Modern Slavery Act 2015

Background

Modern supply chains are often extremely long, complex and international. The goods that are bought and sold in the UK are produced all over the world. Companies sourcing their products overseas must be confident that those they do business with are not using forced or trafficked labour, so that consumers in the UK can be equally confident that the goods and services they buy are free from slave labour. Under the Companies Act 2006 large, listed companies are required to report on human rights issues, and these reporting requirements have been strengthened further in 2015. From 1st April 2016, under the Modern Slavery Act, the Government has committed to introducing measures that specifically address modern slavery. It has introduced a legal duty on all businesses with a turnover of more than £36m to report annually on the steps they have taken to ensure modern slavery is not taking place within their business or supply chains anywhere in the world.

Reporting on these issues allows the public, consumers, employees and investors to know what steps an organisation is taking to tackle modern slavery, and have greater confidence in the goods and services they buy.

Introduction to the Act

Article 4 of the Human Rights Act is the right to be free from slavery or forced labour. The Government, in introducing the Modern Slavery Act 2015, is recognising the unique and strong position that organisations with significant resources and purchasing power have to influence global supply chains. The Transparency in Supply Chains provision contained within the Modern Slavery Act seeks to address the role of businesses in preventing modern slavery from occurring in their supply chains and organisations.

Modern Slavery is a term used to encapsulate the two offences in the Modern Slavery Act 2015: slavery, servitude and forced or compulsory labour; and human trafficking.

Forced labour and human trafficking can occur in business operations in a variety of ways:

Directly – by employing a trafficked or exploited person within the business or through a subcontractor or recruitment agency;

Indirectly – through illegal subcontracting occurring within the supply chain or through use of products or materials which have been produced by people under conditions of forced labour;

By association – where trafficking occurs within the local area as the result of a company’s operations, or as a secondary consequence of a company’s actions.

Section 54 of the Modern Slavery Act 2015 requires that any commercial organisation in any sector, which supplies goods or services, and carries on business in the UK, with a turnover threshold of £36m, must produce a slavery and human trafficking statement for each financial year. The provision requires an organisation to be transparent about what is happening within its business. This means that if an organisation has taken no steps to ensure slavery and human trafficking is not taking place, they must still publish a statement stating this to be the case.

The Government encourages all businesses to develop an appropriate and effective response to modern slavery. Businesses may choose to take further action over and above what is prescribed by the Act but this will be a decision for individual businesses themselves. The provision seeks to create a race to the top by encouraging transparency and increasing competition to drive up standards.