A new transparency for businesses under the Modern Slavery Act 2015

More relevant for businesses is the additional requirement of the MSA that, as from 29 October 2015, commercial organisations must prepare a 'slavery and human trafficking statement' (statement) for each financial year.

Who needs to prepare a statement?

Commercial organisations (Companies, Partnerships, Limited Partnerships and Limited Liability Partnerships) must comply with the MSA if they:

• carry on a business or part of a business in any part of the United Kingdom;
• have an annual turnover of £36m or more; and
• supply goods or services.

When does the statement need to be published?

Although there is no prescribed time limit in which to make the statement, guidance suggests it should be published as soon as possible after the financial year end to which it relates.

It is worth noting that a commercial organisation with a financial year that ends before 31 March 2016 does not have to make a statement in respect of that financial year, but will need to do so in respect of future years.  It will, nonetheless, be prudent for an organisation that will be caught by the MSA to address the issues raised by the MSA early and adopt policies and to prepare to comply with the MSA.  There is no harm in producing the statement before it is strictly required by the MSA.

What form should the statement take?

Whilst the MSA only sets out content that may be included (see below), guidance recommends that the statement should be:

• written in simple language to ensure that it is easily accessible to everyone;
• succinct but cover all the relevant points and link to relevant publications, documents or policies;
• in English, but may be provided in other languages that are relevant to the supply chain; and
• if the organisation has a website it must publish the statement on that website and include a link to the statement on that website's homepage.

What needs to be included in the statement?

The statement should aim to set out what the organisation has done to ensure that there is no modern slavery in their supply chains or their own businesses.  The MSA guidance as to what maybe included to achieve this are:

• 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 manage the risk;
• its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains; and
• the training about slavery and human trafficking available to its staff. 

Priority steps to prepare for the MSA transparency requirements

The MSA requires the statement to be approved and signed by an appropriate senior person in the business, ensuring a level of senior accountability.  The relevant person depends on the type of organisation.  For a body corporate the statement must be approved by the board of directors and signed by a director.  For a limited liability partnership it must be approved by the members and signed by a designated member.  If the organisation is any other kind of partnership, a partner is required to sign the statement.

It is ultimately the responsibility of the management of an organisation to ensure that the MSA has been complied with, both in form but also in substance.  A high-level summary of the action that should be taken is:

• Carry out a review and a risk assessment of the potential for slavery or human trafficking in your organization and supply chains;
• Check anti-slavery clauses in contracts with suppliers;
• Undertake training of both business personnel and supply chains;
• Incorporate anti-slavery compliance into policies and procedures; and
• Identify the countries in which the organisation operates and which understand the organisation's operations.

Consequences of failing to prepare a statement

If a commercial organisation fails to prepare a statement, the Secretary of State may bring civil proceedings in the High Court for an injunction requiring that organisation to comply.

Furthermore, organisations are likely to suffer damage to their reputation and brand if they are found to have breached the requirements of the MSA by failing to prove that they are doing their bit to help eliminate Modern Slavery.

If you require further information on anything covered in this briefing please contact Anthony Turner ([email protected]; 020 3375 7460) or your usual contact at the firm on 020 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, January 2016