If you’re a compliance practitioner seeking to design an anti-corruption program consistent with all laws that apply to your company, you probably recognize the phrase “carries on a business, or part of a business, in any part of the United Kingdom.”
That phrase comes from the U.K. Bribery Act 2010 and has probably caused you to spend some time thinking about the UKBA’s jurisdictional scope and its potential application to your company. Depending on the extent of your company’s connections with the United Kingdom, you may have also updated your anti-corruption compliance program to ensure its consistency with the UKBA.
You may not have recognized, however, that starting this month, this jurisdictional language may have implications for another part of your company’s compliance program — human rights.
The U.K. Modern Slavery Act 2015 was passed into law of March 26, 2015, and will go into full effect in October 2015.
The Modern Slavery Act is intended to prevent labor exploitation, including human trafficking, forced and bonded labor, child labor, etc., and increase visibility into supply chains of qualifying companies.
In addition to establishing substantive prohibitions on modern slavery, it includes Transparency in Supply Chains provisions — Section 54 of the Modern Slavery Act — which apply to any commercial organization (such as a corporation or partnership) that supplies goods or services, carries on a business or part of a business in the United Kingdom, and has an annual turnover above £36 million.
Every annual financial cycle, each commercial organization meeting those criteria must publish a statement on its website with either:
1) details on the steps the company has taken during the financial year to ensure that slavery and human trafficking is not taking place in its business or supply chains, or
2) a statement that no such steps have been taken.
For corporations, the statement must be approved by the entity’s board of directors, and signed by a director. Where a commercial organization does not have a website, it must provide the statement within 30 days to anyone who makes a written request. If a company fails to comply with the requirement, the U.K. Secretary of State can bring civil proceedings for an injunction.
Providing guidance on circumstances and steps that companies should consider in seeking to address slavery and human trafficking risks, the Modern Slavery Act notes that such statements may include information about the company’s:
- structure, business and supply chains
- policies on slavery and human trafficking
- due diligence processes in relation to slavery and human trafficking in its business and supply chains
- business and supply chain where there is a risk of slavery and human trafficking, and the steps it has taken to assess and manage that risk
- effectiveness in ensuring that slavery and human trafficking is not taking place, measured against KPIs, and
- training about slavery and human trafficking available to its staff.
With jurisdictional language that mirrors Section 7 of the U.K. Bribery Act 2010 (Failure of a Commercial Organization to Prevent Bribery), the Modern Slavery Act could have similar application to multinational, non-U.K. companies that have connections to the United Kingdom.
While no official guidance has yet been published to help understand the Modern Slavery Act’s jurisdictional scope, the Ministry of Justice’s Guidance for the UKBA may be instructive. (For background on UKBA jurisdiction, please see Miller Chevalier’s article interpreting the Guidance). Companies that have already determined that they may be subject to the UKBA should consider whether they could be subject to the Modern Slavery Act’s reporting requirements, and if so, take steps to comply with them.
In doing so, companies seeking to make the best uses of existing resources should consider ways to leverage their anti-corruption processes to address modern slavery and other human rights risks, particularly in conducting training, due diligence reviews of potential business partners, and risk assessments.
In addition, companies may be able to draw on efforts already being made to comply with other laws that have emerged to address slavery and human trafficking risks, i.e. the California Transparency in Supply Chain Act and the Federal Acquisition Regulation on Ending Trafficking in Persons. Such approaches may enable companies to more effectively accomplish human rights compliance goals and prevent violations and reputational harm in this area of increasing regulation.
Nathan Lankford is Counsel at Washington, DC’s Miller & Chevalier. He focuses on matters involving the FCPA, business and human rights and other areas of international corporate compliance. He’s a founding member of Miller & Chevalier’s business and human rights practice group.
Alice Hsieh is an associate in Miller & Chevalier’s international department. Her practice focuses on corporate anti-bribery compliance. She performs risk assessments, assists in investigations and provides advice on training and compliance program implementation, as well as other related risk mitigation advice.
Maryna Kavaleuskaya is a law clerk in Miller & Chevalier’s international department. She focuses on Foreign Corrupt Practices Act-related matters, business and human rights, global anti-corruption training programs and rule of law issues.