In April, a Financial Reporting Council FRC report on modern slavery reporting practices in the UK found that around 1 in 10 organisations failed to comply with the Modern Slavery Act 2015’s (“MSA 2015”) requirement to publish an annual slavery and human trafficking statement (“modern slavery statement”). Furthermore, it found that 1 in 3 organisations published a poor-quality statement.
New Modern Slavery Bill announced
On 10th May 2022, the deliberation of a new Modern Slavery Bill in this parliamentary session was announced by the UK government in the Queen’s Speech. The Bill purports to increase the accountability of commercial and public organisations to tackle modern slavery in their supply chains.
The Bill will promise to strengthen the transparency requirements on covered organisations by introducing civil penalties for those that fail to comply. Plans to introduce penalties for non-compliance have been mentioned by the UK government on previous occasions.
The Bill will also require organisations to publish their modern slavery statements on a government-run registry, though they have already been urged to publish this in an online registry operated by the Home Office, launched in March 2021.
What is the key requirement under the Modern Slavery Act 2015?
The MSA 2015 Act exists to ensure that modern slavery is not taking place in the UK and those areas where all UK-related businesses are concerned worldwide. To achieve this goal, the provision in the MSA 2015 requires every commercial organisation carrying on a business (or part of their business) in the UK with a total annual global turnover of £36 million or more, to produce a modern slavery statement for each financial year of the organisation.
Are overseas businesses covered by the Modern Slavery Act 2015?
The legal requirement of publishing a modern slavery statement is limited to those whose annual global turnover is £36 million or more and have a ‘demonstrative business presence’ in the UK. This means even if you are an overseas business, if you have a demonstrative business presence in the UK and have an annual global turnover (including subsidiaries’ turnover operating wholly outside the UK) of £36 million or more and meet the other criteria, you should publish your modern slavery statement every year.
What is a ‘demonstrative business presence’ in the UK?
The UK Government set out examples of the factors that you should consider in determining whether your organisation has a demonstrative business presence in the UK:
- Is it registered at UK Companies House?
- Does it have offices in the UK?
- Does it provide services or support functions in the UK?
- Does it receive income in the UK?
- Does it have other visible presence in the UK e.g. a website?
A corporate group may have one or more subsidiaries that meet the criteria for publishing a modern slavery statement under the MSA 2015. Subsidiary organisations can choose to publish separate statements, or the group can publish one statement covering all the organisations.
What are you expected to do under the current Modern Slavery Act 2015?
The minimum requirements are;
- To assess, annually, whether your organisation meets the criteria for the preceding financial year, and to publish a modern slavery statement within six months of your organisation’s financial year-end (complete with board/members’ approval and with signature by a director).
- To place the link on a prominent place on your home page for your modern slavery statement (if you do not have a website, you are to provide a copy of the statement in writing within 30 days of receiving the request from anyone who requests your statement).
The modern slavery statement may cover the following six areas:-
- Organisation structure and supply chains.
- Policies about slavery and human trafficking.
- Due diligence processes.
- Risk assessment and management.
- Key performance indicators to measure the effectiveness of steps being taken; and
- Training on modern slavery and trafficking.
How 3CS can help
If you need help or advice on Modern Slavery Act requirements or help with any corporate or commercial legal matter, we are here to support you. Please get in touch with your usual 3CS contact for further information.