Modern Slavery Act 2015 - what are the proposed changes?

The proposed changes will include prescribing the topics that must be covered by modern slavery statements, the introduction of a single reporting deadline and enhanced transparency concerning the statement itself. A strengthening of the related enforcement regime also remains a real possibility.

These developments come at a time when the appetite for enhanced corporate transparency and accountability on environmental, climate and social issues continues to grow both domestically and at the EU- level.^[1] 

This article examines some of the key aspects of the UK Government’s proposals.

Proposed reforms

The proposals in the Response arose out of a consultation exercise launched following the publication of the final report of the Home Office’s independent review of the Act (the Independent Review). The Independent Review contained 80 recommendations, 21 of which related to modern slavery statements. In respect of the requirements in s. 54 of the Act relating to such statements, the overall conclusions of the Independent Review were that too many organisations are failing to go beyond the minimum requirements and that there is a lack of effective associated enforcement mechanisms and penalties.^[2]

We set out below how the Response seeks to address the limitations with the current regime relating to modern slavery statements. Notably, where legislative changes are required, the UK Government has not committed to a particular timetable. Rather, the Response states that the measures will be “introduced when parliamentary time allows”.

Content of statements

The six areas of content suggested for inclusion in any statement published pursuant to the Act will now become mandatory. Entities that are in scope will therefore be required to report on the following:

1. the organisation’s structure, its business and its supply chains;
2. its policies in relation to slavery and human trafficking;
3. its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
4. the parts of its 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;
5. its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
6. the training about slavery and human trafficking that is available to its staff.

Other topics may also be added to this list and elements of the list may be amalgamated. The additional topics may include disclosure of instances of modern slavery, whistleblowing mechanisms and collaboration with external partners.

Greater transparency

Organisations covered by the Act will be required to publish their statement on a UK Government-run reporting service in addition to their websites. This measure is intended to increase transparency and allow stakeholders such as investors and NGOs to study, benchmark and track the progress of statements in a much easier way than is currently possible.

Single reporting deadline

Furthermore, the UK Government will introduce a single reporting deadline, requiring statements to be published annually by 30 September in respect of the preceding 1 April – 31 March period. By setting the single reporting deadline six months after the end of the reporting period, the UK Government intends to mitigate some of the potential challenges a single reporting deadline might present.

Increased accountability

Organisations are currently required to publish statements that are approved by the Board and signed by a director. However, this has given rise to practical difficulties for many large reporting groups and it can be unclear whether these approvals have been obtained. The UK Government will amend the legislation to require modern slavery statements to state the date of Board (or equivalent) approval and director (or equivalent) sign off. 

Modern slavery statements will also need to name the individual entities that they cover when they are produced for a group.

Enforcement

Where legal obligations are not backed up by an effective enforcement mechanism and penalties, they often have limited effect. For this reason, the Act is often labelled as a “toothless tiger”, lacking the necessary means of enforcement to have any real impact. 

The enforcement proposals put forward by the consultation included the introduction of civil penalties for non-compliance with s. 54. However, the views expressed in the responses to the consultation on the nature and level of civil penalties were mixed. As a result, the UK Government has stated it will “consider enforcement options in line with the development of the Single Enforcement Body for employment rights and issue a further update in due course”. 

Conclusion

The UK Government’s proposals mark a significant step towards increased corporate transparency and accountability. However, whilst the proposals, when they are enacted, will go some way to giving the Act “teeth”, key question marks remain around the quality of statements published and the extent to which the enforcement mechanisms associated with the Act will be enhanced. Companies will need to carefully monitor developments in that regard and consider what additional steps they should be taking to prepare for the changes proposed.

These changes should also not be seen in isolation. We are seeing an increase in European Union Member States adopting supply chain transparency and reporting requirements and the European Commission is proposing to adopt a new EU-wide due diligence law the details of which have yet to emerge. 

Should you have any questions on the matters discussed in this bulletin, please contact Matthew Townsend, Jonathan Benson or your usual contact at Allen & Overy LLP.

_{[1] See, in particular, the announcement on 29 April 2020 by the European Commissioner for Justice, Didier Reynders, that the European Commission intends to introduce legislation in 2021 which would require all businesses in the European Union to undertake mandatory human rights and environmental due diligence.}

_{[2] For further background on the Independent Review and the UK Government’s consultation exercise see our article here.}