Partner Article

Modern slavery laws: Commercial enterprises must have statement

A corporate and commercial legal specialist has issued a reminder to businesses operating internationally of a new law now in force that is designed to stop exploitation, slavery and human trafficking.

Kim Klahn is an employment specialist and partner at Lodders Solicitors. She explains: “Section 54 of the Modern Slavery Act 2015 requires commercial organisations supplying goods or services with a global turnover of £36 million or more, to publish an annual slavery and human trafficking statement, for each financial year ending on or after 31st March 2016.

“Smaller businesses with a turnover of less than £36 million may be under the illusion that they will not be caught by the legislation. However, it will affect them if they are part of the supply chain of larger businesses who have to comply with the provisions. In order for the large businesses to publish their annual statement they will be asking their suppliers to give their assurances on their position regarding modern slavery.

“For all affected organisations, the requirements apply whether part or all of the business is carried out in the UK and it does not matter where the organisation was incorporated or formed. The purposes of the commercial activities are irrelevant, with charitable, educational and public services all covered by the Act.”

She explains that the statement produced must detail the steps the organisation has taken to ensure human trafficking is not taking place in any of its business or supply chains and/or if no steps have been taken:

“The statement must be published in a prominent place on the homepage of the organisation’s website, or if none is in place, within 30 days of a written request,” Kim explains.

The statement can include:

* 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 assess and manage that risk; * its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; * the training and capacity building about slavery and human trafficking available to its staff.

“Relevant documents need not be included verbatim in the statement,” says Kim. “They can be linked, provided the documents are already published on the organisations’ webpage, if one exists, and could include Supplier Codes of Conduct.”

The organisation is not being asked to guarantee that its supply chain is slavery free, but to detail the steps and procedures it has in place to fulfil the requirement to ‘ensure that slavery and human trafficking is not taking place in any part of its supply chain.’

Kim explains: “The focus appears to be on due diligence, of encouraging steps to be taken by organisations to satisfy themselves regarding slavery (or absence of it) in their supply chains, rather than ensuring that this does not take place. The Secretary of State may seek an injunction requiring compliance, breach of which is punishable by an unlimited fine, but this will very much depend upon the appetite for perusing this. It seems to me, at this stage, that the main incentive for organisations to comply with the requirements and to improve their processes will be the perception regarding what damage might arise from the threat of any bad publicity.”

In any event, the requirement only applies to organisations which undertake commercial activities in the UK, thereby providing the opportunity to avoid the obligations for organisations which do not fall within the qualification.

Lodders Solicitors LLP is an established and thriving law firm based in Cheltenham, Stratford upon Avon and Henley in Arden. The firm is recognised as a leading private client law firm, offering specialist advice to both private individuals and privately owned businesses, including its highly regarded work in the agricultural and real estate sectors. For more information, visit: www.lodders.co.uk.

This was posted in Bdaily's Members' News section by Lodders Solicitors LLP .