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Local authorities and the Modern Slavery Act 2015

Tick iStock 000013381987XSmall 146x219Is your authority compliant with the Modern Slavery Act 2015? Raj Shah outlines what you need to know.

Public bodies (including local authorities) in England and Wales may be caught by the requirement under the Modern Slavery Act 2015 to publish a slavery and human trafficking statement. Any doubts as to whether they are subject to this requirement will be dispelled if – as seems likely – a newly proposed Bill becomes law.

Requirement to publish slavery and human trafficking statements

‘Modern slavery’ refers to slavery, servitude, human trafficking, and forced or compulsory labour. The National Crime Agency highlighted this month that this is far more prevalent in the UK than previously thought, with tens of thousands of potential victims.

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The Modern Slavery Act 2015 (the “Act”) requires “commercial organisations” to disclose the steps they have taken to ensure human trafficking and slavery does not occur within them or their supply chains. Under section 54 of the Act, such commercial organisations must publish a statement (a “Section 54 Statement”) for each financial year ending on or after 31 March 2016.

A Section 54 Statement must detail the steps an organisation caught by the Act has taken during the previous financial year to ensure that no slavery or human trafficking is taking place in any part of its business or in any of its supply chains (or a declaration that no such steps have been taken). The Act requires a relevant organisation to publish its Section 54 Statement on its website and to include a prominent link to the Section 54 Statement from the homepage (and if it doesn’t have a website, the organisation must provide it on request within 30 days).

Does this affect local government authorities?

Although the term “commercial organisation” doesn’t immediately sound like it would apply to public sector bodies, a reading of the Act in conjunction with the Home Office’s guidance on the legislation suggests otherwise. Under the Act and regulations made under it, relevant commercial organisations are defined as bodies corporate or partnerships that supply any goods or services in the UK and whose annual global aggregate turnover (including that of any subsidiaries but after the deduction of VAT, trade discounts, and any other taxes based on the amounts derived) exceeds £36m.

Do local government authorities in England and Wales fall within this definition? This has been the subject of some debate, and steps are already being taken to clarify this ambiguity. On 12 July 2017, the first reading took place in the House of Lords of the Modern Slavery (Transparency in Supply Chains) Bill 2017 (the “Bill”), which adds the words “or public authority” after the reference to commercial organisations in section 54 of the Act.

Even without the Bill’s proposed amendment, it is difficult to argue that local authorities are exempt from the requirements of section 54 if their turnover exceeds the £36m threshold. Local authorities are bodies corporate insofar as they are established under statute (such as the Local Government Act 1972 and the London Government Act 1963) or by Royal Charter. They are also likely to supply some services themselves (as opposed to through contractors). This means, if a local authority’s annual global turnover exceeds £36m (taking into account the turnover of subsidiary companies that it may wholly own), then they already appear to fulfil the definition of “commercial organisations”, regardless of the status of the Bill’s clarification. It is worth noting too that the Act does not stipulate any express exemption for public bodies or local authorities, and the Home Office’s published guidance on the Act states that the requirements of section 54 will apply irrespective of whether the organisation pursues “primarily charitable purposes, educational aims, or purely public functions”.

If your local authority does not already have a Section 54 Statement on its website, therefore, it is at risk of contravening the Modern Slavery Act 2015 if its annual aggregate turnover exceeds £36m. In any event, publishing a Section 54 Statement is certainly best practice for any public authority, and the progress of the Bill means that it is likely that this will soon become an unambiguous statutory obligation.

When must a Section 54 Statement be published?

A Section 54 Statement must cover the prior financial year and must be refreshed annually. The Home Office’s guidance on the Act states that Section 54 Statements ought to be published no later than six months following the end of the relevant financial year. If your organisation is caught by the requirements of section 54 and has not published a Section 54 Statement for the financial year ending 31 March 2017, you should ensure therefore ensure that this is done as soon as possible and no later than September 2017. It is worth remembering that you will need to factor in time for the Section 54 Statement to be signed off by the appropriate senior-level officers (for example, the Chief Executive and the Leader of your local government authority following Cabinet approval).

Raj Shah is a solicitor at Sharpe Pritchard LLP. He can be contacted on 020 7405 4600 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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