The Modern Slavery Act 2015 (the MSA) requires all commercial organisations with a global annual turnover of £36 million or above, who carry on business in the UK, to publish a slavery and human trafficking statement for each financial year. The statement must be accessible from a link on the website’s homepage. It should set out in considerable detail the steps taken by the organisation to guard against slavery and human trafficking in its supply chains, including information about the organisation's corporate structure and supply chains. Failure to publish a statement may result in the Home Secretary obtaining an injunction compelling it do so, and significant bad publicity.
This new legal requirement came into force on 29 October 2015.
Home Office guidance accompanying the commencement of the transparency obligation puts some flesh on the bones of the statutory requirement. It clarifies some of the areas of uncertainty that have caused concern since the MSA was passed. There is greater detail on how to calculate turnover for corporate groups, and how they should approach the preparation and publication of their MSA transparency statements. The dates for compliance are clarified, with a transitional period provided so that organisations whose year end falls before 31 March 2016 are not required to produce a statement for the current financial year.
But in other respects the guidance does not provide certainty to businesses. It acknowledges that defining the boundaries in this area is not easy. Where do poor working conditions and labour practices end, and modern slavery and exploitation begin? And it leaves several matters to a “common sense” approach, such as determining whether an organisation is carrying on a business at all, and whether it has a demonstrable business presence in the UK. It leaves enough uncertainty at the margins to make many organisations nervous about whether they must comply or not, seemingly with the intention of encouraging them to comply.
Overall, there is clearly a desire to promote in-depth examination of policies and practices both within an organisation and in its supply chain, and produce a reflective and tailored report on what is and is not being done to tackle the issue. The message is one of encouraging real engagement with the issue at the highest level of management. Although the legislation does not impose heavy sanctions for non-compliance, the government has said that it expects the press, NGOs and the public to look closely at these statements and hold organisations to account. The potential reputational risk for failing to take this seriously is substantial.