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Two sets of regulations have been published relating to the Modern Slavery Act 2015. Their effect is to require large commercial organisations to publish an annual ‘slavery and human trafficking statement’ setting out the steps they are taking to ensure their businesses and supply chains are free from slavery and human trafficking. The legislation promotes transparency and encourages big businesses to take responsibility for mitigating the risks of forced or trafficked labour in their operations. Lenders will no doubt want to support and encourage compliance by their large commercial customers.

To whom does the obligation to prepare a ‘slavery and human trafficking statement’ apply?

The requirement applies to:

  • a body corporate or partnership, including limited partnerships, limited liability partnerships and general partnerships, as well as foreign entities;
  • whose business or part of its business is carried on in the UK;
  • that supplies goods or services; and
  • has a minimum annual total turnover of at least £36 million.

Turnover includes an organisation’s subsidiary undertakings and refers to amounts derived from the provision of goods and services as part of its ordinary activities less trade discounts, VAT and any other applicable taxes.

The requirement to produce a statement affects financial years ending on or after 31 March 2016. 

What are the requirements for a ‘slavery and human trafficking statement’?

The regulations do not prescribe what must be included in the statement but suggest the statement may include information about a commercial organisation’s:

  • structure, business and supply chains;
  • policies relating to slavery and human trafficking;
  • due diligence relating to slavery and human trafficking in its business and supply chains;
  • risk management systems relating to areas of its business and supply chains that have the potential to be affected by issues of slavery & human trafficking and the steps being taken to assess and mitigate such risks;
  • 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; and
  • staff training relating to slavery and human trafficking.

Alternatively, the commercial organisation can simply state “No parts of the company’s structure and business and supply chains have been identified as posing a risk that slavery or human trafficking is taking place” – if the organisation can safely make that statement of course!

In any event, the statement needs to be approved by the board and signed by a director or otherwise signed off at a senior level. It must be available on the commercial organisation’s website.

What is the likely impact on loan documentation? 

The Loan Market Association (LMA) brought an anti-corruption law undertaking into its template forms to address the Bribery Act and equivalent legislation.  Parallels have been drawn to this legislation and those interested will be watching for any similar provision with regards to the anti-corruption statement. A key difference is, however, that the anti-corruption statement is just that – a statement. It is not an undertaking to do or refrain from doing something in the way the Bribery Act is so whether any provision would just be looking for a statement or would go further and seek comfort as regards policies and procedures being in place we shall have to wait and see. 

What are the consequences of failing to provide a ‘slavery and human trafficking statement’?

The Secretary of State may force a commercial organisation to prepare a statement by way of injunction. The main incentive for compliance, however, is negative publicity and reputational damage of failing to ensure that slavery and human trafficking is not taking place in its business or supply chain. We expect to see businesses looking for compliance by their suppliers and lenders may want to ensure borrowers are compliant to avoid being tarred with any residual reputational fallout. However, the effectiveness of the new legislation at promoting transparency and responsible business governance remains to be seen.

What steps should be taken to combat the risk of slavery and human trafficking occurring in businesses and supply chains?

The Home Office has published a practical guide that contains some “top tips” for writing a statement as well as some case studies and examples that should help organisations when preparing a slavery and human trafficking statement for the first time. Such tips include ensuring whistleblowing procedures are in place for employees to raise potential issues surrounding slavery and human trafficking and ensuring the organisation retains documentary evidence to show the steps it is taking to mitigate the risks.

In addition, commercial organisations may wish to consider including wording in commercial agreements with suppliers which prohibit the use of forced or trafficked labour and require them to agree to your organisation’s anti-slavery and human trafficking policy.

For more information, email blogs@gateleyplc.com.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.