The trust and transparency agenda, how does the Modern Slavery Act affect you?
October 25, 2016
By Susan Fadil, Director Entity Governance and Compliance team and Chris Cartmell, Senior Manager, Regulatory & Commercial Disputes.
With the passage of the Modern Slavery Act 2015 (MSA) in March 2015, the United Kingdom (UK) has made rapid progress in the fight against modern slavery – that is, slavery, servitude, forced and compulsory labour and human trafficking. From October 2015, the MSA requires an estimated 12,000 organisations to publish a modern slavery statement for each financial year ending after 31 March 2016.
Who does it apply to?
The MSA’s provisions on transparency in business and supply chains apply where an organisation:
- is a commercial organisation
- has a global annual turnover in excess of £36m
- carries on business or part of a business in the UK
- supplies goods or services.
What do businesses need to do?
Organisations that meet the above requirements will need to create a ‘slavery and human trafficking statement’ for each financial year and publish this on their website. If an organisation doesn’t have a website, it needs to retain hard copies of the statement and provide it to someone who requests it within 30 days. This statement can either be active, disclosing the steps taken to ensure that slavery and human trafficking is not taking place in a business’s operations and supply chains, or it can be passive, stating that the business has not taken any such steps.
How will companies comply with this?
The statement must be approved by the board of directors and signed by a director, and a link to the statement should appear on the organisation’s website home page. The expectation is that statements will be published within six months of the organisation's financial year end or as soon as reasonably practicable.
A failure by an organisation to follow good practice and publish an accurate and robust slavery and human trafficking statement may attract criticism and negative publicity from its key stakeholders and others in the community. In turn, this has the potential to attract negative publicity that affects its brand, share value and, ultimately, its bottom line.
Organisations must therefore take steps to ensure that their slavery and human trafficking statements are prepared and underpinned by an appropriate policy and operational response to modern slavery in their business and supply chains. This should reflect an organisation’s particular risk profile, the complexity of its supply chains, and the industry and jurisdictions in which it operates.