29 July 2016 | By Daniel Wilde
The Modern Slavery Act came into law on 26th March 2015. As recently as 24th May, a family that ran a tarmacking business and farm in South Wales was convicted of requiring people to perform forced or compulsory labour.
Reputable businesses would not act in this way, so why is the act relevant to facilities management companies?
Section 54 of the act requires commercial organisations with a global turnover above £36 million to publish an annual 'Slavery and Human Trafficking Statement' for each financial year ending after 31st March 2016. This requirement aims to promote transparency in the supply chain and ensure that large businesses have effective policies and due diligence procedures in place so that slavery or human trafficking do not take place within their supply chains.
The statement must be approved by the board and signed by a director, and should also be published on the company's website.
Although there are no penalties or sanctions for failing to comply with this obligation, large businesses that fail to comply can expect to suffer adverse publicity and reputational risk if they do not take appropriate measures to preclude the risk of slavery and human trafficking within their supply chains.
What should large businesses do now?
As outlined, large businesses need to publish a 'Slavery and Human Trafficking Statement' for each financial year. The statement should disclose:
- The steps the business has taken during the financial year to ensure that slavery and human trafficking are not taking place either in its own operations or that of its supply chains;
- Whether no steps have been taken by the business.
Clearly, if a business publishes that no measures are in place, there is a risk that the business may suffer adverse publicity or key stakeholders whom the business may supply may be reluctant to deal with the business.
When should action be taken?
All businesses with a financial year ending on or after 31st March 2016 need to publish this statement, and it should be published as soon as reasonably practicable after the end of the financial year. Although no specific deadline is set, it would be reasonable to assume that businesses should publish their statements within six months of their financial year end. Logically, the statement would be published at the same time as the business's annual statement and accounts.
What should be included in the statement?
Although there is no prescribed content, the act does cover six areas that you should consider including in your statement:
- A summary of the business's structure, a summary of its operations, and supply chains to provide context;
- Any policies in place which are relevant to slavery and human trafficking;
- The steps taken to ensure that slavery and human trafficking do not take place in the business and supply chains, to include demonstrating an understanding of who a business's suppliers actually are;
- Whether a business has identified within its supply chain that there is a risk of slavery and human trafficking and the steps taken to assess and manage that risk;
- The effectiveness of approaches in ensuring slavery and human trafficking do not take place in a business's supply chain; and
- Whether any training is provided by a business dealing with slavery and human trafficking issues to key employees and suppliers.
Even if a business is not a large employer, it may still need to respond to queries from customers that are required to comply with the requirements of the legislation, and may even be asked by these companies to demonstrate that there are no issues in its supply chain.
Being aware of the legislation and its implications will guard against any adverse impacts. The government has published comprehensive guidance on the transparency provisions required by Section 54.
Daniel Wilde is partner and head of employment at HardingEvans LLP