When preparing your company's Modern Slavery Act 2015 (the Act) statement, it can be hard to know where to start.
This article sets out a few things you should consider, and what we can expect going forward. Now that numerous organisations have published statements, a report by consultancy Ergon Associates has considered trends within 150 of these statements. This report highlights several pitfalls that should be avoided going forward and we have summarised the key issues below.
1. Don't forget the contractors: Ergon's report found that while the majority of organisations were very good at considering the risk of modern slavery within their supply chain, a surprisingly small number of published statements adequately considered their contractors - over half did not discuss them at all.
What to do: Many organisations rely heavily on a variety of contractors to fill gaps within their businesses, and such contractors undeniably pose risks, temporary labour provided by third party agencies in particular. Organisations will not have the same level of control over contractors as their own employees, but you should ensure staff responsible for the recruitment of contractors that work with third party recruitment agencies are trained how to recognise modern slavery and what to do if they suspect it is occurring.
2. No company works in a vacuum - collaboration and stakeholder engagement: Less than a quarter of statements reviewed by Ergon mentioned membership of a cross-industry or sector specific group committed to working to promote respect for workers' rights worldwide.
What to do: Consider whether your company would benefit from collaborating with groups such as Sedex, The Ethical Trading Initiative and Stronger Together who all provide services to organisations to assist in encouraging ethical practices within their supply chains, including training, auditing, and risk assessment. In addition to these, you could join or create a sector-specific group such as The Better Cotton Initiative, or the Ethical Tea Partnership. Beyond the tangible services these groups can provide, they also offer opportunities for knowledge sharing, which can be invaluable when dealing with this relatively uncharted area.
3. Measuring performance - KPIs are key: Less than 20% of statements reviewed by Ergon discussed any mechanisms by which the success (or otherwise) of approaches to tackling modern slavery will be measured.
What to do: The Act requires organisations to publish a new statement every year, the intention being for them to develop their approach to combating modern slavery, and for the statements to track this ongoing process. In order to fully engage with the legislation, you should think about how you assess and measure the effectiveness of your company's strategies. These KPIs can include both qualitative and quantitative measurement categories, and the more detail that you can include in your company's statements the better. You should also consider auditing your company's on their performance against such KPIs and compliance with the Act.
4. Administrative compliance - remember the basics: Ergon discovered that a surprisingly large number of statements did not meet the legislative requirements for publishing a statement.
What to do: Organisations should be aware of the following key requirements under the Act:
- All organisations doing business in the UK with a turnover of over £36 million are required to publish a statement every year.
- The statement must be approved by the board of directors (or equivalent) and signed by a director (or equivalent).
- The statement should also include the director's name and position, and the date the statement was approved by the board (or equivalent).
- The statement must be published on the company's website and linked directly from its home-page. If the company does not have a website, a copy must be made available to anyone requesting it within 30 days of the company receiving the request.
A bill to amend the Act (The Modern Slavery (Transparency in Supply Chains) Bill 2017) had its first reading in the House of Lords earlier this year. Changes proposed by the bill include mandating what content should appear in organisations' statements, as well as giving public bodies more power to reject tenders by organisations without compliant statements. Coming just over a year after the transitional provisions of the Act came into force, this bill is a statement of intent by the government and a timely reminder for organisations to consider what they should be doing to comply with the Act. While section 54 of the Act currently has very few legislative teeth, non-governmental organisations and investors are being encouraged to put commercial pressure on companies that produce inadequate statements, and there have been calls in the House of Lords for tougher rules to encourage compliance.
Shoosmiths has broad experience in assisting companies in complying with the Act, including drafting statements, advising on supply chain issues, drafting policies and updating template contracts. Shoosmiths also has a range of e-learning courses and bespoke training available, details of which can be found here.
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.