Takeaways
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Larger businesses must develop and publish a slavery and human trafficking statement each year describing the steps taken to ensure modern slavery is not taking place in their business or supply chains.
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New updated guidance describes the Home Office’s expectations for these statements and provides further detail on best practices.
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The updated guidance also adds a definition of child labour.
Section 54 of the Modern Slavery Act 2015 obliges commercial organisations with a global turnover of more than £36 million that supply goods or services to or from the UK to publish a slavery and human trafficking statement each financial year. Each statement must set out the steps an organisation has taken to ensure there is no slavery or human trafficking in their business or supply chains, or say that no such steps have been taken. The first statements required to be published were for financial years ending on or after 31 March 2016. (In other words, all businesses that meet the threshold will have to publish their statements in 2017.)
On 4 October 2017, the Home Office published an update to its section 54 guidance “Transparency in Supply Chains: A Practical Guide.” The guide is essential reading for all involved in the procurement and governance of an organisation’s supply chain, as it covers:
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who is required to publish a slavery and human trafficking statement,
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how to write a statement, and
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how to approve and publish the statement.
The guidance acknowledges the vital role that businesses must play in driving out modern slavery.
“Modern slavery is a brutal way of maximising profits, by producing goods and services at ever lower costs with scant regard for the terrible impact this has on individuals…Businesses must not be knowingly or unknowingly complicit in this horrendous and sickening crime…transparency statements on their own are not enough. The challenge for businesses is to take serious and effective steps to identify and root out contemporary slavery which can exist in any supply chain, in any industry. All businesses must be vigilant and aim to continuously improve.” —Home Secretary, RT Hon Amber Rudd MP
New Definition of Child Labour
The International Labour Organisation’s definition of child labour has been added to the definitions set out in Annex A of the updated guidance, namely children below 12 years working in any economic activities, children aged 12 - 14 engaged in more than light work, and all children engaged in the worst forms of child labour. The updated guidance recognises that whilst children can be particularly vulnerable to exploitation, child labour will not always constitute modern slavery. However, a child does not need to have been forced, threatened or deceived into their situation for it to be considered as exploitation.
In the case of the worst forms of child labour (which per the ILO definition includes slavery, bondage and serfdom, forced and compulsory labour, involvement in pornography and drug trafficking, and work which is harmful to health, safety or morals), the activity is “very likely” to be modern slavery.
Best Practices
The updated guidance describes a number of best practices:
Information to Be Covered.
A non-exclusive list of items that may be included in the slavery and human trafficking statement is provided by Section 54(5). The updated guidance now says that the “statement should aim to include information” covering such items:
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Organisational structure, business and supply chains
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Modern slavery and human trafficking policies
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Business and supply chain areas which present a risk of slavery and human trafficking, and steps taken to assess and manage that risk
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Supply chain due diligence processes in relation to slavery and human trafficking
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Effectiveness of steps taken with reference to appropriate performance indicators
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Training and capacity building about slavery and human trafficking for staff.
Approval and Accountability
The Act requires the slavery and human trafficking statement to be approved and signed by an appropriate senior person in the business, in order to ensure senior level accountability. The updated guidance recommends that the director signing the statement should be a member of the same board of directors that approved the statement and that the statement records the date on which board approval to the statement was given.
Transparency and Year-on-Year Improvement
The updated guidance describes how businesses “should be aware that their statement will be assessed by the public, investors, the media and other external parties. They will expect to see year-on-year improvements outlining practical progress on how they are tackling the risks and incidence of modern slavery in their operations and supply chains. Organisations are encouraged to be as open and transparent as possible, as this is likely to drive more honesty and collaboration between organisations in the knowledge that no single business can tackle the problem alone.”
In the same vein, the updated guidance suggests that businesses continue to make historic statements from prior years available online, rather than taking them down, enabling “the public to compare statements between years and monitor the progress of the organisation over time”.
Smaller Organisations
Smaller businesses who do not meet the turnover threshold may ponder whether or not making an annual slavery and human trafficking statement, and all such a statement entails, would be worthwhile.
The updated guidance suggests that small organisations voluntarily publish such a statement. “Even if the legislation does not apply, we would encourage all businesses to be open and transparent about their recruitment practices, policies and procedures in relation to modern slavery and to take steps that are consistent and proportionate with their sector, size and operational reach.” In support, the Home Office mentions that when bidding for contracts with larger businesses, smaller firms are likely to be asked about their approach to tackling modern slavery, and producing a statement can be a helpful means of managing such requests and providing an appropriate level of assurance to their customers.
And businesses with falling global turnover such that they are no longer legally required to complete a statement are “strongly” recommended to publish nonetheless in order to build on earlier statements and to demonstrate that they consider the issue an important one.
Empty Threat?
In her foreword to the updated guidance, Home Secretary Amber Rudd says that tackling modern slavery is a top priority for the UK government. However the main driver for improvement is left largely to the court of public opinion—that is, change should result from the scrutiny of the public, investors and stakeholders, and pressure from human rights organisations such as the Business & Human Rights Resource Centre (which maintains the Modern Slavery Registry).
Another NGO, Anti-Slavery International, has called for harsher sanctions for breaching the Act to be put in place similar to those in the UK’s Bribery Act 2012 which can lead to companies and directors facing prosecution and fines. Whilst this doesn’t appear to be in the cards at present, a number of governments around the world, including Australia, are currently looking at introducing compulsory reporting similar to that under the UK’s Modern Slavery Act, and with countries such France and the Netherlands having recently bolstered their human rights laws, businesses with a global footprint in particular need more than ever to embrace the need for transparency and openness and take steps to implement good working practices throughout their businesses and supply chains in order to tackle slavery and human trafficking.
