The Government has today released its practical guidance for organisations on the new and radical legislation requiring transparency in supply chains under the Modern Slavery Act 2015 (MSA).

It has also published legislation bringing into effect today the requirement for certain businesses to prepare a slavery and human trafficking statement.

Under the MSA, every organisation which carries on a business supplying goods or services in the UK, with a total global turnover of £36 million or more, will be required to produce a slavery and human trafficking statement for each financial year of the organisation, setting out the steps they have taken to ensure there is no slavery or human trafficking in any aspect of their supply chain.

For full details on the scope of this obligation, please click here for DLA Pipers briefing note.

Impact

Whilst the practical Guidance is welcome, it leaves much to every organisation to consider what is a relevant and proportionate response.  Whilst it appears a modest obligation merely to issue a statement, in reality it places an onerous burden on the director who will now be obliged to sign off on this. He or she will need to satisfy themselves that appropriate underlying verification work has been undertaken, to ensure the organisation is indeed taking steps to prevent modern slavery and human trafficking in its supply chains.

Further, there remains some critical commercial decisions for complex organisations with multiple corporate structures, where some may be within scope and some outside.  These organisations will need to consider whether they comply merely for those UK companies and related businesses that are in scope, or whether they will embrace the whole spirit of the legislation globally.

Businesses could easily underestimate the challenge in front of them.

There is not a huge amount of transitional relief and businesses will need to take action now to understand the extent of their obligations and prepare accordingly.  Those with a year end of 31 March 2016 will be the first to be required to publish a statement for their 2015/16 financial year, albeit with up to six-months in which to evaluate and respond. However, where an organisation has only recently undertaken activities they may choose to produce a statement that indicates that activity undertaken covers a particular part of the financial year.

Every affected business will need to consider the suggested content of a statement, enshrined in the legislation – whilst the information set out is not mandatory, it is difficult to see why it would not be at least used to underpin a statement even if it is not actually disclosed.  This includes mapping the structure of the business and its supply chains, referencing the policies in relation to slavery and human trafficking, proportionate due diligence processes, identifying where there is a risk of slavery and human trafficking in the parts of its business and supply chains and steps taken to assess and manage that risk, measuring the effectiveness of steps taken to ensure that slavery and human trafficking is not taking place including adopting appropriate KPIs, and making training available to staff.

In truth, the verification required behind making such a statement covering all tiers of a supply chain means this is no small enterprise for any organisation.  The reality is that businesses will have to take the generic guidance and adapt it as appropriate for themselves, fully mindful of the reputational risk if they do not.

DLA Piper have prepared a useful ‘placemat’ of the modern slavery lifecycle and identifying some of the potential steps which may need to be taken.  Please click here for full details.