Modern Slavery – April Update
Many commercial organisations who fall within the scope of the Modern Slavery Act (MSA) are now receiving further correspondence from the Home Office on modern slavery compliance.
The Home Office has confirmed its intention to have commenced an audit of compliance by 31 March 2019. By this time, organisations must have assessed their obligations and be actively in compliance with those obligations.
The Home Office will identify whether organisations that fall within the scope of the MSA:
- have published a slavery and human trafficking statement; and
- whether that statement is complaint with the MSA requirements.
Failure to comply may result in a 'name and shame' exercise by the Home Office risking reputational damage to any commercial organisation which is in breach of its obligations.
Organisations also have a positive duty to ensure compliance in their supply chains. Lack of compliance by entities that are not directly affected by the act, but are within a directly affected commercial organisation's supply chain, could face damaged business relationships and termination of commercial contracts going forward. Therefore it is important for all organisations, above and below the £36m turnover threshold, to be fully aware of the risks of non-compliance.
Within the last month, the Home Office has also published user friendly guidance on what it expects from an organisation's modern slavery and human trafficking statement. Additionally, it has developed a practical guide to transparency in supply chains. Both of these resources provide useful 'best practice' guidance for commercial organisations regarding what they are expected to do, who is bound by compliance and in what form compliance may take.
We have provided a case study for Group Companies publishing slavery and human trafficking statements below.
If you need any assistance in designing or updating your organisation's slavery and human trafficking statement, conducting your audit or advice on your compliance obligations, please do not hesitate to contact the Employment and Incentives Belfast team at A&L Goodbody.
Summary of obligations of each company within the group
In the above case study, the parent company and subsidiary 1 must produce a slavery and human trafficking statement, within 6 months of the organisation's financial year end. The two organisations can agree to produce a single statement detailing the combined steps taken towards compliance, or the parent and subsidiary can produce separate statements. However, the parent company's statement must contain details of steps taken by its subsidiaries.
At first glance, it appears that subsidiary 2 and 3 are not required to produce a slavery and human trafficking statement. However, these subsidiaries may form part of the supply chain or business of the parent company. Therefore, at a minimum, the parent company's statement should include steps which have been taken in relation to subsidiary 2 and 3 (even though the subsidiary may not be technically 'bound' by the obligations under the MSA). If the parent is seen to be ignoring the operations of subsidiary 2 and/or 3, the parent company risks reputational damage.
This structure relates to larger group companies however, if an organisation does not meet the various thresholds under the MSA, it may still be asked by those it supply goods and services to, about the steps it has taken to help combat modern slavery. If a small organisation is neglectful in its obligations this may impact on future orders, bidding for contracts and business relationships. Therefore it is important for all organisations to remain live to its obligations under the MSA.
For more information on this topic please contact a member of A&L Goodbody's Belfast Employment & Incentives team.
Date published: 3 April 2019