The Modern Slavery Act 2015
The Modern Slavery Act 2015 is not something that will affect many of our clients at this moment in time, although as our clients grow and develop it is likely to become something they need to know about and take action on in coming years.
As of 31st March 2016, all companies with global annual revenues of £36m or more, who operate wholly or in part within the UK have an obligation to report against the transparency in their supply chain on an annual basis. The transparency in supply chains provision in the Modern Slavery Act seeks to address the role of businesses in preventing modern slavery.
The Act requires firms who have their operations in the UK to report on their efforts to ensure that there is no slavery, forced labour or trafficking in their business or supply chains. At least 17,000 companies, both those based in the UK and international firms with UK operations who meet the revenue threshold, will need to produce an annual modern slavery statement which must be approved by the board of directors, and signed by a director or equivalent.
Most organisations might well think that they are low risk, however, a recent survey found 71% of companies suspect the presence of modern slavery in their supply chain. This figure is not so surprising when you consider that the International Labour Organization estimates that 21 million people in the world are victims of forced labour, of which 44% are believed to be migrants.
Many large companies have already made a start and now require their suppliers to have an ethical sourcing policy and practices in place to check that their suppliers and sub-contractors are doing all they can to ensure modern slavery is not taking place.
Does it apply to my business?
The requirements of the act apply to commercial organisations supplying goods or services and having a minimum total turnover of £36 million and above. A ‘commercial organisation’ includes a partnership or a company, wherever incorporated, which carries on a business, or part of a business in the UK.
Total turnover is calculated as the turnover of the organisation and of any of its subsidiary undertakings, including those operating outside the UK, after deductions of trade discounts, VAT and other taxes.
Making a start
First, assess the make-up or your organisation and establish whether or not your turnover is currently, or is likely in the near future to mean you are affected by the act. Even if your organisation is not required to comply yet, your growth plans might mean that you would be wise to start looking into the requirements of the act sooner rather than later, and it will help if the management team start to think about these requirements now and look to incorporate policies and due diligence work as and when new suppliers come on board, or new systems are developed.
Secondly, it is essential that the company understands its supply chain and assesses where the risk of modern slavery is greatest. This risk mapping process will enable the company to develop a plan to target the sourcing countries where it is more likely that slavery and human trafficking is taking place. The mapping process should also consider the different types of materials, manufacturing processes, or where there is a high use of migrant workers, temporary or contract labour.
Thirdly, once the initial risk mapping exercise has been completed, the company should start to look at its purchasing practices, supplier policies and its relationships with suppliers, examining your company’s requirements for suppliers and their own standards, specifically around worker rights and labour standards.
As a final step before the company is able to start moving forward with the process on the ground, the company will need to consider who within the company will take charge of this process and what training they may need.
It may take a company, especially an SME several years to complete the review and feel confident that it has completed the due diligence process, but being able to demonstrate that the company has a plan in place and that they are dedicating resources towards achieving it will satisfy the regulatory requirements initially.
Annual Slavery and Trafficking Statement
Your Company’s annual slavery and trafficking statement will need to include five general areas of activity and be published prominently on the company’s official website. The general areas of activity are:
- A brief description of an organisation’s business model and supply chain relationships;
- A business’s policies relating to modern slavery, including due diligence and auditing processes, implemented;
- Training available and provided to those in a) supply chain management and b) the rest of the organisation;
- The principal risks related to slavery and human trafficking, including how the organisation evaluates and manages those risks in their organisation and their supply chain; and
- Relevant key performance indicators
If you would like further advice and guidance on the requirements of the act, and whether or not your business will need to comply, please get in touch with us. The Home Office has also produced a document which provides guidance on:
- who is required to publish a statement
- how to write a slavery and human trafficking statement
- how to approve and publish the statement