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Modern Slavery Act Update. What should your statement say?

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This is an update following the commencement of the Modern Slavery Act 2015 (the Act), in particular s.54 which places an obligation upon those businesses with a total turnover in excess of £36 million which carry on business in the UK, or a part of their business is carried on in the UK (regardless of where the business is incorporated or formed).

Once you reach the threshold, the obligation is to prepare a “slavery and human trafficking statement” which is either:

  • A statement detailing the steps you have taken to ensure slavery and human trafficking is not taking place in any of your supply chains, or part of your business; or
  • A statement that you have taken no such steps (a “No Steps Statement”).

Arguably s.54 has no real “bite”; there is no penalty for those businesses that fail to publish a statement, and the duties s.54 imposes are only enforceable (currently) if the Secretary of State brings civil proceedings for a High Court Injunction thereby forcing your business to produce a statement. In which case, you still have the option to produce a “No Steps Statement”.

However, the commercial reality is that your customers, especially where they are large retail businesses, will undoubtedly want to avoid the uncertainty of its suppliers failing to publish a statement. This is especially significant given the potential damage to business reputation negative PR can have (for example the 2014 revelations concerning prawns sourced in Thailand). It is also anticipated that large retailers will come under pressure from those activist groups relevant for each sector and as such it is expected that the S.54 statement will play a significant role in developing ethical standards across the industry.

With this in mind, exactly what should your statement say? Here is some practical advice:

  • Starting with the Act, the following are useful starting points:
    • What is you organisation’s structure, business and supply chains;
    • Do you have any policies in relation to slavery and human trafficking;
    • Do you undertake due diligence processes in relation to slavery and human trafficking in your business and your supply chains;
    • Are there any parts of your business/supply chains where there is a risk of slavery and human trafficking taking place? If there is what do you do to assess and manage that risk;
    • Are your policies effective in ensuring that slavery and human trafficking is not taking place in your business or supply chains?  When do you intend to measure these and how;
    • Detail the training available to your staff.
  • Once you have thought of your policies, procedures and training stick to them. You could be in a worse position if you say you do something and then fail to undertake it.
  • Consider breaking down your specific actions by country to allow readers to understand the context of the steps taken.
  • You may already be doing many things that go towards the statement, for example only using agencies authorised by the GLA (or their equivalent in other countries), or visiting your foreign suppliers regularly. In which case you do not need to start from scratch, refer to those policies already in place using website links.
  • Consider your cross compliance, are your own suppliers meeting the same level of action that your business is taking? Are your business demands of your suppliers and subcontractors likely to lead them to violate human rights? This might be steps such as late payments, late orders, or high pressure deadlines that result from poor forecasting.
  • When risk assessing consider your exposure to risk across various aspects of your business. You may contract with businesses based in countries where the available protection against breaches of Human Rights is limited. Throughout different sectors there will be different levels of risk, for instance those low skilled areas may be more risk prone than high skilled manufacturing sectors. Consider the transactional risk, financial institutions may be involved with bonded labour or through money laundering. Finally, consider your business partners, have you had long standing relationships and have you attended their premises recently?

Whatever you decide, bear in mind the size of your organisation and the proportionality of your statement. As a small company you are not likely to have the resources to instruct large ethical trading initiatives to undertake a comprehensive review of your policies whilst monitoring breaches and assessing risk but you may be reasonably expected to regularly attend the site of your suppliers to see the supply chain first hand.

Guidance supplied by the Home Office can be found here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/471996/Transparency_in_Supply_Chains_etc__A_practical_guide__final_.pdf

If in doubt, please do not hesitate to contact Roythornes who can sit down with you, discuss your current processes and prepare a bespoke S.54 Statement for your business.

 

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