On October 29, 2015 the Home Office published Transparency in Supply Chains etc. - A practical guide (the Guidance) under section 54(9) of the Modern Slavery Act 2015 (the Act). Section 54 of the Act requires certain businesses to produce a statement setting out the steps they have taken to ensure there is no modern slavery in their own business and their supply chains. If an organisation has taken no steps to do this, their statement should say so. The measure is designed to create a level playing field between those businesses, whose turnover is over a certain threshold, which act responsibly and those that need to change their policies and practices. The Guidance sets out the basic requirements of the legislation, provides direction on how the Government expects organisations to develop a credible and accurate slavery and human trafficking statement each year, and sets out what must be included in such a statement.
Every organisation carrying on a business in the UK with a total annual turnover of £36m or more will be required to produce a slavery and human trafficking statement for each financial year of the organisation.
The Modern Slavery Act 2015
The Guidance notes that, for the purposes of section 54 of the Act, ‘supply chain’ has its everyday meaning.
The Act specifically states that the statement must include “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, and in any part of its own business”. The Guidance points out that when the Act refers to ensuring that slavery and human trafficking is not taking part in any part of its supply chain, this does not mean that the organisation in question must guarantee that the entire supply chain is slavery free. Instead, it means an organisation must set out the steps it has taken in relation to any part of the supply chain (that is, it should capture all the actions it has taken).
Since the provision requires an organisation to be transparent about what is happening within its business, if an organisation has taken no steps to ensure slavery and human trafficking is not taking place they must still publish a statement stating this to be the case.
Who is required to comply?
The Guidance makes it clear that the Government expects that whether a body or partnership can be said to be carrying on a business in the UK will be answered by applying a common sense approach. Similarly, by applying a common sense approach, organisations that do not have a demonstrable business presence in the UK will not be caught by the provision. Likewise, having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK, since a subsidiary may act completely independently of its parent or other group companies.
Where the turnover of a franchisee is above the £36m threshold the Guidance notes that they will be required to produce a slavery and human trafficking statement in their own right. In addition, the Guidance notes that each parent and subsidiary organisation (whether it is UK based or not) that meets the requirements must produce a statement of the steps they have taken during the financial year to ensure slavery and human trafficking is not taking place in any part of its own business and in any of its supply chains. If a foreign subsidiary is part of the parent company’s supply chain or own business, the parent company’s statement should cover any actions taken in relation to that subsidiary to prevent modern slavery. Where a foreign parent is carrying on a business or part of a business in the UK, it will be required to produce a statement.
Writing a slavery and human trafficking statement
In writing the slavery and human trafficking statement, the Government suggests:
- keeping the statement succinct but covering all the relevant points and, if possible, providing appropriate links to relevant publications, documents or policies for the organisation;
- writing the statement in simple language to ensure that it is easily accessible to everyone;
- that the statement should be in English but may also be provided in other languages, relevant to the organisation’s business and supply chains; and
- specifying actions by specific country, as this will help readers to understand the context of any actions or steps taken to minimise risks.
The structure of a statement
Section 54(5) of the Act sets out a list of non-exhaustive information that may be included in a statement so as to paint a detailed picture of the steps the organisation has taken to address and remedy modern slavery. This comprises:
- the organisation’s structure, its business and its 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; and
- the training and capacity building about slavery and human trafficking available to its staff.
Annex E to the Guidance provides information on the type of activity that could be included under each heading and why such information would be useful in a statement. This is intended as a guide only.
Commencing the provision
Businesses with a year-end of March 31, 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. However, the Guidance notes that 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.
The Government expects organisations to publish their statements as soon as reasonably practicable after the end of each financial year and encourages organisations to report within six months of the organisation’s financial year end.
Approving a statement
The statement must be approved and signed by a director, member or partner of the organisation. The Guidance points out that the person who is required to sign the statement depends on the type of organisation. For a body corporate (other than a limited liability partnership), the statement must be approved by the board of directors and signed by a director (or equivalent). Where the organisation is a limited liability partnership it must be approved by the members and signed by a designated member. For a limited partnership, registered under the Limited Partnerships Act 1907, a general partner must sign it and if the organisation is any other kind of partnership, a partner must sign it.
Publishing a statement
The statement must be published on an organisation’s website with a link in a prominent place on the homepage. The Guidance acknowledges that, in some instances, where there is a complex organisational structure, an organisation may have more than one outward-facing website. For organisations where there is more than one website, the Government recommends placing the statement on the most appropriate website relating to the organisation’s business in the UK. Where there is more than one relevant website, the Government recommends placing a copy of the statement or a link to the statement on each relevant website in order to increase transparency and ensure recognition for the efforts the business is making.
The Guidance also points out that the Act is clear that the link must be in a prominent place on the home page itself. 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 Guidance states that the link should be clearly marked so that the contents are apparent. A link such as ‘Modern Slavery Act Transparency Statement’ is recommended.
(Home Office, Transparency in Supply Chains etc. - A practical guide, 29.10.15)