The UK's ground-breaking Modern Slavery Act 2015 (the Act) is set to have a significant
impact on businesses.
The Act requires businesses to be transparent with regard to the slavery and human
trafficking implications of their supply chains. Specifically, certain businesses with their
financial year ending on or after 31 March 2016 will be required to produce an annual
Slavery and Human Trafficking statement (the "Statement").
The Statement will need to detail the steps an organisation has taken during its financial year
to prevent slavery and human trafficking throughout its global supply chains.
Does the requirement for a statement apply to my business?
The Statement is required to be produced by
commercial organisations (ie companies and
- Supply goods or services
- Operate in the UK:
- regardless of whether registered in the UK or in
non-UK jurisdictions, and
- regardless of the size of their UK operations
- Have a turnover of at least £36 million annually,
judged on a worldwide basis and including subsidiary
undertakings (even those operating wholly outside
It is therefore possible that both parent and subsidiary
undertakings will have independent obligations to
produce a Statement (in practice, a joint statement
could be produced, but it would need to set out the
steps that each organisation has taken).
The Home Secretary's guidance on the Statement states
that organisations that pursue charitable or educational
aims or purely public functions can also constitute a
"commercial organisation" and may therefore be subject
to the requirement to produce a Statement.
Whilst the requirement to produce a Statement was
brought into force on 29 October 2015, transitional
provisions state that if a commercial organisation's
financial year end is before 31 March 2016, the
obligation to produce a Statement will apply to the
following financial year.
The Statement will need to contain details of the steps a
commercial organisation has taken during the financial
year to ensure that slavery and human trafficking is not
- in any part of its own business, and
- in any of its supply chains – at any level.
The Act suggests that the Statement should cover the
following key points:
- A description of the business' corporate structure, a
brief description of how the business operates, and a
map of its supply chains.
- A description of the business' internal policies and
procedures relating to slavery and human trafficking.
- A description of the business' due diligence
processes to prevent slavery and human trafficking in
its supply chains.
- A risk assessment of the areas of the business and its
supply chains where there may be a risk of slavery
and human trafficking.
- A description of the key performance indicators
which the business will use to benchmark its
effectiveness at preventing slavery and human
trafficking. These benchmarks should be assessed
year by year, and adapted to ensure effectiveness.
- A description of the training which the business
offers, both to staff and potentially down the supply
Furthermore, the Statement:
- Requires approval of senior management (in the case
of a company, board approval and a director's
signature on the Statement (or equivalents if the
commercial organisation is not a company)), and
- Must be published on that business's website with a
link in a "prominent place" on the website's
The annual Statement should be viewed as an iterative
process, particularly with regard to measuring
effectiveness year-on-year. Whilst the Statement
provides a snapshot, businesses may wish to consider a
proactive approach to demonstrate compliance.
The Act also permits an organisation to make a
Statement that it has taken no such steps to ensure that
slavery and human trafficking are not taking place. Of
course, a business would carefully want to weigh up any
potential adverse publicity and reputational impact that
may result from such a course of action.
It should also be noted that an organisation may find its
customers requesting information in respect of the steps
taken to ensure that slavery and human trafficking is not
taking place in order to enable them to make their
A failure to produce any such Statement can lead to the
Secretary of State taking enforcement proceedings
against a commercial organisation.
What impact will the Act have on the new and existing public projects and contracts?
It is our view that the Act may well influence the
broader evaluation of tenders for public contracts. The
Government has clearly thrown its weight behind this
new regime, and the Home Secretary’s guidance
envisages that the requirement for a Statement will
create a "race to the top" in encouraging business
transparency, and ultimately, driving up standards.
Developing and demonstrating a strong track record of
producing thoughtful, thorough and targeted Statements
is a clear way to stand out, add value and evidence a
clear commitment to support the Government's drive to
combat modern slavery and human trafficking,
particularly whilst bidding for public contracts.
In addition, if you are operating in the public sector (at
any level of the supply chain), you may find that the
public sector entity is looking to you, as part of their
supply chain, to help them produce such a Statement.
Albeit unlikely, it is worth noting the Act amended the
Public Contract Regulations 2015 so that a conviction
under the Act for slavery or human trafficking is a
mandatory exclusion from participating in a public
Finally, the Act is seen as a model that may be adopted
in other jurisdictions and over time you may find you
have multiple, similar obligations across your operations.
Suggested steps and how DLA Piper can help
Your business should carefully appraise its corporate
approach to the Act (particularly the requirement for
the Statement) and its engagement with its supply chain.
As noted above, your business may be approached by its
customers as part of their processes for making the
Statement. Embracing the new regime may be a way to
add real value to your operations, and may become the
new norm for the conduct of business.
DLA Piper can assist your business to prepare for the
coming changes in several ways. We are ideally placed
to help on multiple fronts, including:
- Development of appropriate policies and procedures
– including compliance and monitoring procedures
and proactive management
- Developing bespoke new contractual clauses and
adopting a risk-sensitive approach
- Undertaking due diligence, bid evaluation and risk
assessment exercises in respect of supply chains
- Delivering tailored training to senior staff across
disciplines (eg corporate management, procurement,
legal, risk, HR) and potentially to suppliers as well
- Preparation of the Statement
- Corporate sign-off in respect of the Statement
- Potential non-compliance and crisis management