Modern slavery transparency statements – new obligations announced

The response to the transparency in supply chains consultation outlines the intended reforms including the mandatory content of modern slavery statements, a new government-run reporting service, a single reporting deadline, civil penalties, and the extension of reporting to the public sector.

Existing requirements

When the Act came into force, the UK became the first country to require organisations with a turnover of £36m or more to produce a modern slavery statement. Government guidance confirms that charities and social enterprises over this threshold may be within scope.   

The Act currently provides a non-mandatory list of topics such as due diligence processes and risk management) which it is suggested should be covered in the statements. The absence of obligations for public bodies and the lack of sanctions for non-reporting were noted by many. This led to the transparency in supply chains consultation and the UK government publishing the world’s first Government Modern Slavery Statement in 2020 as the first step towards expanding the scope of the Act.

New requirements

The response confirms the government’s intention to introduce the following reforms (though the measures will need to be implemented through legislation, so will require Parliamentary time).

• Public bodies. The response confirms that public bodies with budgets of £36m or more will be brought within the scope of the Act and will need to regularly report on the steps they have taken to prevent modern slavery in their supply chains. This is an important step in terms of the reach of the Act as public bodies have immense procurement power.
  
• Mandatory content. The proposed measures will also make it clearer which topics the modern slavery statements must cover. If an organisation or public body does not take any steps within the mandated areas, it must clearly specify why that decision was taken. The increased clarity will allow for greater transparency as organisations and public bodies will not be able to avoid answering uncomfortable questions about their supply chains.
  
• Single reporting deadline. The proposed amendments will also introduce a single reporting deadline of 30 September. This will facilitate accountability, by allowing comparison between activities and progress across the sectors will be much easier to monitor. A shared reporting period of 1 April – 31 March will be introduced to replace the current requirement for organisations to report on activity undertaken during their respective financial years. Organisations will have six months to prepare their modern slavery statements.
  
• Central reporting platform. The government also proposes to establish a government-run reporting service early 2021, which will require organisations and public bodies to upload their statements not only on their websites but also on a centralised system to increase accountability. Currently certain third sector organisations are seeking to fill this gap to increase accountability and transparency (for example, the Modern Slavery Registry).   
  
• Enforcement. Little detail was given in this regard: the response stated that the government will wait for the outcome of the public consultation launched by the Department for Business, Energy & Industrial Strategy on the establishment of a new single enforcement body for employment rights. It seems like the possible sanctions for non-compliance with the Act will be most likely in line with the enforcement options proposed by this hypothetical single enforcement body. The lack of an effective enforcement mechanism is seen as a weakness of the current regime, so the understanding that greater enforcement and sanctions are needed is a step in the right direction (though the devil will be in the detail).

The government’s proposals are likely to be seen as a positive step for encouraging compliance with the Act and taking further action to tackle all forms of modern slavery.  All organisations with a turnover or budget of £36m should be aware of the proposed reforms and look out for the legislation implementing them to ensure compliance. 

Please contact Melanie Carter or Alistair Williams for more details.

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This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of September 25, 2020.