Modern slavery and supply chain reporting obligations

Modern slavery and supply chain reporting obligations

Published:

Author: Ron Reid

Applies to: UK wide

The new Modern Slavery Act (2015) will apply to all commercial organisations who carry on business or part of a business in the UK.

Regulations under the Act expected to be implemented in October 2015 will require those with turnover above a yet to be determined threshold to produce an annual statement for each financial year under the so-called 'Transparency in supply chain provisions'.

Organisations are likely to have only until the end of the current financial year to produce their first statement. Current reports suggest that a threshold of around £60million is likely.

The government has indicated it will publish compliance guidance in the next few months.

The Act introduces two main offences

  • servitude or forced labour
  • arranging or facilitating the travel of another person with a view that a person is being exploited

Preparing the Statement

If caught, the basic requirement is to produce a statement confirming:

  • the steps taken to ensure that slavery and human trafficking are not taking place in your business or in any supply chain

Or

  • that you have taken no steps to confirm the existence of slavery or trafficking

However if you decide to take steps to investigate and report, the Act suggests information that the statement may include namely:

  • brief description of your organisations business model and supply chain relationships
  • your organisation's policies relating to modern slavery including due diligence processes and the training available/provided for those in supply change management and the rest of the organisation
  • the parts of the business and supply chain most at risk in the organisation and how the organisation evaluates and manages those risks
  • relevant key performance indicators which would allow a reader to assess the effectiveness of the activity described in the statement.

Publication

The homepage of your website must contain:

  1. a prominent link to the statement
  2. the statement must be approved by the board and signed by a director
  3. homepages of both the parent company and any subsidiaries websites
  4. if the company does not have a website it must provide a copy of the statement within 30 days to anyone who requests it

Application / Jurisdiction

  • a company/partnership over a certain size
  • supplies goods or services
  • carries on a business or part of a business in the UK

Implications

The Act itself imposes no legally binding requirements to conduct due diligence on its supply chains. At present there is some flexibility surrounding the content of the statement, this is critical in the early years of the new regime, as organisations may struggle to obtain the information required

What should your company be doing now?

Companies should assess whether you are caught by these requirements, for some this will be straight forward, however for others they will need to decide on an entity by entity basis once the turnover threshold is published.

  • if caught you will need to decide on the type of statement you wish to make in the initial reporting years
  • start assessing current levels of information on your supply chains. The company will need to start engaging with your direct and indirect suppliers and set up due diligence systems to obtain reliable information
  • assessing the need for training within the organisation and your supply chains on human rights compliance
  • reviewing how these obligations fit within any wider mandatory or voluntary reporting undertaken by the business.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

About the author

contact photo

Ronald Reid

Consultant

03700 868471

Ron is a consultant with Shoosmiths having previously headed the regulatory & compliance team advising clients on non contentious matters as well as those facing investigation or prosecution for breaches of regulatory legislation. He has considerable experience of crisis management. He has over 40 years' experience including having prosecuted complex matters on behalf of the Health and Safety Executive giving him considerable insight into the enforcement process and the major causes of prosecution.

Ron also formed part The Law Society Steering Group on the Modern Slavery Act practice note and spoke alongside Kevin Hyland, OBE, at the Law Society on the 6th December 2016.

Share this page