Out-Law Analysis | 22 Dec 2016 | 12:31 pm | 3 min. read
The Modern Slavery Act 2015 does not require companies to take any anti-slavery steps. Instead, it requires businesses with individual or group turnovers of £36 million or more to publish a modern slavery statement covering any preventative steps actually taken by the business in the last financial year.
Nevertheless, the obligation to publish a modern slavery statement has had a significant impact to date. That impact will grow as more businesses enter the reporting period.
What are the main risks for businesses when publishing a statement?
The sanctions under the Act for failing to publish a statement are civil in nature. A business may face a civil action to publish a statement.
There are also contractual and reputational implications for failing to make a statement or for making an inadequate statement. For example, an organisation called the Business & Human Rights Resource Centre is compiling a database of published modern slavery statements and it has issued a critique of the statements published to date by FTSE 100 companies (more below).
It is worth noting the Modern Slavery (Transparency in Supply Chains) Bill. This private members bill has been debated in the House of Lords and had its first reading in the House of Commons on 30 November 2016. If brought into force as drafted, it would exclude companies from public procurement processes which had not published a statement when obliged to.
What is a Modern Slavery Statement?
The Modern Slavery Act 2015 requires certain commercial organisations to publish modern slavery for each financial year ending on or after the 31 March 2016. Commercial organisations have six months for the year to publish a signed modern slavery statement on the organisation's website.
Commercial organisations that are obliged to publish are those that: (i) carry on a business or a part of the business in the UK; (ii) have a turnover of over £36 million (including that of subsidiaries); and (iii) supply goods or services.
The statement should outline the steps that the organisation has taken to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its own business, or should say that that the organisation has taken no such steps. This statement may include information about:
The Act requires publication of the statement on an organisation's website, and a link to the statement should be placed on website homepage.
What have the published statements covered?
The Business & Human Rights Resource Centre maintains a register of published statements and it records that over 1,000 have already been published.
Many businesses have been criticised for not meeting the basic legal requirements to publish a statement or to publish a statement in accordance with section 54 of the Act. For example, for there to be a prominent link to the company's statement on its website or for the statement to be signed by a director
Other organisations have been criticised for publishing statements that contain no or little information on the organisations':
Guidance from the Home Office expands on these three points.
The obligation on commercial organisations is penalty light but impact heavy because of the business and reputational drivers to publish a fulsome statement and therefore to take the measures recommended by the Act and the Home Office guidance.
Tom Stocker and Neil Carslaw are regulatory law experts at Pinsent Masons, the law firm behind Out-Law.com.