Modern Slavery Act - Reporting Threshold Set

Modern Slavery Act 2015

Today the UK Government has confirmed that all companies with annual revenues of £36m or more will have to report against the transparency in supply chains requirement of the Modern Slavery Act.

This means that from October 2015 at least 12,000 companies, both those based in the UK and international firms with UK operations who meet the revenue threshold, will need to produce an annual modern slavery statement covering the steps they have taken to ensure there is no modern slavery in either their supply chain or their own operations. 

The statement must be approved by the board of directors, and signed by a director or equivalent. To give businesses sufficient time to prepare, transitional provisions will be developed so that statements are not required where a businesses’ financial year end is close to the date that the requirement comes into force.

The announcement was part of the response to a consultation which Fifty Eight took part in, and many of the of respondents who opted for the £36m threshold suggested that, in order for this requirement to be effective there should be a way that small and medium sized businesses, non-governmental organisations, and other international companies who are not required to report within the legislation can opt in as early adopters of the requirements of the Act. This would allow companies to be recognised for the actions they are taking, and would help consumers make decisions about the companies they purchase from.

Introducing the response, Home Secretary Theresa May said, “I know many businesses are already working with those in their supply chains to ensure they are free from slavery. I am confident that the transparency measure will encourage more businesses to do the same. The presence of modern slavery in supply chains should concern us all, from the businesses who sell goods and services in the UK, and the investors who financially support businesses, through to the consumers who buy the end products. That is why this measure is so important. It raises the bar and sends out a powerful signal to the world about the UK’s determination to confront all forms of modern slavery.”

Modern Slavery Definition

Modern slavery is a broad term used to encompass the offences of ‘slavery, servitude and forced or compulsory labour’ and ‘human trafficking’. 

- UK Government

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Modern Slavery Act
Supply Chains Guide

Annual Slavery and Trafficking Statement

The response also confirms the five general areas of activity that should be included in a slavery and human trafficking statement. For businesses who already produce an annual Sustainability or CSR report, the statement can be included as part of the existing reporting. The general areas of activity are:

1. A brief description of an organisation's business model and supply chain relationships; 
2. A business’s policies relating to modern slavery, including due diligence and auditing processes implemented; 
   
3. Training available and provided to those in a) supply chain management and b) the rest of the organisation; 
   
4. The principal risks related to slavery and human trafficking including, how the organisation evaluates and manages those risks in their organisation and their supply chain; and 
   
5. Relevant key performance indicators (The choice of which measures to use will depend on the individual circumstances of the business).
   

Over the coming months, the government will produce guidance which sets out the kinds of information that might be included in a disclosure, but it will only be guidance. The response states “ultimately, we want businesses to take the issue of modern slavery seriously at the highest levels and for businesses to be able to determine, demonstrate and explain their policies and practices relevant and specific to their own circumstances. We fully expect slavery and human trafficking statements to differ from business to business. Clear and informative guidance will help to prevent this requirement from becoming a simple tick box exercise by directing businesses towards the kinds of important steps and actions they could take, without setting rigid minimum requirements.”

It has also been strongly suggested that there should be a central website which at least lists the companies who are required to comply with the Act, and which allows companies to flag that they have published an annual statement for their reporting period. The website would allow the public, businesses, consumer groups and potential investors to compare corporate responses to the challenge of addressing modern slavery.

Read the full consultation response here, or see more on the Modern Slavery Act and what it could mean for your business here.