The Modern Slavery Act – Are You Ready For Its Disclosure Requirements

Posted 16/03/2016

The Modern Slavery Act of 2015 came into force in October of last year and businesses with turnover in excess of £36 million will be “required to produce a statement, in each financial year, setting out the steps they have taken to ensure there is no modern slavery in their own business and their supply chains." 

This requirement is not something that can be put on the “to do” pile, it is something you should be addressing now.  If your organisations financial year-end is before the 31 st March 2016, lucky you, you have a little time because this year’s financial report is exempt from the requirement, but all financial reports after that date must include a statement. 

Maybe you think you can just cobble together a few words and you will be fine?  Maybe but the statement must be readily available to the public, on your website and in publicly available financial reports, and it must be signed by an “appropriate senior person in the business” – typically this will be the CEO or CFO, I am not sure many such individuals will be comfortable signing off on a few cobbled together words.

Failure to provide a statement at all will create significant business impact, either unlimited fines if the breach is persistent, or if you are a Plc censure from shareholder bodies such as PIRC which could/will ultimately impact the value of your organisations shares.  You are allowed to state that you have “taken no steps“ and in this first year of implementation of the legislation such statements will be viewed leniently, not so next year. 

So what should your (well-structured) statement contain, the points listed below would constitute good practice: 

    1. Your organisations structure, business and an overview of its supply chains
    2. Its policies in relation to slavery and human trafficking
    3. The due diligence processes in relation to slavery and human trafficking
    4. A summary of the parts of its business and supply chain where there is risk of slavery and human trafficking and the steps it has taken to mitigate that risk
    5. The effectiveness of those measures against appropriate performance indicators
    6. The training and capacity building about slavery and human trafficking available to its staff
       

Maybe you think modern slavery is not an issue in your supply chain, because you buy little or nothing from overseas/the developing world and you assume, wrongly, that that is where all the issues lie.   If you are in the hospitality, food or logistics sectors, or you buy soft FM services (esp. cleaning, ground maintenance), or warehousing and distribution services it is clear you should be identifying some of your supply chain as a potential area of risk regarding issues of slavery and human trafficking. 

Just two examples to get you thinking: 

A)    Do the supermarkets know who picks the UK grown fruit and vegetables on their shelves – were the workers involved procured through the services of gang masters and if so did the workers have the right to work in the UK (or were they trafficked) and were they paid the minimum wage (or were they in a form of slavery) 

B)    Do the vast number of businesses that use the services of subcontract vehicle, office or factory cleaning suppliers know whether their suppliers employ the workers who do the cleaning, and pay them through a bank account.  If those businesses do not know such facts, or do not have a process to establish these facts they could be using the services of people who are being exploited under the terms of the Act.  Recently a vehicle wash supplier in London has been prosecuted for having 7 illegal aliens working at their site, and it subsequently emerged that they did not employ the individuals but contracted their services through an agency who equally did not employ them.  Any customers of that supplier who now are aware of these facts, which are in the public domain, would have a tough job crafting a plausible statement for their next financial report. 

Hopefully this wake up call to the requirements of the Modern Slavery Act is redundant and all readers of the FP Blog are fully up to speed, if not you had better get your skates on. 


Tagged by topic: News

  by John Matthews

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