The Modern Slavery Act 2015 is new legislation introduced in the UK with the intention of combatting slavery and human trafficking.  Continuing the trend for legislation to have extra-territorial reach, as illustrated by the UK Bribery Act, it can apply to entities based outside of the UK.

Of particular importance to businesses is Section 54. This contains a requirement for certain businesses to state annually and publicly the steps they have taken to ensure that their business and supply chains are free from human trafficking and slavery (a “Section 54 Statement“).

Who is required to issue a Section 54 Statement?

Section 54 applies to entities that meet each of the following conditions:

  • They are a commercial organisation (irrespective of where incorporated such that both UK and non-UK entities are covered by the legislation);
  • They supply goods or services;
  • They have a turnover (globally and not just in the UK) of £36 million per year; and
  • They carry on a business or part of their business in the UK.

As to carrying on a business or part of a business in the UK the relevant Home Office guidance (the UK government department responsible for the legislation) states that the relevant test is whether or not the business in question has a “demonstrable business presence” in the UK. There are nuances in relation to whether the obligation applies to a parent and/or various subsidiaries and whether individual subsidiaries would need to issue their own Section 54 Statement. However, generally where a parent and certain of its subsidiaries are required to make a Section 54 Statement, the parent may produce one statement that its subsidiaries can use. This would need to cover the steps taken in the relevant financial year by the parent and each organisation relying upon the Section 54 Statement.

When must a business make its first Section 54 Statement?

The deadline for making a first Section 54 Statement is within six months of the first fiscal year that falls after 31 March 2016 of a relevant entity. So for example, if the relevant entity has a fiscal year ending on 31 December, the first Section 54 Statement must be published by 30 June 2017.

The content of a Section 54 Statement

The Home Office guidance recommends that a Section 54 Statement should be:

  • Written in simple language to ensure that it is easily accessible to everyone; and
  • Succinct but cover all the relevant points and link to relevant publications, documents or policies.

As to the contents, it must state:

  • The steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business; or
  • That the organisation has taken no such steps.

The requirement to “ensure that slavery and human trafficking is not taking part in any part of its supply chain” does not mean that the organisation must guarantee that the entire supply chain is slavery free, but the organisation should set out in the statement all the actions it has taken to ensure its supply chain and its business is free from slavery.

There is no prescribed form or length requirements for a Section 54 Statement, but guidance suggest that it could include information about the following:

  • The organisation’s structure, 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; and
  • The training about slavery and human trafficking available to its staff.

Approval of a Section 54 Statement

The Board of Directors of the relevant entity must approve the Section 54 Statement and it must be signed by a director.

Publication of a Section 54 Statement

A Section 54 Statement must be published on the website most appropriate for its UK business and include a link to it on a “prominent” place on the homepage of that website.

A prominent place may mean a link that is directly visible on the home page or part of an obvious drop-down menu on the home page. The link should be clearly marked so that the contents are apparent (for example, the Home Office guidance suggests that the link could say “Modern Slavery Act Transparency Statement“).

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Photo of Robert Cleary Robert Cleary

Bob Cleary is the immediate past co-chair of Proskauer’s Litigation Department, a former member of the Firm’s Executive Committee and co-chair of the White Collar Defense & Investigations Group. He joined the Firm in June 2002 after a lengthy career as a federal…

Bob Cleary is the immediate past co-chair of Proskauer’s Litigation Department, a former member of the Firm’s Executive Committee and co-chair of the White Collar Defense & Investigations Group. He joined the Firm in June 2002 after a lengthy career as a federal prosecutor, including service as the U.S. Attorney both in New Jersey and in Southern Illinois.

He has repeatedly been recognized in various publications as a leading practitioner, including The Legal 500 United States, in which clients describe him as “cool, calm and collected” and a “master strategist.” The American College of Trial Lawyers recognized his trial expertise by inducting him as a Fellow in 2014.

Bob concentrates on white collar criminal defense, SEC and related enforcement matters, securities litigation, complex civil litigation, tax controversies and internal investigations. He has extensive experience in international criminal matters, including money laundering investigations and foreign extradition proceedings.

He has been retained in many high-profile corporate scandals of the past several years including, among others:

  • The multi-billion dollar Petrobras scandal in Brazil, one of the two largest corruption investigations in the world
  • The 1MDB international money laundering investigation
  • A sweeping, multi-year federal criminal investigation into a multi-billion dollar investment portfolio for a leading global financial institution
  • Numerous civil lawsuits and government investigations relating to the demise of Lehman Brothers
  • Criminal investigations relating to allegations of manipulation and collusion in the LIBOR market
  • Criminal investigations relating to allegations of manipulation and collusion in the foreign exchange and precious metals markets
  • Air cargo criminal antitrust investigation and prosecutions
  • Auto parts criminal antitrust investigation and prosecutions
  • One of the largest Foreign Corrupt Practices Act cases ever indicted
  • Tyco criminal investigation and SEC enforcement action
  • New York Attorney General’s criminal and civil investigation of investment bank trading practices
  • Mutual fund investigations and enforcement actions
  • Insurance industry investigations and enforcement actions
  • Stock options backdating investigations and enforcement actions

Bob has 30 years of courtroom experience as a trial lawyer and appellate advocate. He recently served as lead trial counsel in what is believed to be the longest criminal antitrust trial in New York State history, representing the alleged architect of the charged antitrust and fraud scheme. After an almost year-long trial, Bob achieved complete vindication for the client by securing acquittals and dismissals on 36 of 37 felony charges, and got the lone count of conviction dismissed post trial.

In his capacity as U.S. Attorney in the District of New Jersey and the Southern District of Illinois from 1999 to 2002, Bob was the chief federal law enforcement officer in those districts, responsible for all federal prosecutions and lawsuits filed against the federal government. Prior to his appointment as U.S. Attorney, he was the lead prosecutor in the Unabomber case, United States v. Theodore J. Kaczynski. Bob and his team of six prosecutors and over 100 federal agents successfully prosecuted Kaczynski for a string of bombings that Kaczynski perpetrated from 1978 until 1995. Kaczynski currently is serving a life sentence.

Bob began his prosecutorial career as a trial attorney for the Tax Division of the U.S. Department of Justice. While with the Tax Division, he tried numerous tax fraud cases to verdict in various jurisdictions throughout the country.

From 1987 to 1994, Bob served as an Assistant U.S. Attorney in the Southern District of New York, ultimately becoming the Chief of the Major Crimes Unit. During his tenure in the Southern District, he successfully prosecuted through trial and appeal many complicated white collar criminal cases involving, among other things, tax fraud, securities fraud and bank fraud.

From 1994 until his appointment as the Unabomber prosecutor in 1996, Bob was the First Assistant U.S. Attorney in the District of New Jersey, responsible for running the day-to-day operations of that 120-lawyer federal prosecutor’s office.

The White House and the Department of Justice have consulted with Bob on homeland security and USA Patriot Act Issues on numerous occasions since he left government service.