The new Slavery and Human Trafficking Statement

As from 29 October 2015, commercial organisations having a financial year end of 31 March 2016 or later and which carry on a business, or part of a business, in any part of the United Kingdom and which have a turnover of £36million or more are obliged to produce an annual “slavery and human trafficking statement”.

Additionally, if any organisation in any part of a group structure meets these requirements, it is legally required to produce a statement. Therefore, it is not just UK-based organisations that must comply - where there is a non-UK organisation carrying on business in the UK that meets the criteria, that organisation will be required to produce a statement.

Where a parent and one or more subsidiaries in the same group are required to produce a statement, the parent may produce the statement that subsidiaries can use to meet their obligations (although the statement should cover the steps that each of the group organisations required to produce a statement have taken in the relevant financial year).

For the purposes of the qualification criteria, turnover means the amount derived from the provision of goods and services falling within the ordinary activities of the commercial organisation or a subsidiary undertaking, after deduction of (a) trade discounts; (b) value added tax; and (c) any other taxes based on the amounts so derived.

So, what is modern slavery for the purposes of the Modern Slavery Act? Modern slavery includes slavery, servitude and forced or compulsory labour and human trafficking. In practical terms, this is as follows:

Slavery - behaviour which deprives the victim of his or her freedom as though the offender owns the person.
Servitude - the obligation to provide services that is imposed by the use of coercion and the impossibility of the victim changing his or her conditions.
Forced or compulsory labour - service which is exacted from a person under the menace of any penalty, where the person has not offered themselves voluntarily and involves coercion, which may be direct threats of violence or more subtle forms of compulsion.
Human trafficking – this offence arises when a person arranges or facilitates the travel of another person with a view to that person being exploited. The offence can be committed even where the victim consents to the travel.
The requirement for a corporate body or partnership to produce such a statement is not limited to any particular sector; it is based purely on turnover and business being carried on in the UK.

The obligation to publish a statement applies to organisations whose financial year ends on or after 31 March 2016 and the statement is to be produced within 6 months of the year end.

The statement for a financial year is:

(a) a statement of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place (i) in any of its supply chains and (ii) in any part of its own business; or

(b) a statement that the organisation has taken no such steps.

If an organisation fails to comply with the requirement to prepare such a statement or reports that it has taken no steps to ensure that slavery is not taking place, there is the potential for damage to the organisation's reputation and brand (which may be picked up on by investors and consumers). In addition, the Secretary of State may seek an injunction requiring the organisation to comply. If the organisation fails to comply with the injunction, it will be in contempt of a court order, which is punishable by an unlimited fine.

The “publishing” of the statement takes place by publishing the statement on the organisation’s website and including a link to the statement “in a prominent place” on the website’s homepage. 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, and must do so before the end of the period of 30 days beginning with the day on which the request is received.

In terms of what the statement is to contain, there is no particular form required but the Act suggests that the following should be included:

Structure – the organisation’s structure, its business and its supply chains.
Policies - its policies on slavery and human trafficking.
Due diligence – the due diligence processes relating to slavery and human trafficking in the business and supply chains.
Risks - the parts of the business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps taken to assess and manage that risk.
Key performance indicators – the organisation’s effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against performance indicators as it considers appropriate.
Training - training about slavery and human trafficking available to staff.
The statement must be produced to a meeting and approved by directors (if it is a company) and members (if it is an LLP) and must be signed by a director, designated member (if it is an LLP), a partner if it is a partnership or a general partner if the organisation is a limited partnership.

Organisations to which this new obligation applies should start to review or examine their own business and supply chains in order to ensure that, when made, the statement is made confidently, having carried out that initial review/examination exercise. It would be sensible to consider the preparation of a draft statement good and early so that it is ready prior to the deadline for publishing it and to ensure that there is no hurried exercise carried out. Organisations should consider putting in place an anti-slavery and human trafficking policy to ensure that staff know their obligations on this area and so that it can be included in the organisation’s suite of internal documents. Further, where appropriate, supply contracts should be reviewed so as to include anti-slavery and human trafficking clauses.

It is not inconceivable that, as Government continues to take steps to stamp out modern slavery in supply chains, the qualifying turnover threshold will be reduced in time so as to require an increasing number of commercial organisations to examine their business and supply chains and to produce such statements.

If you need assistance in the preparation of a slavery and human trafficking statement or require an anti-slavery and human trafficking policy preparing, get in touch with Chris Taylor at christaylor@eatonsmith.co.uk or by calling 01484 821300.

The information contained in this article is for information only, is not exhaustive and does not constitute legal advice. You should take specific legal advice before acting on any of the issues raised in this article.
Posted Monday 2nd of November 2015