Certain commercial organisations must publish an annual statement setting out the steps they take to prevent modern slavery in their business and their supply chains. This is a requirement under Section 54 (Transparency in Supply Chains) of the Modern Slavery Act 2015.
Who needs to publish a statement?
A commercial organisation is required to publish an annual statement if all the criteria below apply:
- it is a body corporate or a partnership, wherever incorporated or formed
- it carries on a business, or part of a business, in the UK
- it supplies goods or services
- it has an annual turnover of 36 million or more
Organisations are responsible for determining whether the legislation applies to them. You may wish to seek legal advice to decide if your organisation needs to produce an annual statement.
Total turnover means the turnover of the organisation and any of its subsidiary undertakings (including those operating wholly outside the UK). Turnover means the amount received from the provision of goods and services falling within the ordinary activities of the organisation or its subsidiary undertakings, after the deduction of:
- trade discounts
- value added tax
- any other taxes
Overseas organisations trading in the UK or UK organisations trading overseas
If your organisation has a demonstrable business presence in the UK and you meet the other criteria, you should publish an annual statement. To help you determine if you need to do this, consider whether the following applies to your organisation this is not an exhaustive list:
- it is registered at UK Companies House
- it has UK offices
- it provides service or support functions in the UK
- it receives income in the UK
- it has other visible UK business presence, for example a website
Groups of companies
Some large corporate groups may have more than one subsidiary organisation which meets the criteria for publishing an annual statement.
Subsidiary organisations can choose to publish separate statements, reflecting the different nature of their businesses, or the group can publish one statement covering all the organisations that meet the criteria.
If a group chooses to publish one statement, it:
- must cover the steps taken to prevent modern slavery in all the organisations within that group that meet the criteria, and their supply chains
- should clearly name the parent and subsidiary organisations it is covering
- should be published on the UK websites of all the organisations covered by the statement
Some holding companies may not meet the criteria for publishing a statement, for example, because they do not provide goods or services. However, any organisations within the holding companys corporate structure that do meet the criteria must publish a statement or be covered by a group statement.
Charities must publish an annual statement if they meet the criteria. When deciding whether a charity meets the turnover criteria, you should include income received from business activities, such as the provision of goods and services for a fee.
Donations, legacies and grants, where the donor receives no service or benefit, are generally not considered to be derived from business activities so do not need to be included when deciding whether a charity meets the 36 million turnover threshold.
Occasionally, grant income might be seen to be derived from business activities. Charities should think about whether the grant giver will receive benefit in return for the grant or whether there are any specific conditions as to what the charity can use the grant for.
Investment trusts must publish an annual statement if they meet the criteria. When deciding whether an investment trust meets the turnover criteria, you do not need to include investment income from dividends and shares. You should include turnover derived from goods and services, for example, fund management services.
If an organisation is in, or entering administration, it must still consider whether it meets the criteria for the financial year in question. It will generally not need to publish an annual statement if it is no longer trading.
If the organisation is trading while in administration, and it meets the other criteria, for example its income from the provision of goods and services meets the turnover criteria, it is required to publish a statement.
If a franchiser meets the criteria it is required to publish an annual statement. It is the turnover of the franchiser which determines if it needs to publish an annual statement. The turnover of the franchisee should not be used to calculate the franchisers turnover.
However, where the turnover of a franchisee is above the 36 million threshold, it must publish a separate statement.
Demonstrate compliance with the minimum legal requirements
To meet and demonstrate you have met the minimum legal requirements:
Update your modern slavery statement every year
Each year, assess whether your organisation meets the criteria for the preceding financial year. If so, publish a modern slavery statement. The Home Office statutory guidance states that you should do this within 6 months of your organisations financial year-end. You should also include the date your financial year ended.
Publish your modern slavery statement on your UK website
Place the link on a prominent place on your homepage. It is good practice to keep previous statements on your website so that your progress can be monitored. If you do not have a website, you must provide a copy of the statement in writing to anyone who requests one within 30 days.
Get approval from the board of directors (or equivalent management body)
To demonstrate that you have met this legal requirement, your statement should clearly state that board approval has been given with the date of approval.
Where the organisation is a limited liability partnership (LLP) the statement must be approved by the members. Your statement should clearly state that members approval has been given with the date of approval.
Get sign off from a director (or equivalent) or designated member (for LLPs)
Include their name, job title and the date. You do not need to include a physical signature but you should still clearly state that it has been signed.
For a limited partnership, registered under the Limited Partnerships Act 1907, a general partner must sign it. For a limited liability partnership, a designated member must sign it. If the organisation is any other kind of partnership, a partner must sign it.
What to include in a modern slavery statement
Organisations are not expected to guarantee that all their supply chains are slavery free. However, statements must describe the main actions your organisation has taken during the financial year to deal with modern slavery risks in your supply chains and your own business.
If your organisation has taken no steps to deal with modern slavery risks, you must still publish a statement stating this to be the case.
The Home Offices statutory guidance recommends that you cover the following 6 areas in your statement:
- Organisation structure and supply chains
- Policies in relation to slavery and human trafficking
- Due diligence processes
- Risk assessment and management
- Key performance indicators to measure effectiveness of steps being taken
- Training on modern slavery and trafficking
More information about these areas is available in the statutory guidance.
The detail and quality of information you include under each of the 6 areas should improve in successive annual statements. Use your statement to show how you are:
- acting transparently and disclosing information about any modern slavery risks you have identified and what actions you have taken in response to them
- targeting your actions where they can have the most impact by prioritising your risks
- making year-on-year progress to address those risks and improve outcomes for workers in your business and supply chains