The Modern Slavery Act 2015 (the Act) came into force on 31 July 2015: businesses now have legal duties to ensure that slavery and human trafficking are not taking place in their supply chain.

Section 54 of the Act came into force in October 2015 and introduced a new obligation on commercial organisations with a turnover above £36 million (the size of a large company for the purposes of the Companies Act) to report what they are doing to combat slavery and human trafficking and achieve "supply chain transparency". Given the relatively high level of migrant workers employed on sites throughout the UK, what does the Act mean for construction businesses?

The new duty applies to all businesses that carry on any part of their business in the UK and that "supply goods or services" (essentially all trading companies and partnerships). Foreign companies may be caught by this as well as UK-incorporated entities.

Under Section 54, companies or partnerships in the UK must publish an annual statement for the financial years ending on or after 31 March 2016 that either: (1) details the steps taken by their organisation to ensure that slavery and human trafficking are not taking place in any part of their business or supply chain; or (2) explains that no such action was taken.

Compliance with the Act will be challenging especially for international companies and those with complex supply chains. A proactive approach to this issue now to allow companies to stay ahead of the regulatory requirements is highly recommended. From a risk perspective, whether legal, operational or reputational, a failure to act could be costly.

To find out more, please read our recent briefings "Supply chain transparency – new legal duties now in place".

Employers contracting with large contractors should remember to include a term in their contracts to oblige the contractors to comply with the Act. For more information on making suitable amendments, contact Jane Miles.

For guidance on the implications of the Act on construction businesses, contact Helen Bowdren.

Other recommended reading

• The government guide "Transparency in supply chains: a practical guide".
• The Chartered Institute of Building's report on "Modern Slavery: the Dark Side of Construction".