The Modern Slavery Act 2015 which came into law in March this year contained an important provision, section 54, for any business with a global turnover of at least £36 million. The implementation of section 54 was delayed but finally came into force on 29 October 2015. Section 54 requires certain businesses to publish an annual slavery and human trafficking statement.
The purpose of section 54 is to require businesses to take steps to monitor its supply chains, and actively improve standards in order to eliminate human trafficking, slavery and forced labour. It requires a commercial organisation that supplies goods or services and has a total global turnover of at least £36million, to prepare a slavery and human trafficking statement for the organisation’s previous financial year which ends on or after 31 March 2016. Companies then have up to six months from the end of their financial year to produce such a statement.
The provision applies to a relevant company, wherever incorporated, or a partnership, wherever formed (including limited liability partnerships), which carries on a business or part of a business in any part of the United Kingdom. The relevant turnover figure of £36million is the turnover of that organisation together with the turnover of any of its subsidiaries less any trade discounts, VAT etc. There is no geographic limit on where the turnover arises, meaning that the organisation’s global turnover must be taken into account.
Slavery is defined as the status or condition of a person over whom all or any powers attaching to the right of ownership are exercised. Servitude is the obligation to provide services that is imposed by the use of coercion and includes the obligation to live on another person’s property and the impossibility of changing his or her conditions. Forced or compulsory labour involves coercion, either direct threats of violence or more subtle forms of compulsion. The key elements are that work or service is required by the threat of any penalty and where that person is not working voluntarily. Human Trafficking is arranging or facilitating the travel of another person with a view to that person being exploited regardless as to whether or not that person consents to the travel.
The section 54 statement must say what steps the business has taken to ensure that no slavery or human trafficking has taken place in its supply chains, or that it has taken no such steps. Whist making a ‘no steps’ statement is possible, it is not recommended given the likely adverse publicity; it is expected that non-governmental organisations, charities, and other similar organisations will choose to ‘name and shame’ companies who do not produce a proactive statement.
A parent company may produce a section 54 statement for itself and each subsidiary as long as the statement fully covers the steps that each organisation has taken to meet the requirements. Although the guidance issued by the Home Secretary does not specifically identify those countries with a high risk of slavery, details of the list of such countries can be found at the Global Slavery Index (https://www.globalslaveryindex.org/findings/) which the Home Secretary’s guidance cites. Businesses should, therefore, as a minimum identify if any part of their supply chain operates in one of those countries.
Organisations may already have policies in place that deal with human rights or corporate social responsibility. The Home Secretary’s guidance states that a section 54 statement does not have to be a standalone policy and can be part of existing policies but it should clarify points about how the organisation’s policies and management systems work to prevent modern slavery and human trafficking.
In our next blog post, we will look in more detail at what should be included in a section 54 statement.
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