The Modern Slavery Act: what does it mean for SMEs?

This year saw the introduction of a major piece of legislation designed to clamp down on the use of forced labour in the manufacture of many items that we take for granted and use on a daily basis.

Under Section 54 (2) (b) of the Modern Slavery Act 2015 and the Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015, companies who supply goods and services and who have a turnover of £36 million or more must publish an annual statement on the measures being taken to eliminate modern slavery in their organisation and their supply chains.

Despite the apparently high turnover limit, many SMEs will find that they too are affected by these requirements. This is because as part of the supply chain for companies who are covered, they are required to provide assurances that they do not make use of slave or forced labour.

The assurances are often required for tender invitations, new contracts and contract renewals. SMEs must be able to point to relevant policies and procedures if they want to continue doing business with these larger companies. They risk losing business if they are unable to do so.

Whilst it is not envisaged that SMEs who fall outside the turnover limit will have to follow the formal steps required of larger organisations, a reporting system similar to those used by companies covered by the Act would make sense inasmuch as it would provide very good evidence of compliance with the Act in the event that enquiries are made.

What should businesses do to prepare?

It is a good idea to follow some or all of the following guidance, since it is good advice regardless of the size of the organisation:

• Be able to provide information regarding the steps that are currently taken to ensure that human trafficking and slavery do not take place in organisations and business further down the supply chain.

• Carry out a risk assessment to identify areas where action is needed.

• Update (or draft and publish) Corporate and Social Responsibility policies so that the issue of slavery and human trafficking is included.

• Embed provisions on slavery or human trafficking into company whistleblowing policies.

• Review commercial agreement templates to ensure that they include a requirement on Modern Slavery Act compliance.

• Prepare a policy on slavery and trafficking, with all members of the management team signing it. This will serve as a notice to partner organisations that the company is serious and sincere about its position on modern slavery.

• Set up a training programme in order to ensure that every member of the organisation is familiar with what the policy requires of them.