Modern Slavery Act: House of Lords Select Committee recommends that UK adopts supply chain due diligence requirements and import bans

On 16 October 2024, the UK House of Lords Select Committee (Select Committee) published its report on the review of the UK Modern Slavery Act 2015 (MSA). It found that the UK has “fallen behind” on international due diligence developments and recommends that the UK adopts modern slavery due diligence legislation, as well as forced labour import bans, in part recognising that many UK companies are already subject to such requirements in other jurisdictions.

While the Select Committee focused solely on the issue of modern slavery, the adoption of such legislation would bring the UK into closer alignment with the new wave of mandatory human rights due diligence legislation, including the long-awaited EU Corporate Sustainability Due Diligence Directive (CS3D), which became law in July 2024 and will apply to in-scope companies from 2027, as well as US and (forthcoming) EU trade restrictions prohibiting the importation of goods on the grounds of suspected forced labour in the supply chain.

Background

Amongst other things, the MSA requires certain commercial organisations carrying on a part of their business in the UK to publish an anti-slavery and human-trafficking statement on an annual basis, describing the measures they have put in place to address the risk of modern slavery occurring in their business or supply chains. At that point, it was considered to be ground-breaking, with only California having passed broadly similar legislation in the form of the Transparency in Supply Chains Act 2010.

Following an independent review of the MSA led by a group of UK parliamentarians commissioned by the government which concluded in May 2019, the UK government published a set of commitments for reforming the MSA in September 2020. These included strengthening the disclosure requirements for commercial organisations under section 54 of the MSA through the introduction of mandatory reporting topics, as well as fines for non-compliance. However, these proposals were subject to legislative timetabling and have not been implemented to date.

On 24 February 2024, the Select Committee was appointed to review the “impact and effectiveness” of the MSA. A core component of review was to assess whether the MSA has “kept up to date” with global developments, noting more onerous human rights reporting and due diligence laws have emerged in other jurisdictions including Australia, Canada, Germany, France, Switzerland, Norway and the EU.

Key Recommendations

Due diligence requirements

A key conclusion of the Select Committee’s report is that “the developments internationally on due diligence indicate that the UK has fallen behind.” The report notably refers to the German Supply Chains Act, the French Duty of Vigilance Law, the Norway Transparency Act and the forthcoming EU CS3D (see our previous article on these legislative developments here). There is an acknowledgement that many UK-based multinational companies or specific entities in their corporate groups would already be subject to one or more these human rights due diligence laws in other countries, and the report contains several references to the lack of a “level playing field”:

As many UK companies operate internationally, they will find themselves obligated to meet the due diligence requirements of other nations.

It therefore recommends that:

The Government should make UK due diligence law compatible with the standards of the international landscape to make compliance easier for companies.

This appears to recognise that many multi-national companies are responding to human rights due diligence and reporting laws globally by developing group-wide human rights due diligence programme which can be tailored to ensure compliance with specific requirements in relevant jurisdictions. Based on these findings, the report recommends that: “The Government should introduce legislation requiring companies… to undertake modern slavery due diligence in their supply chains and to take reasonable steps to address problems.”

The report also stated that “[t]here are many options for enforcing the supply chain requirements of the [MSA]” and recommended that: “The Government should introduce proportionate sanctions for organisations that do not comply with supply chain requirements.”

Forced labour import bans

In addition, the report also recommends the introduction of forced labour related import bans in the UK:

The Government should consider introducing import laws which ban goods being brought into the UK if they are produced by certain companies known to use forced labour.

However, noting that “country-specific bans have significant foreign policy implications”, the report adds that “[t]hese import laws should not be targeted at particular countries.”

Forced labour import bans have already been in place for several years in the US, in the form of the US Tariff Act and the Uyghur Forced Labour Prevention Act and have recently been introduced in Canada and Mexico, pursuant to the United States-Mexico-Canada Agreement (USMCA). The EU Forced Labour Regulation was also adopted by the EU Parliament in April 2024 and will introduce similar forced labour import bans for products imported and exported to and from the EU, likely from 2027 onwards.

Next steps

In order for the Select Committee recommendations to become law, the government will need to take the requisite steps to enact primary legislation. This is likely to involve a stakeholder consultation process.

It is worth noting that the Labour Party previously published an Employment Rights Green Paper whilst in opposition indicating that, if it were elected to form the UK government , it would introduce legislation providing for “joint and several liability” between companies across the supply chain to address modern slavery issues. However, this proposal did not feature in the 2024 King’s Speech, which sets the government’s legislative priorities for the parliamentary year. That said, given the Labour Party’s stated policy position, it seems reasonably likely that the Select Committee report will lead to legislative change.

With thanks to Sam Colman, trainee, for his assistance with this article.