UK Government proposals to strengthen the Modern Slavery Act

On 22 September 2020, the UK Government published its response to a 2019 consultation on potential options for strengthening section 54 of the Modern Slavery Act 2015 (the MSA), which requires certain commercial organisations to publish a slavery and human trafficking (SHT) statement on an annual basis.

Of most interest to businesses will be the Government’s commitment to amend section 54(5) of the MSA such that the matters to be addressed in an organisation’s SHT statement are mandatory. Also significant will be the introduction of a single reporting deadline (30 September) and a Government run reporting service.

A number of the proposed changes will align the MSA more closely with its Australian cousin, the Modern Slavery Act 2018 (the Australian Act), and are intended to facilitate scrutiny and comparison of SHT statements by civil society, investors and other stakeholders.

Mandatory information

At present, the MSA sets out six discretionary criteria which organisations are encouraged, but not required, to address in their SHT statements. Specifically, section 54(5) states that an SHT statement may include information about an organisation’s: (i) structure, business and supply chains; (ii) policies; (iii) due diligence processes, including with respect to its supply chain; (iv) SHT risks (specifically, the parts of the business and supply chain which give rise to a risk of SHT) and the steps taken to assess and manage that risk; (v) effectiveness in mitigating the risks of SHT occurring in the business or supply chain (by reference to appropriate performance indicators); and (vi) training.

The voluntary nature of the six reporting criteria has long been a source of some criticism. Annual benchmarking exercises carried out by NGOs regularly highlight how many organisations include little detail in their statements about key topics such as SHT risk assessments and programme monitoring.

In this context, the announcement by the Government that organisations will soon be obliged to address each of the above areas in their SHT statements is not a surprise.¹ The consultation responses heavily favoured such a change, and the introduction of mandatory reporting criteria also reflects a key recommendation arising from the Government-commissioned independent review of the MSA (which was led by three prominent UK parliamentarians and concluded in May 2019).

The public sector

The applicable criteria for those commercial organisations required to publish an SHT statement remain unchanged.² However, the Government’s response to the consultation confirms that it intends to amend the MSA so that public bodies with an annual budget of £36 million or more (not currently within the ambit of section 54) are also required to publish SHT statements. This reflects a growing commitment on the part of the UK Government to ensuring responsible practices in the supply chains of the UK public sector (which accounts for around £250 billion in annual spend).

Other key commitments

The Government has also committed in its response to implementing other changes in order to help stakeholders, in key areas: (i) monitoring compliance by businesses with the MSA; (ii) scrutinising how one commercial organisation’s SHT statement measures up to those of other organisations, including its competitors (e.g. for benchmarking purposes); and (iii) analysing how an organisation’s current statement compares to those published in previous years (assessing for year-on-year progress). Specifically:

1. Reporting deadline: All organisations will be required to report on the same twelve month period (1 April to 31 March), with a single reporting date of 30 September (six months after the end of that period).
2. Government reporting service: Organisations will be required to file their statements with a Government registry currently being developed by the Home Office (a procedural requirement which draws from the Australian Act).
3. Group statements: Section 54 will be amended to require that “group” statements name all entities in the corporate group covered by the statement.
4. Approval process: Finally, an organisation’s SHT statement will need to specify the date on which it was approved by the board (or equivalent) and the date it was signed by a director (or equivalent).

Enforcement

In addition to these concrete proposals, the Government’s response identifies areas for potential further reform. Of particular note is the issue of enforcement. The Government recognised that whilst consultation participants advocated strongly for greater enforcement of section 54, views on the nature and level of civil penalties were “mixed”. In view of this, the Government plans to consider potential options for enforcement in line with the development of a “Single Enforcement Body” for employment rights, and will provide a further update in due course.

With thanks to Fran Garvey, trainee, for her assistance with this article.