Modern slavery act: why corporate accountability is set to rise

More stringent requirements may be on the way for organisations under legislation designed to safeguard employees, as Sarah Ozanne reports

If the phrase ‘modern slavery statement’ sounds familiar, your organisation is probably already on board with its reporting obligations under the UK Modern Slavery Act. 

In 2015, the Act introduced the obligation on certain large businesses to publish an annual modern slavery and human trafficking statement. This was part of the initiative to curb the persistence of modern forms of forced labour in business supply chains around the world.

Specifically, the need to publish an annual statement applies to those large businesses operating in or selling into the UK, and with an aggregate turnover exceeding £36m per annum.

Those affected should now have already published their statements and updated them accordingly in subsequent financial years. The approach to these statements has been a mixed response. Some organisations have taken a minimalist, ‘box-ticking’ approach, while others have undertaken a wholesale review of the relevant aspects of their contracts, policies, training and supply chains.

To date, enforcement has been light touch, and it does not appear that any injunctive action has been taken against organisations which have failed to comply with their obligation to publish the annual statement. Accountability so far has been through negative publicity and compliance monitoring by not-for-profit organisations.

Proposed changes

The situation is now set to change. In 2017, Baroness Young introduced a Private Members Bill to the UK Parliament which seeks to:

  • require businesses which have not taken active steps to combat modern slavery to publicly explain their apparent inertia;

  • include public authorities within the scope of the reporting obligations;

  • mandate the content of the statements, such that business can no longer ‘pick and choose’ to showcase their achievements so easily while omitting their failings; and

  • require the UK Government to publish a ‘name and shame’ list of non-compliant businesses.

Momentum has also gathered in the form of the government launching an independent review into what more can be done to strengthen the effectiveness the Modern Slavery Act. This includes consideration of how the scope of s 54 (which sets out the transparency obligations for large businesses) might be amended to impose more robust reporting requirements. This may also involve a formal register of statements and more severe sanctions for non-compliance.

With the Modern Slavery Registry now writing to relevant organisations to warn them of the reputational and financial consequences of non-compliance, ensuring that a credible statement has been published should now be a priority for businesses’ legal, procurement and HR teams. 

Until the Private Members Bill or independent review are concluded, businesses within the scope of s 54 should ensure they are not only complying with their obligation to publish the annual statement, but that they are also keeping up with market standards in their sector on this issue. Doing so is likely to place them in good stead in adapting to the outcome of the changes which now seem on their way.

Sarah Ozanne is an employment lawyer with CMS