The Government has updated its guidance on the requirement for large commercial organisations to prepare a slavery and human trafficking statement for each financial year. What are the key amendments to the guidance and what should employers be doing differently as a result of the changes?
Drafting your modern slavery statement
In October 2015, the Government introduced reporting obligations via s.54 of the Modern Slavery Act.
The Act requires commercial organisations carrying out business in the UK with an annual turnover of at least £36 million to publish a modern slavery statement for each financial year ending on or after 31 March 2016.
The Government’s guidance to accompany s.54 of the Modern Slavery Act was originally published in October 2015.
The guidance, which makes good practice suggestions for employers preparing their modern slavery statements, was updated on 4 October 2017.
1. Changes to board-level approval process
What’s new in the guidance?
The Modern Slavery Act requires that modern slavery statements be approved at the highest level of a company, typically the board of directors. Statements must also be signed by a director.
The updated guidance makes two important good practice suggestions in relation to board approval. It states that:
Modern slavery: FAQs
Which employers are required to publish a modern slavery statement?
What duties do employers have under the Modern Slavery Act?
What is the timescale for employers to prepare a modern slavery statement?
- it is “best practice for the director who signs the statement to also sit on the board that approved the statement”; and
- statements should “include the date on which the board or members approved the statement”.
What should employers do differently?
When employers come to sign off their next annual modern slavery statement at senior level, they should ensure that they director who signs the statement is someone who sat on the board during the approval process.
Employers should also check that the date on which the board approved the statement is included (typically at the end of the statement next to the date of the approving director’s signature).
2. Companies should keep previous statements available online
What’s new in the guidance?
Now that some employers will be producing their second modern slavery statement, the guidance addresses what they should do with statements from previous financial years.
The Government encourages organisations to “keep historic statements from previous years available online even when new statements are published”.
What should employers do differently?
Employers that have already produced one modern slavery statement should ensure that their previous statements are easily accessible to the public on their corporate website.
Their new statement should not overwrite their previous statement. A central page on a company’s website could be set up to provide details of older statements.
3. Statements should not remain static
“We have also seen these statements being used by campaigners to scrutinise business activity. The Business and Human Rights Resource Centre produced a report analysing and ranking the statements from 27 FTSE 100 companies and providing recommendations for businesses to improve.” – 2017 UK annual report on modern slavery
What’s new in the guidance?
In the updated guidance, the Government is keen to stress the importance of the content of modern slavery statements evolving over time.
The guidance says that external parties will expect to see “year-on-year improvements outlining practical progress on how they are tackling the risks and incidence of modern slavery in their operations and supply chains”.
Investors, the media and campaigners are among those who could be looking at companies’ modern slavery statements across a number of years.
A failure to show progress in tackling modern slavery could damage a company’s bottom line and reputation.
What should employers do differently?
Modern slavery statements should highlight what practical steps have been taken during the financial year in question.
Statements should avoid repeating generic statements about being committed to tackling modern slavery, without the evidence to back up these claims.
4. Smaller organisations encouraged to produce statements
What’s new in the guidance?
Now that the requirement to produce a statement has bedded in, the guidance suggests that organisations not caught by the legislation could produce voluntary statements.
According to the guidance, companies with a turnover of less than £36 million could benefit if they are bidding for contracts with larger businesses above the threshold.
What should a modern slavery statement include?
The statement is expected to include information on:
- a company’s structure, business and supply chains;
- policies in relation to slavery and human trafficking;
- due diligence processes;
- the parts of the business and supply chains at risk and steps taken to manage risks;
- effectiveness in ensuring that slavery and human trafficking is not taking place; and
- training available to staff.
For example, a smaller organisation could be asked by companies for which it is supplying goods or services if it has a statement or policy setting out their approach to tackling modern slavery.
The guidance also states that businesses required to produce a modern slavery statement in one financial year should continue to produce a statement “even if their turnover has fallen below the £36 million threshold” in subsequent financial years.
What should employers do differently?
Employers not covered by the requirement to produce a modern slavery statement should consider producing a voluntary statement.
Such a statement would be a useful means of managing requests for information about supply chains from larger companies.
A voluntary statement would also provide a level of assurance to customers, who are increasingly concerned about purchasing unethical products.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
