Latest in Employment Law>Articles>Slavery And Human Trafficking – A Re-Cap On Business Requirements
Slavery And Human Trafficking – A Re-Cap On Business Requirements
Published on: 07/09/2022
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Leeanne Armstrong
Leeanne Armstrong

In 2015, the Modern Slavery Act 2015 (‘the Act’) consolidated criminal offences relating to human trafficking, forced labour and slavery. Slavery is widely defined to include servitude, forced labour and human trafficking; the Act came into force. 

Section 54 of the Act requires large business to produce a slavery and human trafficking statement each financial year. The statement is intended to improve transparency in business supply chains and encourage businesses to take steps to avoid any association with modern slavery. 

In 2018, the government issued a review of the Act and a consultation,following publication of a report which highlighted the severe social and economic cost of modern slavery: estimated at £4.3billion a year in support costs, lost earnings, law enforcement and physical and emotional harm suffered by the victims.  The government has put forward a range of proposals for tightening up the reporting process. For example, the government intends to legislate for the contents of modern slavery statements and include reporting deadlines. However, no timetable has been published for these reforms to take effect. 

In this article we revisit the current requirement to produce a statement, who it applies to and what must be covered. 

Requirement To Produce a Statement 

The requirement to publish a statement applies to: 

  • commercial organisations (including companies, whether incorporated in the UK or not, and partnerships, whether formed in the UK or not);  
  • carrying on a business or part of a business in the UK;  
  • supplying goods or services; and  
  • having an annual global turnover of £36 million or more.  

If the organisation meets the criteria above, it does not matter if it operates with or without profit, for charitable or educational aims or performs purely public functions. 

If any organisation in any part of a group structure (whether parent or subsidiary and whether based in the UK or not) meets the requirements of section 54 then it is legally required to produce a statement. 

Turnover 

Total turnover is calculated as: 

  • the turnover of the organisation; and  
  • the turnover of any of its subsidiary undertakings (including those operating wholly outside the UK).   

For corporate groups, the turnover threshold of £36 million takes into account the combined global turnover of all subsidiaries within that group. 

Businesses caught by section 54 but whose turnover drops below £36 million in a subsequent financial year are strongly recommended by the guidance to continue to produce a statement each year. 

Carrying on a Business or Part of a Business in The UK 

The guidance provides that a common-sense approach should be taken to assessing whether a body incorporated outside of the UK is carrying on a business or part of a business in the UK.  The suggestion is that having a demonstrable business presence in the UK will meet this requirement.   

Having a UK subsidiary will not, in itself, mean that a parent company is carrying on a business in the UK since the subsidiary may act completely independently of its parent or other group companies.   

Content of Statement 

The statement must detail the steps the organisation has taken during the relevant financial year to ensure that slavery and human trafficking is not occurring in its supply chains or in any part of its organisation.  This can include setting out that it has taken no such steps, or is just beginning investigations. The Act places particular emphasis on the investigation of supply chains as this has been identified as an area in which many organisations may unknowingly support crimes related to slavery.  

The statement should be succinct and written in simple language that is easily understood.  It is up to the organisation how they present information and how much detail they provide.  Relevant links to documents/policies can be included (rather than replicating wording).  Organisations can draw on existing programmes of activity rather than creating new ones where appropriate. 

The statement may include information about the following. 

  • The organisation’s structure, its 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 and capacity building about slavery and human trafficking available to its staff. 

Annex E of the statutory guidance provides detailed guidance with regard to the information that should be included in a statement, which is summarised below: 

