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  • Overview

    The Modern Slavery Act 2015 (“the Act”) came into force on 29 October 2015. 

    The Act requires commercial organisations with a turnover of £36 million with a “demonstrable business presence” in the UK which supply goods or services to make an annual public statement as to the actions taken to detect and deal with forced labour and trafficking any where within their supply chains.

    The statement must be published (prominently linked via the home page on the organisation’s website) for each financial year setting out the steps taken to ensure compliance. The statement is designed to be read by the public and accordingly should be in succinct, user friendly language.

    The statement is required to be signed off at Board level by a director (for a company), a designated member (for an LLP) or a Partner (in a partnership).

    Globalisation and complexity in supply chains mean the Act extends (directly or indirectly) to many organisations.

    The Act applies to any “body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom”. The Act is not prescriptive as to the scope of “carrying on business”. The Government has indicated a “common sense” approach should be applied as to whether a business has a “demonstrable business presence”. 

    The Act will apply to any subsidiary within a group which meets all the relevant criteria for producing a statement. If a global group is also required under the legislation to produce a statement then they may put forward a single statement for all relevant entities in the group which might be affected. In those circumstances the single statement must contain all issues relevant to each subsidiary.

    The system is self-regulatory. There are no financial penalties for failing to comply. The Government can enforce compliance through the Courts but reputational damage to a company failing to comply or returning a statement which discloses no action has been taken will be a commercial deterrent.

    By virtue of section 11 of the Act there is specific provision for forfeiture of vehicles (and other modes of transport) used or intended to be used in connection with trafficking which will impact on the logistics sector. Forfeiture arises where the person convicted is the owner or a director, secretary or manager of the company owning the vehicle, or the owner (or director, secretary of manager) of the company in possession of the vehicle under a hire purchase agreement. It will also arise where the person convicted is the driver of the vehicle.  

    Businesses with a financial year end of March 2016 will be the first required to comply. For businesses with a financial year end from 31 March 2016 onwards the first transparency statement will be due within 6 months of the current financial year end.

    Steps should be taken now to carry out due diligence, risk assess organisational structures and investigate supply chains to identify risks of forced labour and trafficking. It is necessary to make clear what steps are being taken to deal with risks identified.

    Companies not caught directly by the Act will come under pressure to provide evidence of anti-slavery and anti-trafficking measures from UK purchasers who are required to comply with the legislation. That was fully intended by the Government. By selecting companies with turnover’s in excess of £36 million the intention was to target companies with large supply chains and networks which would consequently influence and indirectly materially change how the wider business community within each sector engages with this issue. 

    Thomson Snell & Passmore can assist in ensuring compliance for businesses required to comply directly or indirectly with the Act by advising on areas of risk in the supply chain, training staff, assisting with supply chain investigations and due diligence, working with you to prepare the annual statement and advising on best practice. Our Transport & Logistics sector team have extensive contentious and non-contentious experience advising clients across the sector in relation to ensuring compliance and mitigating risk through commercial contracts and standard terms of business throughout the supply chain. 

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