Compliance by businesses with the Modern Slavery Act 2015 continues to be a hot topic in the wake of the UK Home Office’s “postal offensive” late last year, with some 17,000 letters being issued to organisations it believes are legally required to publish Slavery and Human Trafficking Statements. In spring this year the UK Government released online guidance to help identify whether your organisation is one to which the 2015 Act requirement to publish a statement applies.
Do you need to publish a statement?
The 2015 Act places a “transparency” responsibility on certain businesses to issue a public statement every year showing what steps it has taken to ensure that slavery and human trafficking is not taking place in any part of its business or in its supply chains. If no such steps were taken then the organisation must make that clear in its statement.
Organisations themselves are responsible for determining whether or not they are caught by the legislation.
The 2015 Act sets out that businesses must publish a statement if they (1) supply goods or services; (2) carry on any part of their business in the UK (regardless of place of incorporation) and (3) have an annual total turnover of at least £36million.
The new guidance now helpfully expands on some of these criteria.
Total turnover, for the purposes of the 2015 Act, is to be arrived at by totalling the turnover of the organisation and the turnover of any of its subsidiary undertakings, including those operating wholly outside the UK.
Carrying on business in the UK
This requires a “demonstrable business presence” in the UK. The new guidance provides that the following (non-exhaustive) considerations would be relevant:
- being registered at UK Companies House
- having UK offices
- providing service or support functions in the UK
- receiving income in the UK
- having “other visible UK business presence, for example a website”.
Holding companies and group companies
The new guidance acknowledges that “some holding companies may not meet the criteria for publishing a statement, for example, because they do not provide goods or services”. The guidance also emphasises that subsidiary organisations can decide to publish separate statements, reflecting the different nature of their businesses, or alternatively the group can publish one statement covering all entities which meet the 2015 Act criteria. Organisations must ensure that the relevant requirements for such group statements are met.
Charities and investment trusts
These entities must publish a statement if they meet the 2015 Act criteria. In calculating whether or not a charity meets the £36million annual turnover threshold, donations, legacies and grants (where the donor receives no service or benefit) are, according to the new guidance, “generally not considered to be derived from business activities so do not need to be included”. But consideration should be given to whether grant income might be seen to be derived from business activities.
What do you need to include in a statement?
There is existing UK Government guidance on Transparency in Supply Chains, which sets out expectations and best practice on what to actually include in a statement. The Scottish Government has also published its own suite of guidance, Slavery and Human Trafficking: Guidance for Businesses in Scotland, which it says is “designed to complement UK Government guidance, and other relevant resources”.
Government and public scrutiny of slavery and human trafficking statements is now the norm. Responsible businesses are taking steps to ensure they can positively state the steps taken to prevent slavery or human trafficking in their operations and supply chains. You should assess which parts of your corporate group meet the 2015 Act qualifying criteria for publication of a statement, and whether your existing statements are legally compliant.
On May 23, 2019