Modern slavery law affects your company too

The battle against modern slavery appears to be picking up. The independent review of the Modern Slavery Act 2015 has now published four interim reports on the effectiveness of the act at dealing with slavery and human trafficking as well as protecting its victims. Meanwhile, the government has published fresh guidance on the act; two private members’ bills on modern slavery are progressing through parliament (although slowly); and Sara Thornton is expected to take up the role of Independent Anti-Slavery Commissioner from May 2019 to advise and tackle modern slavery issues. In addition, the government has announced UK support for international anti-slavery projects by contributing to the Modern Slavery Innovation Fund.

The review’s second interim report focuses on section 54, which requires UK businesses with a turnover of more than £36m to report annually on their efforts to tackle slavery in their supply chains. While acknowledging that the act is groundbreaking, the review concluded that its impact has been limited. Lack of enforcement and penalties and confusion about who must report have led to poor-quality slavery and human trafficking statements and a lack of compliance from more than a third of businesses subject to the reporting obligations.

Recommendations in the new report

The review made various recommendations – some of which appear in the Modern Slavery (Transparency in Supply Chains) Bill 2017, a private member’s bill introduced by Baroness Young of Hornsea. The main recommends are that the government:

• List companies falling within section 54 – but require all organisations to remain responsible for determining whether they are subject to section 54.
• Remove section 54(4)(b), which allows companies to state they have taken no anti-slavery steps.
• Require all businesses subject to section 54 to report on all six areas specified in section 54(5) including their anti-slavery policies and training (such reporting is now optional). Businesses considering an area does not apply to them should say why.
• Require companies to reference their modern slavery statement in their annual reports and make a board member accountable for producing the statement.
• Require statements to be dated clearly and uploaded to a central, government-run, easily and freely accessible repository.
• Have compliance monitored by the Independent Anti-Slavery Commissioner.
• Introduce a tiered approach to sanctions and introduce them gradually to allow businesses to adapt.
• Extend reporting obligations under section 54 to public authorities with budgets of more than £36m.
• Legislate so that companies not complying with section 54 are not eligible for public contracts.
• Create a database of checks carried out on public works contractors to simplify checks during procurement.
• Keep the £36m threshold under review – possibly reducing it in future.

The review believes further legislative incentives are now essential to embed slavery reporting into business culture. Its recommendations are to be welcomed and should put equal pressure on companies to report slavery as for equality and human rights. They should also put section 54 compliance failures on the same level as failure to file accounts or prevent bribery.

A proactive approach to slavery law

That slavery exists across the UK is, in itself, a sobering fact. And yet the government’s initiatives and regular reporting can sometimes dull our responses to modern slavery (“It doesn’t affect my business …”). We must remember that modern slavery is widespread, involves grave crimes and has serious consequences for its victims. Efforts are being made to give financial and emotional support to those who have endured slavery: the prime minister’s modern slavery taskforce was set up in 2016; revised guidance on the national referral mechanism was published on 29 April 2019; and parliament is to consider another private member’s bill, the Modern Slavery (Victim Support) Bill, which would create a legal basis for assisting and supporting victims.

The review’s final report is due imminently and we must then await the government’s response. Meanwhile, all businesses – not just those subject to section 54 – have an important role to play. Help is already available. Recent government guidance on how to publish an annual modern slavery statement (issued on 12 March) helps organisations decide whether section 54 applies to them and how they and their supply chain can demonstrate compliance.

Those just below the threshold might want to take a proactive approach and prepare and publish statements before they are legally obliged to do so. Commercial incentives for so doing may soon come into play. Clients might increasingly require smaller businesses in the supply chain to report on their anti-slavery measures.

Those not subject to section 54 can also take the initiative by reviewing government guidance and training resources. Whether you read up on the issues, train staff to raise awareness, implement anti-slavery policies, ask to see the modern slavery policies of your supply chain or prepare a comprehensive modern slavery statement (voluntarily or under section 54), everyone can play a part. There is still much to do.

Akin Akinbode is a partner and Tracey Summerell a managing practice development lawyer at Dentons