Legislation to tackle modern slavery was introduced in the UK in 2015.
This guide sets out the main legal requirements arising for businesses under the UK’s Modern Slavery Act.
What is modern slavery?
Modern slavery exists in or affects trade in all countries. It is a serious organised crime that results in major human rights abuses. The crime includes slavery, forced or compulsory labour, child labour and human trafficking. Whilst it is difficult to establish the scale of the issue, research by the International Labour Organisation (ILO) has estimated that over 40 million people globally are victims of modern slavery.
Read more on international modern slavery law
Companies need to have policies and procedures in place to help them identify and root out modern slavery risk in their supply chains. Doing this will not only enable them to demonstrate a culture and commitment to compliance and, in particular, to good corporate governance, but also avoid reputational damage from any actual or perceived failure of theirs to address the problem. It will also help them comply with any legal obligations arising – such as those stipulated in the UK’s Modern Slavery Act.
Legal requirements under the Modern Slavery Act
Designed to provide the tools to tackle slavery and human trafficking offences, enhance support for victims, and introduce an independent anti-slavery commissioner, the Modern Slavery Act (2015 Act) came into force in October 2015.
Of particular significance for businesses are the requirements of section 54, which require commercial organisations in scope to prepare a slavery and human trafficking statement each financial year.
Who is in scope of the requirements?
The requirement to produce an annual slavery and human trafficking statement applies to all “commercial organisations” that have a total turnover, or total group turnover – i.e. the total turnover of a company and its subsidiaries – of not less than £36m; which supply goods or services; and which carry on their business, or part of it, in any part of the UK.
A “commercial organisation” is defined as a company, wherever incorporated, or a partnership, wherever formed, which carries on a business, or part of a business, in any part of the UK. The 2015 Act also makes it clear that “business” includes a trade or profession.
Core duties arising under the Act
Since 29 October 2015, commercial organisations in scope have been obliged to prepare a slavery and human trafficking statement for each financial year of the organisation ending 31 March 2016 or later. That statement must set out the steps taken in the financial year to ensure there is no slavery or human trafficking in the organisation's business or supply chains or should state that no steps have been taken.
The 2015 Act suggests matters which may be included in the annual slavery and human trafficking statement. These include identification of risk areas in the business and steps taken in mitigation, as well as details of the organisation’s structure, its business and supply chains, its policies in relation to slavery and human trafficking, its relevant due diligence processes, and training and benchmarking of performance. Further guidance (46-page / 1.57MB PDF) has been published by the UK government.
The statement must be approved by the board, signed by a director or equivalent and published on the company’s website, if there is one, with a link in a prominent place on the homepage.
Organisations are also encouraged to publish their modern slavery statements on the UK modern slavery statement register. However, this is not compulsory.
In October 2022, the British Standards Institution published the first national standard on modern slavery, providing organisations with important guidance on managing modern slavery risks.
Sanctions for failure
The secretary of state can enforce the disclosure duties via an injunction requiring the organisation to comply, or via an order for specific performance in Scotland. However, most organisations consider the potential for reputational damage to arise to be a sufficient deterrent against non-compliance.
Whilst the government has signalled an intention to reform corporate reporting under the 2015 Act, this has not been a recent focus. Criticism tends to centre around the fact that there is no mandated structure for modern slavery statements under the current law. As a result, organisations can decide not to report on the areas where they have taken no action, rather than explicitly acknowledging that lack of action in their statements.
A House of Lords committee was established in February 2024 to, among other things, examine the effectiveness of the 2015 Act and consider whether and how it could be updated. The committee is due to report by the end of November 2024.
Some of the areas where the law could be reformed, based on government consultations to-date, include:
- making it mandatory for businesses in scope of the Act to report on each of the areas for modern slavery statements listed in the legislation – and requiring them to state clearly where they have taken no steps within a particular area;
- making it mandatory to publish modern slavery statements on the modern slavery statement register;
- the introduction of criminal sanctions for breaching risk and prevention orders;
- the introduction of civil penalties for general non-compliance; and
- the introduction of a single reporting deadline.
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