28 legal spotlight
What is the Modern Slavery Act 2015?
Angela Shields (AS) partner and Jenny Littlewood (JL) solicitor at Pitmans LLP discuss the Modern Slavery Act 2015 and the steps an HR team might need to take
AS: It is an Act of Parliament that requires commercial organisations to take appropriate and proportionate action to ensure slavery and human trafficking is not taking place in its business or its supply chains.
JL: Modern slavery is defined as slavery, servitude, forced and compulsory labour and human trafficking.
So, who will have to take action?
JL: Any corporate bodies or partnerships carrying on any part of their business in the UK that supply goods or services and have a minimum turnover of £36 million per annum. The minimum turnover threshold includes the turnover of “subsidiary undertakings” and is calculated on the basis of total net turnover.
AS: There is no minimum level of “business” required in the UK to trigger any action and no requirement for the organisation to be physically located in the UK. However, the guidance suggests applying a common sense approach. If an organisation does not have a demonstrable business presence in the UK it will not be caught by the provision.
It is highly likely that an organisation’s HR team will be involved in the procedural and compliance aspects of the Act.
What will an organisation have to do to comply with the Act?
AS: They are required to publish a slavery and human trafficking statement each financial year which discloses the steps they have taken to ensure their business and supply chains are free from slavery.
When do organisations have to comply with the publishing requirements?
JL: Organisations with a year end of March 31, 2016 or later are required to publish their statement for the 2015-2016 financial year with the expectation that statements will be published within six months of the financial year end.
Group companies can produce and publish one statement as long as it covers the business and supply chains of each entity in the group.
What does the statement have to say?
AS: It has to state the steps (if any) taken to ensure slavery is not taking place within the business and its supply chains. It will need to be approved by the organisation, signed by a director and published
www.businessmag.co.uk
on its website. The website will need to include a link to the statement in a prominent place on its or the group’s homepage.
JL: There are no absolute requirements as to content. For guidance, the Act sets out the following information that may be included:
1 Company structure, business and supply chains, 2 Policies and due diligence,
3 Parts of its business and supply chains where there is a risk and any steps it has taken to assess and manage the risk,
4 Effectiveness, measured against appropriate performance indicators, and
5 Any training available to its staff.
What will happen if an organisation does not publish a statement?
JL: There are no fines or penalties for failing to prepare or publish a statement. The main incentives for compliance are public opinion and the likely requirements of parties with whom the organisation contracts to comply with the Act. Organisations will be keen to avoid negative public opinion and/or social media campaigns with the potential impact on reputation and share values.
AS: There is one potential legal impact: the secretary of state has the power to bring a civil case for an injunction requiring an organisation to comply with disclosure. Any subsequent failure to comply would risk being in contempt of court, punishable by an unlimited fine.
What action should HR take?
AS: The first step will be to work with the management team to identify which parts of the business will conduct a comprehensive risk assessment, clearly mapping the supply chains and identifying potential touch-points for modern slavery. Next, the appointed individuals will carry out the due diligence and audits on suppliers within the supply chain. HR might need to consider consulting with employees to widen their remit of responsibilities. Furthermore, HR will implement the appointment of a compliance officer with responsibility for overseeing the annual preparation of the slavery and human trafficking statement.
JL: HR is also likely to be asked to review their own policies and procedures or, if not already in place, develop them, taking into account the results of the risk assessment and should ensure employees are obliged to comply with the Act. Specifically,
THE BUSINESS MAGAZINE – THAMES VALLEY – MARCH 2016 Jenny Littlewood, solicitor
the whistleblowing policies will need to adequately accommodate the reporting of slavery issues. Importantly, for HR they will need to address how employees are required to act to minimise the risk of slavery occurring in the business and in its supply chains. HR will be responsible for publicising the anti-slavery stance internally within the organisation. HR will also need to prepare employees for enquires and challenges on the statement from inside and outside the organisation.
AS: I agree. It is absolutely foreseeable that issues will arise in that context and for HR the implementation of targeted training for those involved in procurement or supply chain management, including how to respond to slavery when identified, will be key.
Details:
Angela Shields 0118-9570450
ashields@pitmans.com
Jenny Littlewood 0118-9570257
jlittlewood@pitmans.com
Angela Shields, partner
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