The Modern Slavery Act update: reporting obligations come into force

Written on 31 Mar 2016

From 31 March 2016, medium and large businesses operating in the UK will need to start publishing Transparency in Supply Chain (TISC) statements, setting out the steps they have taken to ensure that there is no slavery or forced working within their supply chains.

Does the Modern Slavery Act apply to your organisation?

The Modern Slavery Act 2015 (MSA) applies to all commercial organisations that carry on a business in the UK, supply goods or services and have a total worldwide annual turnover of £36m or more. This includes non-UK organisations that carry on business in the UK and can apply to multiple group companies (although it is possible to produce a consolidated group TISC statement).

For more guidance on how to determine whether your business is affected by the MSA, and what a TISC statement should contain, see our previous article here.

When do you need to publish your first TISC statement?

The MSA came into force on 1 October 2015, but under transitional provisions, the requirement to publish a TISC statement applies to all financial years starting on or after 31 March 2016.

The MSA does not specify a deadline for when the TISC statement needs to be published, but the government has suggested that it expects TISC statements to be published within six months of the end of the financial year to which they relate. This means that we will start seeing the first TISC statements being published in the next few months.

Since TISC statements report retrospectively on the action which an organisation took during the relevant financial year, those actions and compliance programmes should already be underway.

What happens if you have not published a TISC statement?

The MSA does not set out prescriptively what a TISC statement needs to contain, although it does suggest a number of elements that organisations may want to include. If an organisation has not taken any steps to ensure the absence of slavery in its supply chains, it can simply publish a statement to that effect.

If an organisation that is required to produce a TISC statement, fails to do so, the Secretary of State has the power to compel it to publish a statement. We do not expect this power to be widely used, at least during the first year that the MSA is in force. However, the real risk for organisations that fail to publish a TISC statement (or publish a statement that falls far short of the government’s guidelines) is reputational damage.

The MSA requires TISC statements to be signed by a director, be approved by the board and to have a link to them displayed on a prominent place on an organisation’s website. With the first TISC statements being due for many organisations in the coming months, now is the time to ensure that appropriate steps are being taken that can be reported on, as part of an integrated approach to compliance and risk management.