Modern slavery and supply chains: Part 1

Modern slavery and supply chains: Part 1

The Modern Slavery Act 2015 (MSA 2015) came into force a few weeks ago on 31 July 2015.

It is the first of its kind in Europe to specifically address slavery and trafficking in the twenty-first century.

What's more, companies with a turnover of more than £36m will be required to report on slavery and human trafficking in their supply chains from October 2015.

Claire Falconer, legal director of Focus on Labour Exploitation, examines this reporting requirement in more detail and the implications for companies if they do not comply.

What obligations does MSA 2015 place on employers in terms of preventing slavery and human trafficking taking place in their supply chains?

MSA 2015, s 54 requires certain businesses to prepare and publish an annual ‘slavery and human trafficking statement’ that outlines what businesses are or are not doing to address slavery and human trafficking.

This provision will come into force in October 2015 and will apply to ‘commercial organisations’ conducting business or part of a business in the UK, and with an annual turnover of £36m or more.

Statements must set out what steps the business has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its own business.

A statement may also say that a business has taken no such steps.

MSA 2015 also sets out details that statements ‘may’ include, for example:

  • the organisation’s structure, business and supply chains
  • its policies on slavery and human trafficking
  • its due diligence processes; parts of the supply chain where there is a risk of slavery and human trafficking
  • its effectiveness in addressing slavery and human trafficking, and
  • training available to staff

Guidance to be issued at the same time as the provision comes into force in October 2015 will also provide further information on the matters to be included in the statement.

Statements must be approved by the board of directors or equivalent management body, and must be published on the business’ website with a link to the statement on the website’s homepage.

If the business does not have a website it must make a copy of the statement available upon request.

How can companies with sophisticated supply chains ensure they comply with the law in this area?

MSA 2015 itself only requires that a company prepare and publish a human trafficking statement.

However, in order to publish a true and comprehensive statement, and indeed to effectively address human trafficking and slavery in their supply chains, companies will need to take proactive steps to know, verify and audit their supply chains.

Guidance on how best to comply with MSA 2015, s 54 has not yet been produced by either the government or civil society. However, this provision largely replicates the California Transparency in Supply Chains Act (SB657) for which there has been detailed guidance produced by:

  • the Attorney General Of California (see here)
  • the Alliance to End Slavery & Trafficking (ATEST) (see here), and
  • Veritée (see here)

Next time, we'll look at what the risks are for companies found to have fallen short of the provisions of MSA 2015.

In the meantime, if you'd like further information on the definitions used within the MSA 2015, subscribers to Lexis®PSL can click here for the full version of this news analysis.

We also welcome any views that you may have on this important subject. Do feel free to let us have your thoughts below.

Interviewed by Susan Ghaiwal. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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