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The Modern Slavery Act 2015 (the Act) is a new piece of legislation which cracks down on modern slavery practices, both within the UK and beyond.
The Act will have far reaching consequences for the commercial arrangements of many businesses with activities in the United Kingdom. The Act imposes annual reporting requirements on organisations with an annual turnover of £36 million or more.
The Act also consolidates the offences of slavery and human trafficking, introduces new civil preventative measures, establishes the office of Anti-Slavery Commissioner and introduces measures to support victims.
In a climate of increasing expectations on businesses to respect human rights, the Act is aimed at a wide range of businesses deemed to have the resources to undertake due diligence on suppliers, and exert influence on their supply chains. This, in turn, is likely to impact upon smaller businesses within their supply chains.
In its consultation paper “Modern Slavery and Supply Chains”, the Home Office acknowledges that the reporting requirement should “ensure that large businesses cannot turn a blind eye to modern slavery simply because of their corporate status or domicile”.
Organisations within scope of the Act are:
The £36 million threshold includes sums derived from the provision of goods or services falling within the ordinary activities of the organisation and its subsidiary undertakings after deduction of trade discounts, VAT and other taxes. All such global turnover must be included in the calculation, not only revenues derived from UK-based transactions.
The Act imposes a requirement on certain organisations to prepare an annual report in relation to slavery and human trafficking within their respective supply chains. The intention behind this is to encourage organisations to take more action as a result of increased pressure from stakeholders and public perception.
The statement must be:
In terms of content, the statement must either:
The Act suggests that the statement may include, amongst other things, information on the organisation’s structure, business and supply chains, its policies in relation to slavery and human trafficking and the steps taken to assess and manage the risk of slavery and human trafficking. See also the Home Office guidance on what should be included in the statement and how it should be presented.
The annual reporting obligation came into force on 29 October 2015. There are, however, transitional arrangements intended to assist those businesses with a financial year end in close proximity to October 2015.
Businesses with a financial year end on or before 30 March 2016 will not be required to publish a statement for the 2015-2016 financial year. The first businesses required to produce and publish a statement will be those with a financial year ending on 31 March 2016. The Government has indicated that it expects statements to be published within six months of the year end.
What are the penalties for non-compliance?
If a business does not comply with its obligation to publish a statement, the main impact is likely to be reputational damage.
Under the Act, the Secretary of State may seek an injunction requiring the business to comply. If the business does not comply with the injunction, an unlimited fine may be imposed for contempt of court.
Organisations within the scope of the Act need to be considering the steps the organisation needs to take to comply with the Act. The approach of course needs to be tailored to the characteristics of the organisation, but we offer the following ‘top tips’ which are likely to assist most businesses:
This article was originally published in Purely Payroll, December 2015
This article was written by Paul Henty and Anne-Marie Balfour. For more information please contact Anne-Marie on +44 (0)20 7427 6588 or at email@example.com.