Section 54 of the Modern Slavery Act 2015 (MSA) came into force on 29 October 2015. It is designed to increase supply chain transparency and place greater accountability on businesses for the condition of their supply chains.
‘Modern slavery’ is the term used to encapsulate the two offences in the MSA: slavery, servitude and forced or compulsory labour; and human trafficking.
S54 applies to a commercial organisation which:
Charities and universities engaging in commercial activities will not be exempt from the requirement if they fulfil the relevant criteria (regardless of their purpose and whether or not profits are made).
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Commercial organisation A body corporate or partnership, wherever incorporated or formed, which carries on a business, or part of a business, in any part of the UK. This includes franchisers, and each parent and subsidiary (whether or not based in the UK). Turnover Total global turnover of the commercial organisation (including all of its subsidiary undertakings) after the deduction of trade discounts, value added tax and any other taxes. |
| Prepare a statement per financial year | An organisation which fulfils the above criteria will have to make a ‘slavery and human trafficking statement’ stating the steps it has taken during that financial year to ensure that slavery and human trafficking is not taking place in:
OR Issue a statement that it has taken no such steps. |
| Disclosure/ Publication |
If the organisation has a website, the statement must be published on the organisation’s website, with a prominent link to the statement on its homepage – the government suggests a directly visible link on the home page or it being part of an obvious drop down menu and recommends a link such as ‘Modern Slavery Act Transparency Statement’. If the organisation does not have a website, it must provide a copy of the statement to anyone who makes a written request for one within 30 days from the date the request is received. |
| Appropriate approval | In the case of a company, the statement must be approved by the board of directors and signed by a director. |
A slavery and human trafficking statement must be made in respect of each financial year.
There are currently no mandatory requirements as to the content or length of the statement. Based on the MSA requirements, the information relating to an organisation that may be contained in a statement includes:
However, the recently published ‘Transparency in Supply Chains etc. A practical guide’ gave further pointers on what the statement should include. See our checklist below…
The government expects organisations to build on what they are doing year on year, so it will not be possible to simply ‘recycle’ this statement each financial year – first statements might reflect how an organisation is starting to act on the issue and outline planned future actions, whereas subsequent statements will build on this and show how compliance is evolving. Remember that this statement is not a guarantee that an organisation’s entire supply chain is free from slavery – it should however capture all of the actions that have/are being taken in relation to any part of its supply chain.
Please refer to the schedule for a checklist of practical steps that can be taken now to aid compliance with S54.
There is no initial fine However, the Secretary of State may seek an injunction to compel the organisation to issue a statement - if this injunction is not complied with the organisation will be in contempt of a court order, which is punishable by an unlimited fine
The requirements of the MSA seek to create a ‘race to the top’ by encouraging organisations to be transparent about what they are doing and in the process drive up standards. Non-compliant organisations may expect pressure from wider society, shareholders and competitors to implement the MSA requirements – and risk negative publicity and an adverse impact on brand and share value for failing to comply, especially if they operate in a sector which is already in the spotlight for labour and supply chain issues. Your suppliers or customers may also scrutinise your actions more closely in light of their own obligations to comply.
The government has also indicated that it may name and shame organisations that do not comply in a timely manner.
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raymond.silverstein@brownejacobson.com
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