The Modern Slavery Act: new obligations for companies

Failure to do so could leave businesses open to civil proceedings.

What does the Act do?

The Act aims to tackle instances of slavery and human trafficking in the UK.

As well as covering the activities of companies within the UK, it also looks to tackle such practices which may occur in the supply chains of businesses.

As part of this, commercial organisations have to report every year on the steps they have taken to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains.

Who does the Act affect?

The obligation to make annual reports on steps taken applies to all organisations with a total turnover of £36 million or more which are either incorporated in the UK or carry on a business in the UK. In this instance, the total turnover of a commercial organisation includes the turnover of any of its subsidiary undertakings.

When does it come into force?

The requirement to publish an annual report comes into force for all financial years ending either on or after 31 March 2016.

What needs to be included in the report?

While organisations do have to report on the steps they have taken, there are no set rules on what this report should contain.

The Act contains a list of information that may be included within an organisation’s report, including:

• the organisation’s structure, its 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 and supply chains, measured against such performance indicators as it considers appropriate;
• the training about slavery and human trafficking available to its staff.

Alternatively, an organisation could state that it takes no specific steps or, where applicable, that it follows the procedures of its parent company.

The anti-slavery report or statement needs to be signed off by either the board of directors in the case of a corporate entity or by partners or members in the case of a partnership.

Once completed and signed off, it should be published in a prominent location on the organisation’s website with a link to the statement included on the organisation’s homepage.

What happens if a report isn’t done?

Civil proceedings can be instituted against organisations which fail to comply with the reporting obligations in the High Court for an Injunction requiring the company to publish a statement.

Notwithstanding this, and perhaps of more concern, is the reputational damage facing companies for failing to detect profits from slavery and human trafficking.

How can Ward Hadaway help?

We can provide advice and assistance on drafting an appropriate statement for your organisation to ensure you comply with the Modern Slavery Act requirements and the processes required for approval of this statement by your organisation.

We can also prepare policies for your supply chains and oblige supply chains to follow these policies by updating your business contracts. These are all important steps which you can refer to in the annual statement as evidence of steps taken to comply with the Act.

For further information, please contact Matthew Cormack in Ward Hadaway’s company and commercial team or Stephen Graham in Ward Hadaway’s regulatory team.