Obligations under the Modern Slavery Act: compliance update

Insight

09.05.2019

Guidance materials have been published by the Home Office clarifying the scope and requirements of the Modern Slavery Act 2015 (MSA).

In broad terms, the MSA requires commercial organisations to prepare and publish an annual modern slavery statement (Statement) if they:

carry on a business or any part of a business in the UK
have an annual turnover of £36m or more, and
supply goods or services.

The Statement should aim to set out what the organisation has done to ensure that there is no modern slavery in its supply chains or its own business.

The UK Home Office has updated its Transparency in Supply Chains Guidance (the Guidance) to strengthen certain requirements under the MSA.

Key updates include:

Clarification on the Statement publication deadline, the initial requirement of “as soon as possible” is now “at most within six months of the financial year end”.
Stronger recommendation that organisations “should aim” to include information on the six categories set out in the MSA in their Statement.
Suggestion that it is best practice that Statements be dated and signed by a director who also sits on the board that approves the Statement.
Additional guidance on due diligence processes. Due diligence should form part of a wider framework around ethical trade, corporate social responsibility and human rights.
Suggestion that organisations falling below the £36 million turnover threshold release a statement voluntarily.
An emphasis on the assessment of Statements by the public, investors, the media and other external parties.
An encouragement that organisations keep historic Statements available online to provide a year-on-year comparison.

The Home Office has now written directly to the chief executives of some 17,000 businesses which the Home Office considers are in-scope of the MSA, with very clear instructions to support effective reporting under the legislation. It also intends to publish a list of non-compliant companies.

A series of interim reports commissioned by the Home Secretary have looked to strengthen the remit of the MSA. It is not yet clear which, if any, of the recommendations will be enacted or whether the existing “common sense” approach outlined in the government guidance will prevail.

For example, the interim reports have encouraged more robust sanctions for non-compliance, including fines as a percentage of turnover, court summons and directors’ disqualifications. It was recommended that a government enforcement body should be set up to impose such sanctions on non-compliant organisations.

With more intense scrutiny expected, businesses are encouraged to think again about the impact of modern slavery on their business and to assess their internal compliance. Even if there is no obligation to do so, companies are advised to publish voluntarily a statement in the interests of transparency and good governance, not least, as this demonstrates good governance and may help avoid reputational issues of the company.

The following steps are recommended to prepare for this:

Carry out a review and a risk assessment of the potential for slavery or human trafficking in the organisation and its supply chains
Check anti-slavery clauses in contracts with suppliers
Undertake training of both business personnel and supply chains, and
Put in place anti-slavery policies and procedures.

If you require further information about anything covered in this briefing note, please contact Anthony Turner or Sophie Lucas, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.