Modern slavery October 2015 New reporting obligations on large companies to ensure supply chains are slavery free. The UK Government has said that from October 2015, commercial organisations that conduct business in the UK, and have a global turnover of 36 million or more, will be required to publish annually on their website a statement of the action they have taken in that financial year to ensure their supply chains are slavery free. Both UK and non-uk entities are affected. Khurram Shamsee and Ceri Fuller, employment lawyers at DAC Beachcroft, have kindly written this briefing, which outlines the new legislation and sets out what you can do to be ready to comply. 1
IT WILL BE AN OFFENCE under the Modern Slavery Act 2015 to subject anyone to slavery, servitude, forced or compulsory labour and human trafficking. Subsidiary companies must produce their own statement if their own turnover meets the 36 million threshold, but they can replicate or modify their parent s statement. At the time of writing, it has not been confirmed precisely when the duty will come into force. The statement will have to be produced each financial year, and a brief description of an organisation s business model and supply chain relationships. Policies relating to modern slavery, including the due diligence and auditing processes that have been implemented. The training that is available and provided to those in supply chain management and the rest of the organisation. The principal risks related to slavery and human trafficking, including how risks are evaluated and managed in the organisation and its supply chains. Key performance indicators, which will allow third parties to assess the effectiveness of the activities described in the statement. Alternatively organisations may publish a statement that no steps have been taken to ensure their supply chains are slavery free, but this is not very attractive in terms of branding and reputation. The statement must be approved by the board of directors and be signed by a director. It is likely that there will be transitional provisions, so that statements will not be required where an organisation s financial year end is close to the date that the duty comes into force. Commercial organisations that do not comply with this requirement are subject to civil proceedings by the UK s Secretary of State to compel them to comply. Statutory guidance is currently being drafted The UK Government will provide guidance and information covering the five key areas set out above, as well as advice on when and where statements should be published. The Government has also committed to providing guidance on how businesses can identify modern slavery and good practice for due diligence processes. The statutory guidance is currently being drafted. The Government has said that it will work with stakeholders in its development with a view to reflecting feedback from the consultation. This is likely to include details on how compliance with the reporting requirements will be monitored. 2
Lockton Companies LLP - October 2015 ACTIONS AND NEXT STEPS. Depending on your particular organisation s circumstances, some or all of the following steps may be required: Make sure slavery and human trafficking is covered in your CSR policy. Expand your whistleblowing policy to cover any concerns about slavery or human trafficking. Audit practices to ensure all employees are paid at least the national minimum wage and have the right to work. Appoint someone with overall responsibility for compliance with the Act, including signing off the statement. Map supply chains. This will be essential for many to understand risks and exposures across multiple tiers of suppliers. Prioritise any high-risk areas. Prioritise any high-risk geographies, perhaps by reference to your bribery and corruption policies. Put clear procurement policies in place. Ensure adequate contractual protections in supply contracts, including warranties, reporting requirements and audit rights to ensure and force suppliers to comply with the Act. Undertake site inspections. Deliver consistent messaging throughout the supply chain. Train employees, local suppliers and agents. Review existing compliance policies, contractual provisions and supply chain relationships to identify gaps and risks ahead of the reporting requirement coming into effect. ABOUT DAC BEACHCROFT, a leading international law firm. DAC Beachcroft s insurance specialists work with almost all of the world's leading insurance companies, providing expertise on claims resolution, policy advice, mediation, arbitration, corporate, commercial and regulatory advice. They were named 2015 Insurance Team of the Year by the Legal Business Awards. www.dacbeachcroft.com 13
CONTACTS DAC Beachcroft Ceri Fuller Associate & Head of Client Training +44 20 7894 6583 cfuller@dacbeachcroft.com Ceri is an experienced Senior Associate and has headed up DAC Beachcroft s client training unit since January 2009. Alongside her advisory practice, Ceri regularly designs and delivers bespoke training on all aspects of employment law for managers, HR professionals, in-house lawyers and boards of both public and private organisations. Khurram Shamsee Partner +44 20 7894 6566 kshamsee@dacbeachcroft.com Khurram is Head of the London Employment & Pensions team, which comprises 20 employment specialists. His experience is predominantly in the financial services sector, having been instructed by leading investment and commercial banks and insurance companies. Khurram is also an expert on data privacy and human rights issues arising in the employment context. 4
Lockton Companies LLP - October 2015 CONTACTS Lockton Debbie Day Partner +44 121 232 4555 Debbie.Day@uk.lockton.com Debbie leads Lockton s Birmingham office and corporate broking team. She advises many regional, national and multinational clients, including leading food and beverage companies, and companies that depend on complex, global supply chains. Mike Tyler Partner +44 207 933 2773 Mike.Tyler@uk.lockton.com Mike leads Lockton s Benefits practice. He and his team help clients develop preventative and remedial measures to keep people well in the workplace, so the business performs better. www.lockton.com 5
Our mission To be the worldwide value and service leader in insurance brokerage, risk management, employee benefits and retirement services Our goal To be the best place to do business and to work Lockton Companies LLP. Authorised and regulated by the Financial Conduct Authority. A Lloyd s broker. Registered in England & Wales at The St Botolph Building, 138 Houndsditch, London, EC3A 7AG. Company No. OC353198. www.lockton.com