Modern Slavery Statement Updated Guidance & Moral Obligations

18 October 2017 is anti-slavery day #AntiSlaveryDay; very much like the Modern Slavery Act 2015 (MSA) it is designed primarily to raise awareness within business and society.

On 4 October 2017, the UK Government released updated guidance on the reporting obligation set out in section 54 of the MSA.

Companies with a £36 million or greater turnover doing business in the UK must prepare and publish an annual slavery and human trafficking statement as soon as practicable after the end of each financial year (publication within 6 months of the financial year end is suggested.) 2017 marks the first year when all companies covered by the UK Modern Slavery Act 2015 must publish a statement. The section on transitional provisions and commencement of the obligation to produce a statement has been removed by the updated guidance.

The updated guidance is largely unchanged but there is some new material:

  • Para 3.14 encouraging organisations below the £36m turnover threshold to produce a ‘slavery and human trafficking statement’ on a voluntary basis. The guidance notes that this may help them when bidding for contracts with larger organisations.
  • Para 5.5 encouraging openness and calling for year on year improvements outlining practical progress.
  • Para  8.3  calling for making previously published statements to remain available online so that comparisons can be made and para 8.4 encouraging organisations to continue making annual statements even if their turnover falls below the threshold.
  • New sections in Annex A on the definition of child labour.
  • An expanded list of references in Annex G including the Government’s Modern Slavery Webpage, the Anti-Slavery Commissioner and Repositories of Slavery and Human Trafficking Statements (the Modern Slavery Registry and TISC Report).

The Guidance goes beyond the specific legal wording contained in the MSA; however like all formal guidance or best practice this interpretation will be considered should any enforcement action arise. There remains a lack of clarification around concepts such as ‘carries on business’ ‘supply chain’ and ‘operations’. An explanation for the lack of detail previously provided was to ensure the widest possible application of these concepts.

The issue of modern slavery within business and supply chains is one that is gaining prominence in our global economy. It is a corporate risk that should be given the same weight as other criminal corporate risks such as fraud etc. If a food or any other product is being produced at an under-the-usual market value this should put the company on notice to ensure what they are purchasing meets legal requirements both for quality and production.

The guidance wording clarifies ‘the Act… does not mean that the organisation in question must guarantee that the entire supply chain is slavery free’. However, it does reference that Organisations do still nevertheless have a legal duty to drive out poor labour practices in their business, and a moral duty to influence and incentivise continuous improvements in supply chains.’ It is this moral duty that will be underpinned more by public approbation than legal enforcement action. There are no direct sanctions for failure to publish a statement under the Act. However, those that do not comply with section 54 can be served with an injunction by the Secretary of State requiring compliance by the business. 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. Most, if not it is imagined, all, companies will want to avoid the negative publicity that would come from such an action and to demonstrate their commitment to ensuring they have done everything they practically can to confirm there is no slavery within itself or its’ supply chains. It is also likely their policies and stance will be reviewed by others in tender processes and procurement procedures.

For more information please contact Isabel Teare (Isabel.Teare@Mills-Reeve.com) or Jessica Burt (Jessica.Burt@Mills-Reeve.com).

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