The UK Government has published its response to the transparency in supply chains consultation. The response sets out significant new proposals intended to strengthen the Modern Slavery Act 2015 (MSA), and in particular the requirement for certain organisations to produce a slavery and human trafficking statement. The proposals seek to hold businesses and public bodies better to account for tackling modern slavery.
The proposed measures include:
- Contents: mandating the areas that modern slavery statements must cover, in the same way that the Australian Modern Slavery Act does. These mandatory areas will include the current six voluntary areas (that is, the organisation’s structure, its business and its supply chains; its policies; its due diligence processes; the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk; its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains; and the training about slavery and human trafficking available to its staff), albeit these might be restructured, and might include some new areas highlighted through the consultation. Companies will need expressly to state if they have taken no steps in relation to any of the new areas;
- Timing: setting a uniform reporting period for all entities of 1 April to 31 March, and a single reporting deadline of 30 September. This would mean that organisations that do not have a 31 March year-end will need to adjust their reporting timelines. This would also mean that the UK regime will diverge from similar legislation in other jurisdictions, such as the Australian Modern Slavery Act 2018, which requires a statement to be published within six months of the organisation’s financial year-end. This would likely increase the administrative burden on organisations that are within scope of other similar reporting regimes;
- Publication: requiring organisations to publish statements via the UK Government’s new reporting service. Organisations will be encouraged to publish statements via this service voluntarily at first, ahead of the legislative change mandating this coming into force;
- Approval: amending legislation to make some current requirements clearer, namely the requirements for modern slavery statements to specify the date of Board approval and Director sign-off, and for group modern slavery statements to identify the entities covered;
- Public bodies: extending the reporting requirement to public bodies with a budget of £36 million or more; and
- Penalties for non-compliance: introducing possible civil penalties for non-compliance, although the Government will consider such action in accordance with the development of the Single Enforcement Body for employment rights.
Legislative changes to the MSA will be introduced when parliamentary time allows. The Government will also publish updated guidance in 2020, including best practice approaches to reporting against the new mandatory areas.
Please find links below to our briefings on:
- the role and risks of using big data to tackle modern slavery;
- the UK Government’s 2019 response to the independent review of the MSA and the publication of the consultation on transparency in supply chains;
- the UK MSA: One Year On; and
- the initial implementation of MSA in 2015.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2021