The UK Modern Slavery Act 2015: 4 More Things You Need to Know

The UK Modern Slavery Act 2015: 4 More Things You Need to Know

On October 29th, 2015, the United Kingdom’s Home Office released guidance on the UK Modern Slavery Act 2015.

The Act came into effect in the beginning of October, with the expectation that the guidance would follow shortly after. In it, the government provides more details on the consequences of non-compliance, how to determine a company’s turnover for the purpose of scoping, clarity on how franchise and parent/subsidiary models are dealt within the Act and requirements for the content and publication of public statements.


Need more information about the UK Modern Slavery Act and similar regulations? Download the free eBook: Human Trafficking, Slavery & Your Supply Chain. 


Based on questions posed from our industry partners, we’ve compiled a list of key takeaways and clarifications provided within the guidance.

1) The Grace Period

The requirement to publish a public statement on your company’s efforts (or lack thereof) to eliminate human trafficking and slavery through the supply chain began on October 29th. However, a grace period has been implemented with the understanding many organizations were not in a position to immediately comply.

Any organization whose financial year-end date falls between October 29th and March 30th, 2016 will not be required to publish a statement for that financial year. Organizations whose financial year-ends are on March 31st or later will be required to publish a statement.

These organizations will be the first to publish a statement under the Act. However, for those companies who have only recently implemented anti-human trafficking and anti-slavery activities, the guidance suggests their statement should declare that only parts of the financial year were covered by those activities.

2) Clarity on Scoping for Different Business Models

To be in scope of the Act, organizations must be incorporated or a partnership, supply goods and/or services and carry on business or part of a business in the UK. They must also meet a specified turnover threshold.

We already knew the turnover threshold for companies to fall in scope of the Act was set at £36 million. This guidance provides further clarity on how the threshold is calculated and how the Act deals with subsidiaries and franchises.

Turnover is calculated as the total of both the organization and any of its subsidiaries, including those operating outside of the UK. This global turnover is the amount derived from the provision of goods and services by the organization and its subsidiaries, after the deduction of trade discounts, value added tax, and any other taxes based on the amounts so derived.

The guidance states if any organization in any part of a group structure meets the requirements, it must produce a statement. This includes parent or subsidiary organizations, regardless of whether or not they are UK-based.

For example, if a domestic parent company meets the above scoping requirements, it should also report on the anti-human trafficking and slavery activities of its subsidiaries, be they domestic or foreign. If a foreign parent company is carrying on business or part of a business in the UK, it will also be required to produce a statement.

If a parent and one or more of its subsidiaries in the same group are required to produce a statement, the parent may produce one that can be used by others in the group.

Franchise models are handled a little differently. The Act distinguishes between the franchiser and franchisee.

If the turnover of a franchisor surpasses the threshold (and it meets the other requirements), they will be required to produce a statement. However, in a franchise model, only the turnover of the franchisor will be considered.

The turnover of any franchisee using the franchisor’s trademark will not be considered when determining the franchisor’s turnover. The guidance does suggest that despite this provision, franchisors consider the impact of their franchisees’ actions in terms of modern slavery and include those in their statements.

If a franchisee surpasses the threshold on their own, they will be required to file a statement as well.

3) Statement Approval

In an effort to ensure leadership accountability and awareness within an organization, public statements on anti-modern slavery activities must be approved by an appropriate senior person in the business, namely a director or partner.

4) The Consequences

The Act has teeth.

The guidance provides open language on what the consequences would be for organizations refusing to comply with the Act. If a business fails to produce a slavery and human trafficking statement for a particular financial year, the Secretary of State may seek an injunction through the High Court requiring the organization to comply.

Failing to comply with the injunction will place the organization in contempt of a court order, which is punishable by an unlimited fine.

There are no parameters for how the fine will be determined, which gives the court the ability to apply any fine which it deems appropriate.

Non-compliance is defined as failing to produce a statement, publish it on a website, or not taking appropriate steps during the relevant financial year. This can include taking no steps, or only beginning investigations into reports of modern slavery within the organization or its supply chain.

 

To read more about the UK Modern Slavery Act and other slavery and human trafficking regulations, download the eBook: Human Trafficking, Slavery & Your Supply Chain. 

If you have any questions, contact our regulatory experts at info@assentcompliance.com.

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