Company disclosure requirements under the 2015 Modern Slavery Act

Commercial organisations subject to the 2015 Modern Slavery Act ('the Act') must report annually on the steps that they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains.

This guide was last updated in November 2015

The Act applies to all organisations with a turnover, or group turnover - that is, the total turnover of a company and its subsidiaries -  of £36 million or more which are either incorporated in the UK or carry on a business in the UK.

Section 54 of the Act requires those organisations to prepare and publish a statement setting out the steps that they have taken during that financial year to ensure that slavery and human trafficking are not taking place:

• anywhere in their supply chains;
• in any part of their own business.

The law came into force on 29 October 2015. The requirement to publish an anti-slavery statement only applies for financial years ending on or after 31 March 2016.

There are draft Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015 which provide that the combined turnover of a commercial organisation is the turnover of that company and its subsidiaries. 

Businesses should now be considering whether they are subject to these new disclosure requirements, and preparing their approach to compliance.

Which businesses are subject to the new requirements?

A commercial organisation is required to comply with the reporting requirements if:

• it is incorporated or a partnership;
• it "carries on a business, or part of a business" in the UK;
• its turnover or the turnover of a parent company and its subsidiaries is equal to or greater than £36 million per annum – although this threshold is still to be formally confirmed by way of secondary legislation;
• it supplies goods or services.

The term "carries on a business" is not defined in the Act, although this is the same wording as is used in the UK's 2010 Bribery Act. Guidance issued by the Home Office suggests that a "common sense approach" should be applied to determine if a company carries on a business in the UK.

Overseas companies with subsidiaries in the UK will need to analyse whether the Act applies only to the UK subsidiaries or also to the overseas parent. Overseas organisations that supply goods or services to UK-based customers, but which do not have an office or employees in the UK, will also need to analyse the application of the  Act to their business.

What information needs to be included in the statement?

If a business falls within the above criteria, the obligation to publish an anti-slavery statement is mandatory. However, the content of this statement is not mandatory, and it would be acceptable for a business simply to state that it does not take any specific steps or that it follows the procedures of its parent company.

The Act contains a list of information that may be included within an organisation's statement, as follows:

• the organisation's structure, its business and its supply chains;
• its policies in relation to slavery and human trafficking;
• its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
• the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
• its effectiveness in ensuring that slavery and human trafficking is not taking place in its business and supply chains, measured against such performance indicators as it considers appropriate;
• the training about slavery and human trafficking available to its staff.

Further guidance from the Home Office on the scope of the requirement and the type of information to be included in the statement has now been issued.

Who must approve the statement?

If the organisation is a body corporate, then its anti-slavery statement must be approved by the board of directors (or equivalent managing body), and be signed by a director (or equivalent). If it is a partnership, the anti-slavery statement must be approved by the partners or members.

Where should the statement be published?

The anti-slavery statement must be published in a prominent location on the organisation's website, with a link to the anti-slavery statement on the organisation's homepage.

What are the sanctions for non-compliance?

Civil proceedings in the High Court for an injunction in England and Wales . In Scotland, civil proceedings for the Court of Session for specific performance.

http://www.out-law.com/en/topics/commercial/supply-chain-management/company-disclosure-requirements-under-the-2015-modern-slavery-act/