Sarah Ozanne, 18 August 2015
Policies, procedures and training could feature in supply chain audits.
From October, the Modern Slavery Act 2015 (section 54) will require some commercial organisations to publish an annual anti-slavery and human trafficking statement. Businesses may need to carry out significant auditing of their global supply chains to fulfil this obligation, and there is the potential for an organisation’s HR team to play a key role in introducing policies and practices on the issues involved, as well as implementing training and telephone hotlines.
The Act stems from a report published by the Centre for Social Justice in 2013 highlighting the existence of modern slavery in the UK and calling for businesses to “make public the efforts they are making to develop more transparent supply chains, and to recognise their responsibility in stamping out this crime.” The transparency obligations relating to supply chains appeared as an amendment to the original bill following back-bench pressure and business support during the coalition government. The Act follows obligations introduced in October 2013, requiring quoted companies to provide certain information on human rights issues relating to their business in line with the UN Guiding Principles on Business and Human Rights.
Companies in scope will be ‘commercial organisations’ with a turnover above £36 million which are carrying on a business, or part of a business, in the UK. Turnover is determined on a global scale, not just revenue generated within the UK. The total number of UK companies affected may be as high as 12,250. Both UK and non-UK incorporated commercial organisations may be caught.
These organisation will need to publish a statement of the steps they have taken to ensure slavery and human trafficking is not taking place in their supply chain or any part of the business, or a statement that they have taken no such steps. A positive statement is likely to require significant auditing of an organisation’s global supply chain; a negative one is likely to carry the risk of reputational damage.
The organisation must publish the statement on its website (if it has one) and include a link to it from the homepage. Organisations without websites must provide a copy of the statement within 30 days of receiving a request to see it. If an organisation fails to publish the annual statement, it may be compelled to do so by the Secretary of State.
The government has said in its response to a consultation (pdf) on tackling modern slavery that it will not be prescriptive on the content of these statements, and acknowledges they will vary from business to business, but has suggested the core elements may include:
The exact extent of the ‘due diligence’ to be undertaken and, therefore, the resources an organisation will need to prepare the statement, is currently unclear. However, the government anticipates that statements will reflect the business sector the organisation is in. Preparing the statement may involve HR working with internal stakeholders, such as compliance and legal departments, as well as external parties such as trade unions, to create inclusive due diligence processes and safe reporting mechanisms.
The government will be publishing guidance in October on how commercial organisations can comply with their section 54 obligations, including the kind of information to include in the statement, and when and where the statement should be published. Organisations should be considering now how they are going to respond to this requirement and formulating an action plan to take this forward.
Sarah Ozanne is an employment partner at law firm CMS.
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