Media Briefing Note: UK Modern Slavery and Supply Chain Reporting Takes Effect Today

Thursday, 29 October 2015 - From today, regulations under the Modern Slavery Act 2015 require businesses in the UK to disclose what steps they have taken to eliminate slavery and human trafficking in their business and global supply chains.

Companies will be affected if they carry on all or part of their business in the UK, supply goods or services, and have a turnover of at least £36 million. The government estimates that 12,000 organisations will be covered, including many which are based and mainly operate outside the UK. The first statements will be required for financial years ending on or after 31 March 2015.

Commenting on these developments, Louise Moore, partner at Hogan Lovells, said:

"All businesses operating in the UK will need to engage with the issue of modern slavery, not just those within high risk industry sectors. The Global Slavery Index estimates that 35.8 million people are victims of forced labour, human trafficking or debt bondage, more than at any other time in history.

"There is an increasing trend towards supply chain focussed regulation but this is more than a compliance matter. The reputational and commercial risks of supplying slavery-tainted goods and services are considerable and many companies are beginning to adopt practices that go beyond legal compliance.

"The new disclosure requirements provide an opportunity for businesses in the UK to understand their operations and supply chain more comprehensively, to engage with their direct and indirect workforce, and to demonstrate responsibility and leadership on modern slavery.

"Modern supply chains are complex and obtaining reliable and comprehensive information from direct and indirect suppliers will prove challenging. The transitional period provided by the government will be welcomed by business."

The UK is the first country in Europe to address slavery and human trafficking at a corporate disclosure level. Last week, the UK's Anti-Slavery Commissioner, Kevin Hyland released a strategic plan that prioritises engagement with the private sector to promote policies to ensure that supply chains are free from slavery and to encourage transparency reporting.

A slavery and human trafficking statement will need to be published on the company website for each financial year. The relatively low £36 million turnover threshold was confirmed in August, but the regulations require companies to include the turnover of all their subsidiaries when assessing whether the threshold is met, which will catch even more businesses.

The government is expected to release formal guidance today on the information which may be included in a statement and on what steps business can take to identify and address slavery and human trafficking risks in their supply chains.

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