On October 29, 2015, the UK Government issued Guidance on the requirements of the Modern Slavery Act. The UK Modern Slavery Act requires many commercial organizations doing business in the UK to post a slavery and human trafficking statement on their homepages. It is now clear that those businesses (especially those with year-ends on or after March 31, 2016) need to turn their attention to slavery and human trafficking compliance right away.
The first question that most entities are asking is when the statements must be posted. Answer:
- for a business with a year-end on or after March 31, 2016, its initial statement will cover its actions in the 2015-16 financial year (that is, this current year), and it will be among the first businesses to have to post statements.
- for a business with a year-end on or before March 30, 2016, its initial statement will cover its actions in the 2016-17 financial year, and it will be able to delay posting its statement.
So, depending on your year-end date, you may have much more time before a statement must be posted. For example, a business with a financial year-end of December 31, 2015 will cover the financial year ending December 31, 2016 in its first statement (posting no later than June 30, 2017).
However, a business with a financial year-end of April 30, 2016 will have to post its first statement covering the 2015-16 financial year (posting no later than October 31, 2016).
But, don’t be lulled by the October 2016 posting date. Businesses with a financial year-end on or after March 31, 2016 actually have very little time to prepare their statement — and less time to develop, initiate, or enhance their human trafficking-related supply chain activities if they choose to do so during this current financial year. Those already working on supply chain transparency know the time and effort required to set policy, engage with suppliers, provide training, and prepare responses to customers. And developing remedial action plans may take even longer.
And, the businesses that have the early posting requirements must be aware that their statements will be posted (and therefore will be publicly available, reviewed, reported, scored and discussed) many months before other businesses’ statements are due. Businesses with a year-end date before March 31, 2016 have a great advantage under this Guidance because they will be able to learn valuable lessons from the experience of the early filers.
Unlike other supply chain disclosures, the UK Modern Slavery Act does not set a date certain for when the statement must be posted each year. But, the Guidance indicates that businesses are expected to publish their statements “as soon as reasonably practicable” after the end of the financial year and in all cases no more than six months after the year end.
In addition, the UK Government has also published a practical guide for affected businesses including “guidance” on what should be included in a slavery and human trafficking statement. It is similar to, though much less detailed than, the California Resource Guide published in connection with the California Transparency in Supply Chains Act (which was a model for the UK Modern Slavery Act).
We have published an updated briefing note summarizing the steps that businesses should be taking now to prepare for this new obligation. Keep in mind that the UK Modern Slavery Act is much more comprehensive than the California Act and expects transparency throughout the supply chain (not merely with direct suppliers). And, it covers products and services. Your supply chain transparency requirements may now be much broader.