Slavery and human trafficking statement under the UK’s Modern Slavery Act 2015

LexisNexis Legal & Professional, LexisNexis UK, LexisPSL, Risk and Compliance, 8 June 2017

The Modern Slavery Act 2015 (MSA 2015) received Royal Assent on 26 March 2015. Section 54 requires some organisations to produce and publish an annual slavery and human trafficking statement. This Practice Note explains section 54 of MSA 2015.

References: Modern Slavery Act 2015, s 54

What is slavery?

MSA 2015 covers four activities, which are defined by reference to ECHR, art 4:

Slavery

Exercising powers of ownership over a person

Servitude

The obligation to provide services is imposed by the use of coercion

Forced or compulsory labour

Work or services are exacted from a person under the menace of any penalty and for which the person has not offered themselves voluntarily

Human trafficking

Arranging or facilitating the travel of another person with a view to their exploitation

All four activities should be covered in a slavery and human trafficking statement.

Who will be required to publish a slavery and human trafficking statement?

The requirement to publish a statement applies to organisations meeting the following criteria:

References: MSA 2015, s 54

• commercial organisation—the definition appears to catch companies, limited liability partnerships (LLPs) and standard partnerships, but not sole traders

• supplying goods or services

• carrying on business in the UK

• with a total turnover of £36m or more

The £36m turnover threshold will rule out many organisations, although you may wish to publish a statement in any event, eg because:

• the Government encourages all businesses to develop an appropriate and effective response to modern slavery

References:  Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 2.5

• it could be a requirement of competitive tendering

• for corporate social responsibility reasons

• as an employer you have a responsibility to ensure your employees and colleagues are safeguarded

• it's a good way to demonstrate you are protecting your workers

• it can help protect and enhance your reputation and brand

• it could help protect and grow your customer/client base, as more customers/clients seek out businesses with higher ethical standards

• of improved investor confidence

• it can result in greater staff retention and loyalty based on values and respect, and

• it can help develop more responsive, stable and innovative supply chains

Format of the statement

The Government has not been prescriptive about the layout of the statement so it's up to you how you present your statement.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, paras 4.1z–4.4

You should remember it's a public-facing document.

It should:

• be written in simple language that is easily understood

• be succinct, but cover all the relevant points

• provide appropriate links to relevant publications, documents or policies (eg to your CSR policy)

• be in English, but may also be provided in other languages, relevant to your business and supply chains

Contents of the statement

Again, the Government has not been prescriptive here.

It's up to how much detail you provide, but you must include in the statement all the steps you've taken. The information presented in your statement is likely to be determined by the complexity of your structure and supply chains and the particular sectors and jurisdictions in which your suppliers are involved.

The statement must set out:

References: MSA 2015, s 54

• the steps you have taken during the financial year to ensure slavery and human trafficking is not taking place in any part of your supply chains or your own business, or

• that you have taken no such steps

This doesn't mean you must guarantee your entire supply chain is slavery free: it means you should capture all the actions you've taken.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 2.3

You will be able to comply with the MSA 2015 by simply publishing a statement that you have taken no steps to ensure slavery and human trafficking is not taking place. Such an approach is unlikely to be perceived as best practice and may place you at a disadvantage on some tenders.

MSA 2015 provides provide a non-exhaustive list of information you could include:

• a brief description of your business model and supply chain relationships

• your policies relating to modern slavery and human-trafficking

• your due diligence and auditing processes

• the principal risks related to slavery and human trafficking including how you evaluate and manage the risks in your organisation and your supply chain

• relevant key performance indicators (KPIs), ie measures that will assist the reader of a slavery and human trafficking statement to assess the effectiveness of the activities described in the statement

• training available and provided to those in supply chain management and the rest of the organisation

You don't have to include all these areas (unless they in fact reflect the actual steps you've taken), they're examples only.

The table below contains suggested details/information you may wish to include in your statement under each of these points:

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, Annex E

Business model and supply chain

—the sector you operate in

—your organisational structure and group relationships

—the countries you source your goods or services from, including high risk countries

—the make-up and complexity of your supply chains

—your businesses operating model

—relationships with suppliers and others, including trade unions and other bodies representing workers

Your policies

—the process for policy development

—details of policies that concern business relationships, eg Supplier and employee Code of Conducts, recruitment policies and procurement policies

—your recruitment policy

—policies concerning access to remedy, compensation and justice for victims of modern slavery

—polices that relate to staff training and increasing awareness of modern slavery

See Template: Anti-slavery policy.

