Section 54 of the Modern Slavery Act 2015 came into force today, 29 October 2015, accompanied by the publication of statutory guidance on its operation.
Commercial organisations required to publish annual slavery and human trafficking statements
The Modern Slavery Act 2015 introduces a new area of compliance for commercial organisations. Section 54 of the Act and its accompanying regulations provide that commercial organisations supplying goods or services, who undertake business in the UK and have a world-wide turnover of £36 million or above, will have to publish an annual statement setting out what they are doing to ensure that there is no ‘modern slavery’ within their own organisation or in their supply chains.
For information on the scope and operation of this new transparency requirement, see our web guidance Modern Slavery Act 2015 – transparency provisions.
Transitional provisions will ease the initial impact
Although Section 54 comes into force with effect from 29 October 2015, transitional provisions mean that organisations potentially in scope with a financial year-end on or before 30 March 2016 will not be required to produce a slavery and human trafficking statement for the financial year 2015/2016. The first statements will be required from organisations whose financial year ends 31 March 2016 or after. These businesses will be required to publish a statement for 2015/2016 within six months of their applicable financial year end.
The statutory guidance published by the Home office was produced following on-going consultation with key stakeholders across a number of business sectors as well as applicable NGOs and charities.
Some criticism of the final guidance is justified as regards a frustrating lack of legal certainty. For example, there is a failure to define what amounts to a ‘supply chain’ for the purposes of reporting under the Act. Further, suggesting the adoption of a ‘common sense’ approach to deciding whether a particular organisation is ‘doing business' in the UK is distinctly ‘unhelpful’. However, notwithstanding this blurring of legal obligation and aspiration, it is clear from the guidance that the primary focus of the Act’s disclosure duty is to drive up good practice and encourage a race to the top, rather than focussing on enforcing minimum compliance.
The guidance is also realistic in its expectations of initial annual slavery and human trafficking statements, accepting that for some organisations the focus will initially be on ‘getting the ball rolling’, with more significant content being incorporated over successive years as the organisation develops its practical responses to the issue of modern slavery. It also makes clear that whilst organisations caught by the provisions of Section 54 are required to set out the steps they have taken to tackle slavery and trafficking, they are not required to guarantee that they and their entire supply chain are slavery free.
The guidance is also a helpful information resource for case studies relating to organisational policies, due diligence, assessing and managing risk, training ideas and setting performance indicators.
You can access the Home Office’s guidance - ‘Transparency in Supply Chains etc. A practical guide for organisations’ here.
EEF will be running a series of seminars for members and non-members looking at the impact of the Modern Slavery Act’s transparency requirements and exploring routes to compliance ahead of the first slavery and human trafficking statements falling due for publication. Click here for more information and to book a place.