New rules on anti-slavery compliance will catch all businesses with any UK operations and with a worldwide turnover of £36m or more. This sets the threshold much lower than had been expected. Compliance with the rules is through transparency, requiring public disclosure of supply chains, policies, training and risk assessment. Even businesses that are confident that no forced or trafficked labour is used in their supply chains will need to disclose details of what steps they take to be sure of that.
In October, supply chain regulations in the Modern Slavery Act 2015 will come into effect. These rules will require many businesses to issue a statement annually, signed off by the board, and with a prominent link on their website homepage.
A UK government consultation, published in February, asked for views on the size of organisation that should be caught by the new rule. At the top end it would have bitten on only the largest 700 or so businesses, with a worldwide turnover of £1bn. But responses to the consultation overwhelmingly favoured a much lower cut-off point, £36m turnover, likely to impact around 12,000 businesses. And this is what the government has chosen to use. This threshold is well below the $100m cut-off applied in a similar California law.
Prime Minister David Cameron highlighted the announcement to coincide with his visit to Vietnam, a key source country for trafficking victims.
From October, businesses across multiple sectors will be required to publish a statement on what, if any, anti-slavery and human trafficking precautions they have in place. They must give details of:
- Business model and supply chain relationships
- Policies, and due diligence and auditing processes
- Relevant training given to staff across the organisation
- The principal risks and how these are evaluated and managed both within the business and in the supply chain
- Relevant key performance indicators, to help readers assess the effectiveness of the activities described in the statement.
There is no criminal sanction for failure to comply, although non-criminal legal enforcement is possible. Instead the government will rely mainly on ‘naming and shaming’ by journalists and pressure groups, and consumer pressure, to ensure the rules are taken seriously.
More detail on how to comply will be issued later this year, when the obligation takes effect. And transitional measures will give extra time to companies whose year end is shortly afterwards.
A lack of action may tarnish the reputation of both businesses and brands. Now is the time for business leaders to take steps to guard against forced or compulsory labour at any point in their supply chain.