: A general partner must sign the statement.

  • Other types of partnership: A partner must sign the statement.

Publication

If the organisation has a website, it must publish the statement on there and include a link to the statement in a prominent place on the homepage. If the organisation has more than one website, the statement is required to be placed on the most appropriate website relating the organisation's business in the UK - although the guidance suggests placing a copy of the statement, or a link to it, on each website.

If the organisation does not have a website, it must provide a copy of the statement to anyone who makes a written request for one within 30 days of receipt of the request.

Enforcement

The Secretary of State may seek an injunction requiring an organisation to comply with section 54. If the organisation fails to comply with the injunction, it will be in contempt of a court order, which is punishable by an unlimited fine.

However, perhaps the principal “sanction” that may result if a business fails to comply with section 54, or reports that it has taken no steps to ensure that slavery is not taking place, is damage to its reputation and brand.

Corporate responsibility and strategic report

Some companies may already report on human rights and slavery issues as part of their corporate responsibility reporting, e.g. through voluntary disclosures in accordance with the UN Guiding Principles Reporting Framework.

There is also an existing requirement for quoted companies to disclose in their strategic reports information about social, community and human rights issues, to the extent that this is necessary for an understanding of the development, performance or position of the company's business. Quoted companies may therefore already have some of the material necessary to produce a slavery and human trafficking statement.