[Commercial] UK GOVERNMENT TOUGHENS UP MODERN SLAVERY STATEMENT REQUIREMENTS
16 April 2021
We are increasingly asked by our clients to advise on modern slavery issues. These are some of the questions we receive:
What is the Modern Slavery Act?
The Modern Slavery Act 2015 is an Act of the Parliament of the United Kingdom. It is designed to combat modern slavery in the UK and consolidates previous offences relating to trafficking and slavery. It was designed to increase the power of law enforcement (criminal and civil) surrounding slavery and trafficking in the modern day. Combatting modern slavery is one of the National Crime Agency’s priorities when fighting serious and organised crime. The term ‘modern slavery’ refers to human trafficking, slavery, servitude and forced or compulsory labour. The penalties under the Modern Slavery Act are severe - ranging from substantial terms of imprisonment for individuals and large fines for corporates.
As a company, what must we do to comply?
Currently, a company is legally required to publish a statement in accordance with section 54 of the Act if the below criteria apply to them:
it is a ‘body corporate’ or a partnership, wherever incorporated or formed;
it carries on a business, or part of a business, in the UK;
it supplies goods or services; and
it has an annual turnover of £36 million or more – even if only a small proportion of the amount comes from its UK operations.
Is it true that statements must now be made online?
On 11 March 2021, it was announced that the Home Office had launched an online modern slavery statement registry, as part of suggested measures of strengthening the existing Modern Slavery Act 2015 (“the Act”). The introduction of the online registry is to make it easier for the general public to find modern slavery statements and for the government to monitor compliance.
If we produce a statement on our website, is it a legal requirement to also post it on the government’s new online registry?
Not yet, but the government is strongly encouraging companies to do so. The Home Office has just started sending letters to the companies that are required to comply with the current reporting duties, urging them to register themselves on the new online register.
If we do not choose to post our statement on the registry, might it affect our immigration status – for example, our sponsorship licence?
This is unlikely at present, but it may be worth noting that the Home Office manages both the maintenance of the registry and immigration.
Does our statement have to guarantee that the company’s supply chain is slavery-free?
No, but it must show the steps taken and the measures put in place by the company during the financial year to minimise the risk of modern slavery both in the supply chain and the company itself. It must be reviewed each year and an updated statement should be published.
If we know of, or suspect that there is some modern slavery activity taking place within our company or supply chain what should we do?
You should investigate immediately and reflect any actions you take in your statement, and in the meantime report to the authorities if necessary. Failure to do so could carry serious consequences for your company.
I understand the government is reviewing the existing legislation. What is happening?
In September 2020, the government published the response to the ‘Transparency in supply chains consultation’ that was launched in 2019. This response includes a number of suggestions to strengthen the current requirements. These include:
- The six areas of reporting under section 54 of the Act, which are currently voluntary, would be made mandatory.
- Public bodies with an annual turnover of £36 million or more would be required to publish statements.
- Enforcement measures such as civil penalties for non-compliance would be introduced.
- Currently the reporting deadline is different depending on the financial year of each company. A single reporting deadline would be introduced.
- Statements would be required to specify what other group companies are covered.
- Statements would be required to be added to the government’s online registry.
It is not yet known when these suggested changes would be made to the Act. However, the introduction of the registry clearly appears to be a first step towards stricter monitoring of compliance with the Act and more robust enforcement in case of non-compliance. The introduction of the registry also means that those who are not compliant with the legal requirements are more prone to reputational risks than before.
Our group’s annual global turnover is less than £36 million. Can we avoid publishing a statement?
At present, yes. But it is worth noting that whilst companies with a turnover below £36m are not required to publish a statement, current government guidance encourages such companies to do so. And, increasingly, larger companies who are required to publish a statement are demanding that the smaller organisations they do business with also comply with their codes of conduct. That may well include publishing a statement or proving that measures to combat slavery are put in place, to make sure their supply chains are free from slavery. Therefore, even if you are not legally required to publish a statement, there is a clear commercial benefit in doing so.
If you need an assistance with preparing, posting or updating a modern slavery statement, or if you have questions regarding the government’s proposed changes, please contact us.
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