Earlier this month the UK Government published updated guidance updated guidance on the reporting obligation set out in section 54 of the Modern Slavery Act which obliges businesses with a turnover in excess of £36M to produce an annual statement that outlines the actions they have undertaken to eradicate slavery in their supply chains.
The statement must either state what steps the organisation has taken during the last financial year to ensure that slavery and human trafficking is not taking place anywhere in its business and supply chains or that no such steps have been taken.
The updated guidance:
- encourages organisations with turnovers less than £36m also to produce a Transparency Statement;
- more strongly encourages businesses to include information in relation to all six of the categories set out in section 54(5) of the Modern Slavery Act;
- removes the, now superfluous, guidance as to when a business will need to produce its first Transparency Statement;
- adds “best practice” guidance in relation to approving and publishing Transparency Statements; and
- adds ILO Convention (nos. 138 & 182) definitions in relation to child labour
In the updated foreword, the current Home Secretary, Amber Rudd MP, stresses the “vital role” of business in the fight against modern slavery and she sets out her belief that “business must not be knowingly or unknowingly complicit with modern slavery” or “be profiting, no matter how indirectly” from slavery.
However, a recent investigation by the non-governmental organisation, the Transparency in Supply Chains (TISC) Coalition, reported that half of UK firms obliged to produce modern slavery compliance reports had failed to do so in section 54’s first full year of operation.
Whilst, in law, the Home Secretary can seek to obtain a High Court injunction to oblige a company required to publish a modern slavery compliance statement, at present it does not even monitor compliance.
Instead, non-government organisations such as the Human Rights and Business Resource Centre, CORE and TISC have taken up the mantle of monitoring compliance and using public pressure and associated media scrutiny to influence business practice.
The Government’s light touch approach to compliance may be subject to change. Crossbench peer, Baroness Young of Homsey has introduced a private member’s Modern Slavery (Transparency in Supply Chains) Bill 2017 in the House of Lords. The Bill seeks to implement a firmer approach to compliance with section 54 through a number of new obligations including;
- Making it mandatory for a statement to contain certain information;
- Placing an obligation on the Government to publish a list of those commercial obligations that have complied with section 54 (and by doing so draw attention to those that haven’t);
- Require those that publish a ‘no steps’ statement to explain why; and,
- To amend the Public Contract Regulations 2015 to exclude organisations that have not complied with section 54 from participating in public procurement activities.
Whilst the Bill is only at the early stages of the parliamentary process – and, as a private member’s Bill, is far from guaranteed to become law – the focus and public attention on eradicating modern slavery is only likely to increase with significant consequences for companies in non-compliance with their section 54 obligations, ranging from negative media coverage, damaged commercial relationships and potential exclusion from public sector contract opportunities.