Due diligence and auditing

—details of actions you've taken to understand the businesses operating context

—details of risk management processes, including monitoring and evaluation measures

—impact assessments undertaken

—action plans to address and risk/actual instances of modern slavery and how actions have been prioritised

—evidence of stakeholder engagement

—business-level grievance mechanisms in place to address modern slavery

—actions you've taken to embed respect for human rights and zero tolerance of modern slavery throughout your organisation

See Practice Note: Auditing suppliers (modern slavery and human trafficking).

Risk assessment

The government guidance does not set out examples of how you might present this information in your statement.

You may wish to share high-level details of the risks you have identified.

See Practice Note: Assessing modern slavery risk in supply chains and Templates Modern slavery—firm risk assessment, Modern slavery and human trafficking supplier risk assessment and Modern slavery—supplier questionnaire.

Key performance indicators (KPIs)

KPIs could be used in a modern slavery statement in two ways:

—you could choose to provide information on your existing KPIs and set out whether you have considered whether they make your business and supply chain vulnerable to modern slavery, or

—you could outline any additional KPIs which you have introduced to measure the performance of any anti-slavery actions undertaken

Training

The government guidance does not set out examples of how you might present this information in your statement.

You may wish to share high-level details of the training you provide, eg who it is targeted at (whole organisation or specific groups or individuals) and the form it takes.

Approval and signature of the statement

MSA 2015 requires that the statement is approved and signed by an appropriate senior person in the business. This ensures senior level accountability, leadership and responsibility for modern slavery and gives it the serious attention it deserves.

References:  Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 7.3

The person required to sign the statement depends on the type of organisation:

Company

approved by the board of directors (or equivalent management body) and signed by a director (or equivalent)

Limited liability partnership

approved by the members and signed by a designated member

Traditional partnership

signed by a partner

Publishing the statement

Assuming you have a website, you must:

References: MSA 2015, s 54

• publish the slavery and human trafficking statement on that website, and

• include a link to the slavery and human trafficking statement in a prominent place on the website homepage

In the highly unlikely that you meet the qualifying criteria of the Act but you do not have a website, you must provide a copy of the slavery and human trafficking statement to anyone who makes a written request for one within 30 days of receiving the request.

Where you have more than one website the government recommends placing the statement on the most appropriate website relating to your business in the UK. Where there is more than one relevant website, you should place a copy or a link on each relevant website.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 8.2

A prominent place may mean a modern slavery link that is directly visible on the home page or part of an obvious drop-down menu on that page. The link should be clearly marked so that the contents are apparent. The government recommends a link such as ‘Modern Slavery Act Transparency Statement’.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 8.3

Timing and frequency of the statement

To ensure the information contained is relevant and up to date, the government expects statements to be published as soon as reasonably practicable after the end of each financial year. It encourages organisations to report within six months of financial year end.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 6.4

The statement must be prepared and published each financial year.

References: MSA 2015, s 54

Commencement

The requirement for organisations to publish a statement commenced on 29 October 2015.

Transitional provisions are in place meaning businesses with a financial year-end date between 29 October 2015 and 30 March 2016 will not be required to publish a statement for that financial year. Businesses with a year-end of 31 March 2016 will be the first businesses required to publish a statement for their 2015–16 financial year. These organisations will be required to produce a statement covering the full financial year of the organisation. Where an organisation has only recently undertaken activities they may choose to produce a statement that indicates that activity undertaken covers a particular part of the financial year.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, paras 6.1-6.2

You must complete a statement for each financial year in which your turnover meets the £36m threshold. However, the government strongly recommends once you have published a statement that you continue to produce a statement even if your turnover falls below the threshold because producing a regular annual statement will ensure you can build on earlier statements and demonstrate that you are being transparent, not because you're required to do so, but because they consider it important.

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 6.3

Failure to comply

The Secretary of State may seek an injunction through the High Court requiring the organisation to comply. If the organisation fails to comply with the injunction, it will be in contempt of a court order, which is punishable by an unlimited fine.

In practice, failure to comply with the provision will mean the organisation has not produced a statement, published it on their website (where they have one) or has not set out the steps taken by the organisation in the relevant financial year. While the government encourages clear, detailed and informative statements, legal compliance doesn't turn on how well the statement is written or presented (provided it sets out the what it should set out).

References: Guidance issued under section 54(9) of the Modern Slavery Act 2015, para 2.7

However, a failure to comply with the provision may damage the reputation of your business and it will be for consumers, investors and Non-Governmental Organisations to engage and/or apply pressure where they believe insufficient steps have been taken.