Human rights in the supply chain

Organisations operating internationally must ensure that they respect their employees’ human rights, wherever they operate. This includes regions or states in which this is not always common practice. Although the recommendations of the International Labour Organisation (ILO) on child labour, forced labour and the prevention of discrimination are not themselves legally binding, they must be observed as a minimum compliance standard.

Organisations which do business in the UK, even partly, and have an annual turnover of £36m or more, will be subject to a very far-reaching duty of disclosure as of the 2016 financial year. Article 54(4) of the Modern Slavery Act 2015 requires companies to produce a statement for every financial year of the steps they have taken to prevent slavery, human trafficking and exploitation in their own area of business or in the supply chain, or alternatively to state that no such steps were taken. Under this Act, organisations are not obliged to take active steps to prevent slavery and human trafficking in the supply chain but must declare that they took no steps in this respect. This statement must be approved by the board of directors, signed by a director (or equivalent) and, in accordance with Article 54(7) Modern Slavery Act, published on the organisation’s website with a link in a prominent place on the homepage.

The Home Office has published guidance on the interpretation of this obligation (see the PDF file here). The duty to make a statement under Article 54 Modern Slavery Act 2015 is similar to the compliance statement for the German Corporate Governance Code under Section 161 German Stock Corporations Act.

Organisations operating in the UK must adjust to this disclosure obligation early on. Those with their own branches or subsidiaries in the UK will have to ensure by way of suitable processes and procedures that the prohibitions of the Modern Slavery Act 2015 are taken into account when doing business.