Information in the statement about an organisation’s structure, its business and supply chains mayinclude the following:
  • The sector(s) in which the business operates and whether any of its work is seasonal. 
  • The organisational structure and group relationships. 
  • The countries it sources its goods and services from, including high risk countries where modern forms of slavery are prevalent. 
  • The make-up and complexity of supply chains. 
  • The business operating model. 
  • Relationships with suppliers and others, including trade unions and other bodies representing workers. 
Guidance on an organisation’s policies in relation to slavery and human trafficking includes the following key points:
  • A standalone policy is not necessary.  Existing policies and practices etc can be adapted and/or clarified. 
  • Policies should be supported by directors and senior management, communicated effectively and have incentives to aid support. 
  • The guidance provides a list of considerations when drafting a modern slavery policy. 
Information in the statement about an organisation's policies may include: 
  • the process for policy development; 
  • relevant policies (e.g. any supplier code of conduct, recruitment policy, procurement policy and employee code of conduct); 
  • policies concerning access to remedy, compensation and justice for victims of slavery; and 
  • policies that relate to staff training and increasing awareness of modern slavery. 
The following information may be included in the statement about the organisation’s due diligence processes:
  • Action taken to understand the businesses operating context. 
  • Details of risk management processes, including monitoring and evaluation measures. 
  • Impact assessments undertaken. 
  • Action plans to address risk or actual instances of modern slavery and how actions have been prioritised. 
  • Evidence of stakeholder engagement. 
  • Business level grievance mechanisms in place to address modern slavery. 
  • Actions taken to embed respect for human rights and zero tolerance of modern slavery throughout the organisation. 
The following information in the statement about assessing and managing risk may be included: 
  • The organisation’s use of modern slavery risk assessments. 
  • The organisation’s risk assessment policies and procedures. 
  • The training provided to the organisation’s leadership and employees to develop the skills and knowledge to understand and support risk prevention and remediation. 
Information in the statement about the organisation’s performance indicators may include the following:
  • Information on the organisation’s existing KPIs, setting out whether they have considered whether they make their business and supple chains vulnerable to modern slavery. 
  • An outline  of any additional KPIs which the organisation has introduced to measure the performance of any anti-slavery actions undertaken. 
Guidance on the organisation’s training includes the following points. 
  • Training may range from detailed courses to broader awareness-raising programmes. 
  • Training on modern slavery may take place alongside wider training on similar issues. 
  • Organisations should consider where training should be targeted to have the most effect. 
  • The training needs of different groups will differ and so businesses need to determine the most effective and efficient way to reach the most relevant groups in their business and supply chains. 

Approval 

The statement must be approved and signed by an appropriate senior person in the business.  

Publication 

The statement should be published as soon as reasonably practicable after the end of each financial year (and may be published at the same time as other annual or non-financial reports).  The statutory guidance encourages publication within six months of the financial year end. 

The statement must be published on the organisation’s website with a clear link in a prominent position on the homepage.  The guidance recommends calling the link “Modern Slavery Act Transparency Statement”.   

If the organisation does not have a website, a copy of the statement must be provided within 30 days of the receipt of a written request. 

Failure to comply 

If an organisation fails to produce a statement, fails to publish it on their website (where they have one), or has not set out the steps it has taken in the relevant financial year then it will have failed to comply with section 54. 

In this situation, the Secretary of State may seek an injunction through the High Court (or, in Scotland, civil proceedings for specific performance of a statutory duty) requiring compliance.  Failure to comply with the injunction will be contempt of court punishable by an unlimited fine.  While there is no specific criminal penalty as such, it is nonetheless prudent to provide the statement in line with the legislative requirement, as a matter of good practice and in order to avoid facing negative publicity.  

Takeaways for Companies 

If you are not already preparing an annual statement, you should consider your organisation’s financial status (taking into account any subsidiaries where the organisation forms part of a corporate group) in order to determine whether it is likely to meet the £36 million turnover threshold.  

We have included some takeaways below for employers. 

  1. Responsibility - Consider who in the company will take responsibility for ensuring compliance with the requirement to prepare and publish a statement, and who will be responsible for managing the risk of modern slavery in the business and its supply chains 

  1. Policies and procedures – Review existing policies and procedures relevant to modern slavery and consider the introduction of a specific anti-slavery policy if the company does not already have one. 

  1. Training and reporting - Provide training to staff regarding human trafficking and slavery in the modern context so they are able to spot the signs and report anything suspicious. Setting up a confidential whistleblowing helpline can also provide a helpful tool in order to encourage confidential reporting of any concerns.  

  1. Due diligence – review due diligence processes for appointing suppliers etc to minimise the risk of modern slavery occurring. 

  1. Commercial contracts - consider including an anti-slavery clause within commercial contracts 

 

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Disclaimer The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct at 07/09/2022