Modern Slavery Act - companies to have to make an annual statement about supply chains

The Modern Slavery Act 2015 (MSA) section 54 will require every commercial organisation doing business in the UK with turnover over a certain threshold (yet to be established) to publish an annual statement of the steps it has taken to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its business. The definition of slavery in the Act makes it clear that it extends, among other things, to forced or compulsory labour.

The Government response to the Modern Slavery and Supply Chains Consultation is expected shortly. The consultation has been seeking views about the size of the turnover threshold and what kind of information the statement should contain. According to the previously published timetable, the necessary regulations and guidance will be published in time for an October 2015 commencement date.

Sectors vulnerable to forced labour will be those where there is a predominance of low-paid unskilled labour and this is particularly prevalent in the area of food production and processing. This new provision will therefore be of particular concern to food businesses, especially those taking supplies from jurisdictions where the level of labour protection is lower than the UK.

The turnover range that has been consulted on is from £36 million (which could catch around 12,000 businesses) to £1billion (which could catch just over 700 businesses). The turnover will apply globally to companies carrying out ‘any part of their business’ in the UK.

Companies affected will need to disclose what steps they are taking to ensure that 'slavery does not occur anywhere in the entirety of their operations'. It is proposed that this statement will have to be signed off by company boards and directors in order to ensure that those at the top level take the issue seriously.

Guidance on the format of the statement is set out in summary form under MSA section 54(5) where reference is made to the provision of information about policies, supply chain, due diligence, risk management and training. Also, the provision of a prominent link to that statement on the homepage of any company website (MSA section 54(7).)

Summary

It is recommended that companies at risk of being caught by the turnover requirement take steps now to consider their supply chains and their risk management of them.

Submitted by Charles Pigott & Jessica Burt

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