Modern Slavery - time for action!
The Modern Slavery Act 1 received Royal Assent in the final days of the coalition government. Initially focusing on human trafficking, Section 54 ("Transparency in Supply Chains etc," - TISC) was introduced as an amendment at a late stage of the Bill passing through Parliament. The Home Office has conducted a consultation about how this section could be applied, and guidance 2 has been published. Originally scheduled to be effective from 29th October 2015, transitional provisions mean the first reporting date is 31st March 2016 to allow organisations sufficient time to understand the requirement and comply.
All organisations (including those that are non corporate
with trading arms) carrying out business in the UK with a total turnover
in excess of £36m must prepare a “"slavery and human
trafficking statement" for each financial year. This statement “"may
For companies, the parent may produce a statement that UK based subsidiaries can use to meet this requirement. The behaviour of subsidiaries not carrying out business in the UK (and not part of the UK supply chain) may be excluded from this statement, but the view is the parent should cover non UK subsidiaries in its statement as good practice.
The guidance is not prescriptive. An organisation may exclude parts from its statement, except it must include “"the steps it has taken during the financial year to ensure slavery and human trafficking is not taking place in its supply chains or in any part of its own business". If no steps have been taken, this should be stated.
The reporting on the steps taken is critical to the statement. The statement does not indicate the organisation "guarantees" its supply chain is "slavery free" but that it is taking steps to ensure this is the case. The Home Office expects that the requirement for an annual statement will create "a race to the top" and drive up standards. If organisations fail to produce a statement, they will face an injunction, and failure to comply is punishable by an unlimited fine.
The annual statement must be approved by a senior person in the organisation. For a company, this means the statement must be approved by the board and signed by a director or equivalent. For those companies publishing on 31st March 2016 their statement should cover actions for the financial year, but if these commenced after the original effective date, this should be stated.
The statement must be published on an organisation's website (if available), and a link should be featured prominently on the website's front page. The statement may include links to published relevant material such as supply chain actions in its CR report, or policy documents.
Organisations need to start their planning now for their first annual statement.
1 Section 54 can be found at:
The guidance is in line with the consultation’s outcome, but for companies, the question is not “what constitutes a statement” but “how do we deliver it”? At one stage, it was suggested there would be a central database of statements. Instead “it will be for consumers, investors and non-governmental organisations to engage and/or apply pressure where they believe a business has not taken sufficient steps”. Reference to “the race to the top” indicates continued government scrutiny.
Companies should consider supply chains and use of
contractors or temporaries. Modern slavery encompasses slavery, servitude,
forced or compulsory labour and human trafficking. Events prior to TISC
were the Bangladesh factory collapse, and the Morecambe Bay Chinese cockle
collectors. The latter were illegal immigrants controlled by criminal
gangs. To effectively combat modern slavery, companies must ensure all
staff are aware of modern slavery risks to enable mitigation and management.
If you would like to know more about The Virtuous Circle’s work with clients on materiality and the business model, and would like an objective and impartial view, contact Melissa Kittermaster or Tony Hoskins via email@example.com