Modern Slavery Act Guidance - the "race to the top" begins
04 November 2015
On 29 October 2015, the provisions in the UK Modern Slavery Act (the Act) on transparency in supply chains (TiSC) came into force and the government published its long-awaited Guidance. The first organisations who will have to publish their Slavery and Human Trafficking Statements (Statements) are those whose current financial year ends on 31 March 2016.
Transparency in Supply Chains provisions now in force
On 29 October 2015, the provisions in the UK Modern Slavery Act (the Act) on transparency in supply chains (TiSC) came into force and the government published its long-awaited Guidance. The first organisations who will have to publish their Slavery and Human Trafficking Statements (Statements) are those whose current financial year ends on 31 March 2016. They must publish the Statement for their 2015 to 2016 financial year, and must do so "as soon as reasonably practicable" after their financial year end, so the pressure is now on. However, as the Guidance indicates, following best practice in this area is likely to be a significant exercise for affected organisations.
Guidance clarifies which organisations are affected
Publishing the Statement: deadline, other reporting requirements and publication
Content of the Statement
- details of the organisation's structure, business and supply chains - relevant considerations could include the sectors in which goods or services are supplied, the countries from which goods and services are sourced and the organisation's operating model and relationship with its suppliers and others (such as Trades Unions).
- slavery and human trafficking policies - the Act itself does not require a standalone policy to be developed or the introduction of any new policy or the amendment of any existing policy. However, the Guidance notes that the organisation's policies should be supported by senior management and effectively communicated internally and externally. It lists certain questions an organisation could consider, including whether the labour standards expected by a subsidiary or supplier align with the industry standard, the level of due diligence in a supply chain, support for whistle-blowers and victims and whether any slavery discovered can be remedied.
- due diligence procedures - the Guidance notes that these are the main way of assessing risk but that their nature will vary depending on factors such as the severity of the risk and the level of influence a business may have. It recommends the use of tools such as the OECD Guidelines for Multinational Enterprises. There is also a recommendation that businesses actively involve third parties, including civil society stakeholders or workers themselves, in due diligence exercises. A list is given of the types of information which organisations may wish to consider as part of their due diligence (such as risk management processes, impact assessments and action plans).
- assessing the parts of the business or supply chain with the highest risks and the steps taken to manage the risk - the guidance suggests a number of risks which may be identified (and have senior management oversight) including country risks, sector risks, transaction risks and business partnership risks. It also recommends developing a culture that rewards disclosure and sharing risks with "trusted partnerships".
- effectiveness in ensuring slavery and human trafficking are not taking place in the business or supply chains, measured against appropriate key performance indicators (KPIs) - the recommendations in the Guidance set out how KPIs could be used and note the importance of the different types of training required for different parts of the business. KPIs could be used in two ways. Firstly, existing KPIs should be considered for their potential to contribute to slavery (e.g. commitments to short turnaround times and the associated pressure on the workforce). Secondly, KPIs measuring the effectiveness of anti-slavery measures could be introduced, e.g. grievance procedures, whistle-blowing and oversight of suppliers.
- training - the Guidance recommends that organisations think about where training should be targeted in order to identify and remedy modern slavery within a supply chain.
What does this mean for affected organisations?