Guidance for businesses as Modern Slavery reporting requirements take effect

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The obligations under section 54 of the Modern Slavery Act 2015 that require certain businesses to publish an annual “slavery and human trafficking statement” came into force on the 29th October 2015. The new law’s application extends to a wide range of businesses who supply goods and/or services – all organisations incorporated or carrying on part of their business in the UK with a total turnover exceeding £36 million must comply.  For the purposes of the legislation total turnover includes both the turnover of the organisation and the turnover of any of its subsidiary businesses, even if those subsidiaries operate wholly outside of the UK.

Amidst a time of increasing concern as to the presence of slavery and human trafficking within global supply chains, the new rules are designed to prevent UK businesses from conveniently turning a blind eye to human right abuses taking place, often on foreign shores, within their supply lines.  Businesses subject to the new responsibilities will therefore need to set out the steps they are taking to ensure there is no modern slavery within their own business and their supply chains.  If no steps are being taken, this must be explicitly admitted.

The accompanying statutory guidance, entitled “Transparency in Supply Chains etc. A Practical Guide”, does not prescribe the steps business should be taking to eradicate modern slavery and leaves it to individual businesses to determine what steps are reasonable and proportionate in their circumstances.  Businesses are instead advised on examples of good practice, such as proper due diligence as to a prospective supplier’s practices, and encouraged to investigate possible problems with a view to effecting change.

A statement must be published each financial year and cover the whole of the preceding year, with the transitional provisions in the Act entailing that first raft of statements are due from businesses with a 31 March 2016 year end.  The statement must be published publically and prominently on the organisation’s website as soon as reasonably practicable, with the guidance stating that this should be within 6 months of the financial year end.  There are legal penalties for those businesses who fail to comply and the Secretary of State may seek to obtain an injunction compelling an uncompliant business to publish a statement.

Businesses will, however, need to consider the effect that a failure to observe the requirements (and the negative publicity such a move could attract) may have on its brand and reputation.  We would therefore advise businesses to approach the requirements positively and use it as an opportunity to demonstrate their ethical credentials.

If you have any questions about how the Modern Slavery Act 2015 might affect your business or if you require assistance on any other Corporate and Restructuring matters, please contact me at Nick.Pickup@forbessolicitors.co.uk or on 0800 321 3258.

Nick Pickup

About Nick Pickup

Nick Pickup is a Solicitor within the Corporate and Restructuring team at Forbes Solicitors. Nick’s blogs cover his specialism of work on mergers and acquisitions, business start up’s, joint ventures, shareholder issues, company restructures and general company advice.
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