Modern Slavery Act
What is the Modern Slavery Act 2015 (“MSA”)?
The MSA consolidates offences relating to trafficking and slavery.
Who does it apply to?
The MSA applies to employers who conduct all or part of their business in the UK and have a turnover greater than £36million. Those business operating under a franchise model will also be required to comply with the MSA if they meet the threshold.
What will the Employers have to do?
Employers will have to publish a statement (the “Statement”) online which sets out the steps that have been taken to confirm that slavery/human trafficking is not occurring in their supply chain or own business.
When does the Statement have to be published by?
There is no prescribed time limit in which businesses are obliged to make the statement by. The Home Office provides guidance to businesses which states that:
- The Statement should be published as soon as reasonably practicable after the end of the organisations financial year;
- Businesses could publish the Statement alongside its annual or non-financial reports; and
- Businesses are encouraged to report within six months of the financial year end to which the statement relates.
In relation to franchise models, the franchisor must prepare a statement if its total turnover is £36 million (and it satisfies other obligations under the MSA). In determining the turnover of a franchisor, only the franchisor’s turnover is to be considered and any turnover of the franchisee using the franchisor’s trademark, distributing goods or providing services is not to be used in calculating the franchisor’s turnover. Where the franchisee’s turnover is over £36 million they must publish their own Statement.
What should the statement include?
Businesses must set out what steps they have taken during the financial year to ensure that slavery and human trafficking is not occurring in either their supply chain (which is an onerous obligation given that they have little control over how business within their supply chain operate) or within their business. Businesses can simply release a statement which confirms that no steps have been taken in relation to human trafficking and slavery, however, the legislation suggests that the statement should cover:
- The structure, business and supply chains;
- Policies implemented in relation to slavery and human trafficking;
- What due diligence exercises have been carried out in relation to slavery and human trafficking. This should in turn identify areas within the business which are at risk of slavery and human trafficking occurring;
- Performance indicators which have been put in place to ensure that slavery and human trafficking is not taking place;
- Training provided to staff to ensure they are aware of slavery and human trafficking; and
- Confirmation that the statement has been approved at Board level, signed by a director and published on the organisations website in a prominent place.
Franchisors could consider releasing a Statement on behalf of the whole franchise model to demonstrate consistency in their approach to the prevention of slavery and human trafficking.
What are the consequences of failing to comply with obligations under the MSA?
There are no financial or legal penalties for failing to publish the Statement. However, an injunction may be sought from the High Court requiring a business to publish a Statement. The most detrimental consequence for businesses is likely to be reputational damage, should it become apparent that slavery or human trafficking has been taking place and no measures had been implemented to prevent this.
Businesses should take particular note of the requirements placed on both the franchisor and franchisee to publish a Statement. Whilst there are no financial or legal penalties for failing to publish a Statement, reputational damage could be significant. Businesses should consider that due to their supply and distribution chains, alongside high staff turnovers, they are likely to be more susceptible to human trafficking and slavery than businesses in other sectors.
For more information contact our employment team on 0345 070 6000.