Modern Slavery Act 2015 – UK Government’s response to transparency in supply chains consultation

06 October 2020

Author: Richard Gray
Practice Area: Corporate - M&A

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On 22nd September 2020, the UK government published its response to the transparency in supply chains consultation which took place in July 2019. The response adopts many of the changes proposed in the consultation which are intended to strengthen the Modern Slavery Act 2015 and reflect increasing scrutiny on how organisations and public bodies identify and mitigate modern slavery within their supply chains.

The new measures will be of particular interest to businesses involved in contracts for public supplies, works and services who will need to ensure that their human rights risk programmes are reviewed and updated accordingly.

Background:

Currently, section 54 of the Modern Slavery Act 2015 places an obligation on certain commercial organisations which supply goods and services to publish an annual modern slavery statement setting out the steps taken to ensure that slavery and human trafficking are not taking place within their supply chains or other parts of its business, or a statement that the organisation has not taken such steps. Until now, monitoring of compliance with this obligation has mostly been undertaken by non-governmental organisations rather than the government.

Following the independent review of The Act, a decision was made that the provisions of section 54 require stricter enforcement measures and an extension of the requirements to public sector bodies.

The government’s response:

1. Mandatory content

The proposed measures will specify which topics modern slavery statements must cover, a requirement which should promote increased transparency. If an organisation or public body does not take any steps within the required areas, it must specify why such decision was taken. The mandatory content will include:

  • The organisation’s structure, its business and its supply chains;
  • The organisation’s internal policies in relation to slavery and human trafficking;
  • The organisation’s due diligence processes in relation to slavery and human trafficking;
  • The parts of the organisation’s business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • The organisation’s effectiveness in ensuring that slavery and human trafficking is not taking place in its organisation or supply chains, which can be measured against such performance indicators as it considers appropriate; and
  • The training and resources available to staff regarding slavery and human trafficking.

2. Public bodies

Currently, public sector bodies report the steps taken to prevent modern slavery in their supply chains on a voluntary basis. The government response confirms that public bodies budgeting £36m or more will be brought within the scope of the Act, which is a crucial step given their procurement power.

3. Creation of a new government reporting service

The government proposes to establish a government-run reporting service which will require organisations and public bodies to upload their statements on a centralised system. Currently, under section 54 of the Act, statements are only required to be published on an organisation’s website.

4. Single reporting deadline

A common reporting period of 1st April – 30th September will replace the current reporting requirement. Organisations will have six months to prepare their modern slavery statements in advance of the annual single reporting deadline of 30th September. It is hoped that a set deadline will facilitate accountability and allow efficient monitoring of activities and progress.

5. Mandating format for board approval of statement

The government’s response advises that the current best practice, whereby the date of board approval is included in the company’s statement, which is signed by a serving director, will be made compulsory.

6. Penalties

The current regime is lacking an effective enforcement mechanism which is seen as a real weakness. To address this the government response proposes the creation of a new enforcement body and the potential introduction of civil penalties for non-compliance with section 54, although further implementation of these sanctions will need to be explicitly legislated for.

How to prepare for the upcoming changes:

  • Review your current modern slavery statements and identify potential areas requiring further consideration.
  • If a company has not taken any steps in a particular reporting area to date, consider how to address this.
  • Review current internal policies and processes to evaluate what changes will be necessary in order to observe the new requirements, with a particular focus on ongoing mapping of supply chains and due diligence.
  • Look out for the government-run reporting service, as it is recommended to publish statements even before legislation makes it compulsory
  • Review modern slavery statements of companies of similar nature in order to familiarise yourself with what is considered best practice.

If you have any queries the Corporate team at Carson McDowell would be happy to help.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.

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