Legal Updates

Implementing Slavery and Human Trafficking Statements – a potential PR pothole?

Written by David Marchese

The Modern Slavery Act 2015 consolidates offences relating to slavery and human trafficking. The mischief was regarded as sufficiently grave to include a requirement (under section 54 of the Act) for all UK commercial organisations over a certain size to produce a “slavery and human trafficking statement” for each financial year (known as the transparency in supply chains etc requirement). This has to show the steps the organisation has taken during the relevant financial year to ensure that slavery and human trafficking is not taking place in its supply chain and business (or say that no such steps have been taken). The statement must be published on an organisation’s website, with a prominent link on its homepage.

Regulations have now been made which have brought section 54 into force on 29th October 2015. However, it does not have effect in respect of a financial year ending before 31st March 2016. The requirement will apply to all UK commercial organisations with a group turnover over £36 million.

Failure to comply with the new requirement could result in civil enforcement (but would not automatically be a criminal offence).

Section 54 will be of relevance to a wide range of businesses, including those involved in manufacturing and distribution. They will doubtless wish to include appropriate provisions in distribution and supply contracts, as part of the steps they are taking, if indeed they do not already do so.

The Home Office has now published guidance about the new requirement. This raises a number of issues, some of which appear not to have been fully thought through in the legislation. For example, with respect to franchise chains, the guidance says that if the franchiser’s own turnover is above the threshold it will of course have to comply, but the turnover of franchisees does not need to be included in calculating the turnover. However, the guidance says that franchisers may wish to consider the impact on their brand of the activities of their franchisees in relation to modern slavery.

The guidance also includes tips on writing a slavery and human trafficking statement. Many organisations already include ethics statements within their distribution, franchise and supply contracts, but they will need to review these to ensure that they can rely on them to say that they have taken steps to ensure that slavery and human trafficking has not taken place, or produce one from scratch. Clearly, it will be necessary to ensure that any statement is backed up by what the company does in practice, as this will also have PR, and possibly also legal, consequences.

It will of course be an option to state that a company has taken no steps to ensure that slavery and human trafficking is not taking place in its supply chain but, unless there is a very good reason for this, it is unlikely to be an attractive option from the PR point of view.

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David Marchese

I graduated from Oxford University before qualifying as a solicitor at Herbert Smith. I went on to work at Richards Butler and then Davenport Lyons, before joining Gordon Dadds in 2014. I have extensive experience advising on the law of intellectual property, information technology and commercial contracts. I am the author of Business Licensing Agreements (Longman, 1995), the section on Supply of Goods and Services in Practical Commercial Precedents (Sweet & Maxwell) and several published articles including Joint Ownership of Intellectual Property (EIPR, 1999) and Warranties and Covenants in IP Licences (OUP, 2009).

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