Modern Slavery Act – Updated guidance on reporting for businesses
This first of three articles, by way of an update to our article of 2 March 2016, is intended to explore the main changes brought about by the Home Office’s updated guidance on Modern Slavery Act reporting.
What is the legal position in the UK?
By the Modern Slavery Act 2015, the government introduced legislation launching a crackdown on practices falling within what is categorised as ‘modern slavery’. ‘Modern slavery’ is a term used to encapsulate two offences:
- slavery, servitude and forced or compulsory labour, and
- human trafficking (see sections 1 and 2 of the Act)
Commercial organisations which carry on a business, or part of a business, in the UK and supply goods or services with a minimum annual turnover of £36 million are required to publish a slavery and human trafficking statement each financial year on their website (if they have one).
The Home Secretary has produced guidance for businesses to help combat this issue. The guidance, which has been updated this month, is entitled ‘Transparency in Supply Chains: A practical guide’. In her foreword, Amber Rudd makes it clear this issue is a priority for the UK Government.
What are the main changes?
- Organisations which fall below the £36 million turnover threshold are encouraged to produce a transparency statement voluntarily
- Transparency statements must be approved at the highest level, usually by the board of directors, and signed off by a director
- Statements should include the date on which they were approved
- Additional best practice guidance for producing statements have also been issued
- Companies must seek to demonstrate year-on-year improvement in their statements. This is the second year in which companies meeting the threshold requirements will have had to publish their statements and the guidance emphasises the need for them to demonstrate what steps have been taken to improve systems, or a statement setting out that no steps have been taken. If no steps have been taken and this cannot be justified, companies can face penalties ultimately resulting in unlimited fines
- Child labour has been added to the list of definitions. This is significant given the International Labour Organisation’s latest figures estimate 1 in 4 victims of modern slavery are children
- There is an emphasis on transparency. The Government has supplemented its main document with visual publication material it suggests might be used across companies to raise staff awareness and encourage reporting. Links to the graphics can be found here, and to videos here.
Are more changes expected?
Many criticise the Government’s guidance for not going far enough. In particular, it fails to offer clarity on the definition of the terms: ‘carries on business’, ‘supply chain’ or ‘operations’. As such terms are used in establishing whether or not a business falls within the scope of section 54, without definition interpretation will continue to be uncertain.
The Modern Slavery (Transparency in Supply Chains) Bill 2017 is currently making its way through the House of Lords. This calls for a more stringent approach to compliance by proposing:
- The introduction of mandatory requirements as to the content of a statement
- To oblige the Government to publish a list of commercial obligations that are compliant with section 54 (thereby drawing attention to those in default)
- That businesses which state that they’ve taken no steps to update their statement, are required to include details which explain why
- The amendment of public procurement rules so that organisations in breach of section 54 cannot participate
Who can offer support if slavery is suspected?
The Modern Slavery Helpline – 0800 0121 700 – should be the first port of call for those suspecting modern slavery practices.
The guidance suggests that if modern slavery is suspected abroad, within supply chains, the response should be tailored to local circumstance, including seeking the support of local government bodies, trade unions or non-governmental organisations, including the ILO, Alliance 8.7 and A21.
For more information or guidance, please contact:
Partner, Head of Corporate and Corporate Restructuring
T. 020 7227 7254
T. 020 7227 7270
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.