Following a recent Home Office consultation on one of the provisions contained in the Act, it has been announced that all companies with turnovers of £36 million or more will be required to publish an annual slavery and human trafficking statement. The statement should contain details of any steps these businesses have taken to ensure that their supply chains are free of slavery and human trafficking or simply a confirmation that they have taken no such steps. As a consequence, we are expecting larger businesses to show much more interest in the labour arrangements in place further down their supply chains. While parts of the new legislation come into force today (31 July), the requirement to publish an annual slavery and human trafficking statement is not expected to apply until October 2015.
The Home Office consultation sought input on the following two points: (i) the level of the turnover threshold at which companies would be required to produce a statement; and (ii) the contents of the guidelines which will accompany that provision. This week it announced its decision that businesses with turnover thresholds of £36 million or more will be caught by the requirement to produce a statement. This is the lowest of the thresholds proposed in the consultation document (these ranged from £36 million up to £1 billion) and is estimated by the Home Office to catch around 12,250 UK businesses. The requirement will apply globally to companies carrying out any part of their business in the UK.
In its decision statement, the Government outlined its reasons for selecting this particular threshold. One of the reasons identified is that £36 million is already the threshold for determining the size of a ‘large’ business in the Companies Act 2006. In addition, a £36 million threshold will ensure that small and medium sized businesses (which do not have the same resources as larger businesses) are not caught by the requirement. It was also felt that a lower threshold will ensure real change is made to reduce and eliminate slavery from supply chains.
The NFU responded to the Home office consultation in early May, confirming our support for the introduction of measures to reduce slavery and human trafficking in the UK. However, we highlighted our concern that large businesses caught by the turnover threshold may seek to push the costs associated with auditing their supply chains downwards and on to smaller businesses and primary producers. We further raised concerns that growers and farmers supplying a number of large retailers may need to undertake multiple due diligence processes, which could result in additional administrative and financial burdens.As set out in our response, labour use in agriculture is already regulated by the GLA and we are worried that this new measure will result in the overregulation of small agricultural and horticultural businesses in a way which is disproportionate to the risks they present.