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Large businesses required to report on slavery in their supply chains

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Japan, United Kingdom

The Modern Slavery Act 2015 introduces a new requirement for large businesses to publish an annual slavery and human trafficking statement

The Modern Slavery Act 2015 introduces a new requirement for large businesses to publish an annual slavery and human trafficking statement, disclosing steps they have taken to ensure that no slavery or human trafficking is taking place either in their business or in their supply chains.  This requirement is expected to come into force in October 2015.

Who is required to publish a statement?

A slavery and human trafficking statement must be published by all commercial organisations (corporate bodies and partnerships) which:

  • supply goods or services
  • carry on business in the UK
  • have a net turnover above a certain minimum amount

The requirement applies to all commercial organisations operating in the UK, wherever they are incorporated or formed and however small a part of their business is conducted in the UK.

The turnover threshold applies to the organisation's total net turnover, not just its turnover in the UK, and will also include the turnover of its subsidiaries.  Net turnover means the total amount of revenue derived from all sources, after deduction of trade discounts, value added tax and any other taxes based on the amounts so derived. 

The Government is currently consulting on the level at which the turnover threshold should be set, and on whether a higher threshold should be set initially which would be lowered over time to bring more businesses within the scope of the requirement.  It has not given any indication of what it believes the threshold should be.

What should the statement include?

The statement must set out the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its own business.  Alternatively, a statement must be made that no such steps have been taken.

"Slavery and human trafficking" is defined as conduct which constitutes an offence under certain UK statutory provisions, or which would constitute such an offence if the conduct took place in the UK.  The offences cover:

  • slavery, where ownership is exercised over a person
  • servitude, which involves the obligation to provide services imposed by coercion
  • forced or compulsory labour, which involves work or service exacted from any person under the menace of a penalty and for which the person has not offered himself voluntarily
  • human trafficking, which concerns arranging or facilitating the travel of another with a view to exploiting them

The statement may include information about:

  • the organisation's structure, business and supply chains
  • its policies in relation to slavery and human trafficking
  • its due diligence processes in relation to slavery and human trafficking in its business and supply chains
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate
  • the training about slavery and human trafficking available to its staff

The Government is consulting on additional guidance to help businesses understand what the statement might include.  Organisations will be expected to take this issue seriously at the top level and those responsible for the business will be required to approve the statement: in the case of a company, the statement must be approved by the board and signed by a director.

How must the statement be published?

The organisation must publish its slavery and human trafficking statement on its website (if it has one) and include a link to the statement in a prominent place on the website's homepage.  If it does not have a website, it must provide a copy of the statement to anyone who makes a written request for one within 30 days of receiving the request.

What should businesses do now?

It is not yet clear which businesses will be subject to the requirement to publish a slavery and human trafficking statement.  However, businesses which are not themselves required to publish a statement may still be affected, if they are part of the supply chain of a larger business.

All suppliers of goods and services in the UK should therefore take action now to assess and address the risk of slavery, servitude, forced labour or human trafficking occurring in any part of their business or supply chains.

Neil Matthews is a Partner in Fieldfisher's Corporate Group in London.

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