Businesses and certain public sector entities need to prepare and consider the implications of recent proposed changes to the Modern Slavery Act 2015. These were published in a Government response to a Home Office consultation on the ‘Transparency in Supply Chains’ provision in the current legislation.
Section 54 of the Act seeks to address the role of businesses in preventing modern slavery from occurring within their supply chains, via annual reporting requirements. Currently, organisations supplying goods or services in the UK with an annual turnover equal to or more than £36 million must publish a Modern Slavery and Human Trafficking Statement (“Statement”) annually. The obligation requires them to investigate and report on potential trafficking issues within their supply chains.
Following their industry-focused consultation, the Government has proposed the following changes to the legislation:
There are currently six voluntary reporting areas which companies are encouraged but not required to include in their Statements. These include:
- organisational structure and supply chains;
- policies on modern slavery and human trafficking;
- due diligence in relation to slavery and human trafficking;
- risk assessment and management;
- preventative measures an organisation has taken against slavery and human trafficking; and
- staff training.
It is proposed that these areas will now become mandatory for businesses to include in their statements. The Home Secretary noted that there could also be variations of the reporting areas, for example, an amalgamation of existing areas or the introduction of new ones.
Once the legislation is amended and these reporting areas become mandatory, organisations will need to clarify if and why they have failed to take steps in these particular areas. This will create an increased reporting requirement, one which directors will be keen to act upon as their signature is required on each Statement, as mandated in the current legislation.
Further guidance, on best practice approaches to reporting against these areas is expected to be published before the end of the year. The current Government guidance can be found here.
It is proposed that organisations will need to publish their Statement on a new Government reporting website as well the current practice which is to publish it on their own. This is intended to increase transparency and is likely to encourage more businesses to go the extra mile when reporting on their Modern Slavery and Human Trafficking compliance.
There will also be one single reporting deadline for publishing statements. This is to be 30 September, six months after the reporting period of the 1 April to 31 March.
Enforcement and penalties
While the response does not contain any specific proposals on changes to the nature and level of civil penalties where organisations are non-compliant with the legislation, the Home Office stated its intent to explore the development of a Single Enforcement Body for employment rights. It is likely that the enforcement regime will be strengthened in future leading to increased fines. As such, organisations will need to dedicate increased resource to avoid onerous penalties.
Group Statements that cover multiple entities within the same corporate group are permissible under the current legislation. It is proposed that such group statements will now need to include details of all entities covered under the statement as a mandatory requirement; currently, this is a best practice suggestion.
In England and Wales, section 54 requirement to publish a Statement is to be extended to equivalent public bodies, i.e. those who have a budget of £36 million and over. The Government has led the way in this instance by publishing its own Statement in March of this year.
Scotland is due to consult on this proposal separately.
The proposed changes to section 54 of the Modern Slavery Act will encourage better practices across industries and promote higher standards in relation to transparency within supply chain management. Furthermore, the introduction of mandatory reporting requirements will help enshrine the Modern Slavery Act as a key piece of legal compliance to be considered by businesses and public authorities alike. Of course, this will mean increased resourcing will be considered required to ensure compliance when these changes are legislated for, unfortunately no timescales have been given in this respect with the Government response stating they will be introduced “when parliamentary time allows”.
This article was co-written by Calum Lavery, Trainee Solicitor.
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