Legal Update: Will Section 54 affect your business?

Legal Update: Will Section 54 affect your business?

Have you considered or are aware of the Modern Slavery Act 2015, and are you ready for Section 54?

This Act received Royal Assent on 26 March 2015.  Its principal purpose is to consolidate existing legislation containing criminal offences relating to slavery (including human trafficking, forced labour and other forms of exploitation) into a single statue designed to provide law enforcement agencies with stronger tools to tackle modern slavery.  Whilst most readers may now be thinking ‘how and why may this apply to me’, there may be obligations that apply to your organisation. 

Section 54 (transparency in supply chains) is expected to be brought into force in October 2015; Commercial organisations over a certain size will be required to publish a slavery and human trafficking statement each year on their website, setting out the steps that they have taken to ensure that there is no slavery and human trafficking in any part of their own business or their supply chains (Section 54).  Those who supply goods or services and have a minimum total turnover of an anticipated £36 million* will be expected to publicly state each year the action they have taken to ensure their supply chains are slavery free.  *The £36 million threshold corresponds with the Companies Act threshold for determining the size of a large company. 

Companies that qualify as small or medium under the Companies Act will not have to prepare a statement; early signs indicate however, that ‘commercial organisation’ includes all subsidiaries. 

Who does the Act apply to?

A business will need to publish a slavery and human trafficking statement if it:

  • Is a company (not just a listed company) or partnership over a certain size.
  • Supplies goods or services.
  • Carries on a business or part of a business in the UK.

What will the statement need to contain?

Section 54 does not mandate what a statement must contain but there are 6 areas of information a business may include in its slavery and human trafficking statement:

  • The organisation’s structure, its business and its supply chains;
  • Its policies in relation to slavery and human trafficking;
  • Its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • The parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • Its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such key performance indicators as it considers appropriate;
  • The training about slavery and human trafficking that is available to its staff.

The use of the word ‘may’ is key; although no business will be obliged to report on these factors, the list is designed to encourage businesses to adopt a more uniform approach.

Further Guidance

The Secretary of State has the power to issue guidance about the duties imposed by Section 54 (54(9); this guidance may include further provision about the kind of information that organisations may include in a statement.

One area where further guidance may be helpful is the issue of what falls within businesses’ supply chains.  Section 54 refers to any of a business’ supply chains, and so it has to be assumed the drafters of this Act intended to cover both direct and indirect supply chains.


Author: Caroline Beer

Posted on: Wednesday 12th Aug 2015