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4th April 2017

Modern Slavery Act: Transparency in Supply Chains

The Modern Slavery Act 2015 includes a clause on Transparency in Supply Chains which requires organisations to set out what they are doing to tackle modern slavery in their supply chains and organisations.

Public sector procurement plays a key role in ensuring that businesses understand what is expected of them and comply with the legislation. Michael Curtis, Regional Category Specialist at NEPO, describes the role of procurement in achieving compliance and offers practical advice for suppliers.

What is “Modern Slavery” and how does it affect the tendering process?

Modern slavery is a crime resulting in an abhorrent abuse of human rights. It is constituted in the Modern Slavery Act 2015 by the offences of ‘slavery, servitude and forced or compulsory labour’ and ‘human trafficking’.

The Modern Slavery Act contains a clause on Transparency in Supply Chains which addresses the role of businesses in preventing modern slavery from occurring in their supply chains and organisations.

NEPO and its Member Authorities have a responsibility for ensuring that we use supply chains that are ethical and that demonstrate good employment practices. We have therefore developed our procurement processes to ensure that suppliers are aware of, and actively monitor and review, their responsibilities around eradicating modern slavery.

How is the Modern Slavery Act reflected in the tendering process?

The following questions are included in NEPO’s Selection Questionnaire (SQ). The SQ is used to ensure that bidders have the necessary resources and experience to deliver the goods or services that are being procured:

  • Are you a relevant commercial organisation as defined by section 54 ("Transparency in supply chains etc.") of the Modern Slavery Act 2015 ("the Act")?
  • If you have answered “yes”, are you compliant with the annual reporting requirements contained within section 54 of the Act 2015?

They are pass/fail questions, meaning that “relevant commercial organisations” must be compliant in order to proceed through the tendering process.

What are suppliers expected to do?

It is helpful to revisit the questions asked in NEPO’s Selection Questionnaire and describe what is required at each step:

Are you a relevant commercial organisation as defined by section 54 ("Transparency in supply chains etc.") of the Modern Slavery Act 2015 ("the Act")?

  • If your organisation has a turnover of over £36 million or more then you must answer “Yes” to this question.
  • If your organisation’s turnover is lower then you can answer “No” and there is no further action required in terms of compliance with the Modern Slavery Act.

If you have answered “yes”, are you compliant with the annual reporting requirements contained within Section 54 of the Act 2015?

  • All organisations with turnover over £36 million or more must prepare and publish a slavery and human trafficking statement each financial year. The slavery and human trafficking statement should set out what steps have been taken to ensure modern slavery is not taking place in their business or supply chains.
  • The statement must be approved by an appropriate senior person within the organisation and published prominently on the organisation’s website (or available on request if the organisation does not have a website).

NEPO encourages suppliers to be proactive in ensuring that they are compliant with the act. Not only is this good practice in terms of ethical conduct, preparation will ensure that you are bid-ready across NEPO and the wider public sector.

How do I write a slavery and human trafficking statement?

The Modern Slavery Act 2015 does not dictate in precise detail what a statement must include or how it should be structured. It does, however, provide a non-exhaustive list of information that may be included.

A statement may include information about:

  • the organisation’s structure, its business and its supply chains
  • its policies in relation to slavery and human trafficking
  • its due diligence processes in relation to slavery and human trafficking in its business and supply chains
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate
  • the training and capacity building about slavery and human trafficking available to its staff.

What are the consequences of not complying?

As compliance is a pass/fail requirement, NEPO would remove any organisations failing to comply with the legislation from the competitive process. However we recognise that we have a role to play in educating and developing our supply base on procurement-related legislation and in promoting best practice, therefore our first steps would always be to work with organisations to achieve compliance.

There are of course wider implications to non-compliance including risk of High Court injunctions and unlimited fines.

Whilst the primary motivation for compliance is that it will help to prevent and remedy human rights violations; there are some additional business benefits in terms of enhancing an organisation’s reputation, instilling investor confidence and developing more stable supply chains.

Is there further help and guidance available?

You can read the exact requirements of the Modern Slavery Act 2015 at http://www.legislation.gov.uk/ukpga/2015/30/section/54/enacted

The Home Office has produced a practical guide to help suppliers, this includes guidance on how to produce a slavery and human trafficking statement https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide

Please note that while the above information is intended to provide guidance to suppliers, it is up to each supplier to identify their own responsibilities and responses to the legislation.