The Modern Slavery Act 2015 (“the MSA 2015”) was passed on 26 March 2015 for a number of reasons, the primary driving force being to consolidate, simplify and update the legal protections against human trafficking and slavery. The MSA 2015 was drafted to ensure that the crimes of human trafficking and/ or slavery are suitably and sufficiently addressed by law, and that any perpetrators receive punishments befitting of their actions by equipping law enforcement with a clear and robust legal position under a single comprehensive Act. It is hoped that the MSA 2015 will therefore act as deterrent to such horrific acts occurring, consequently providing enhanced protection.
Earlier this year, in February 2024, a House of Lords Committee on the MSA 2015 was established to:
- Consider the impact of the 2015 Modern Slavery Act, and its effectiveness in achieving its aims.
- Consider how the Act’s provisions have been implemented, how the Act has been impacted by recent political developments, and whether the Act is in need of improvement.
The House of Lords Committee has previously made a public call for written evidence to be submitted to them and is due to report back findings at the end of November this year.
So, by way of recap, what are employer’s current obligations under the MSA 2015?
Obligations under Section 54
The MSA 2015 has numerous provisions all geared towards tackling modern salary and human trafficking. However, a fundamental part of the MSA 2015 for many businesses will be section 54, which sets out the requirements for transparency in supply chains and imposes annual reporting duties on many organisations. Such obligations were imposed with a view to increase the accountability on businesses for the conditions which are implemented within supply chains they use, and are designed to therefore identify and combat any conditions reflective of modern slavery or human trafficking.
Section 54 of the MSA 2015 makes clear that:
- all commercial organisations with a turnover of at least £36 million per annum,
- that carry on a business, or part of a business in the UK,
- and supply good and services,
will be subject to the obligations under this section in relation to transparency in their supply chains.
Any businesses who fall under this definition will be required to create and publish an annual slavery and human trafficking statement.
What would the statement contain?
The section 54 statement should detail the steps the business has taken to ensure that slavery and/or human trafficking does not occur both within their organisation itself, but also within their supply chain.
The requirement does not stretch to businesses needing to guarantee that their entire supply chain is slavery free. This was thought to be too onerous a burden to place on a business; the purpose of section 54 is to ensure businesses provide transparency about any actions taken to prevent modern slavery occurring. It is hoped that making businesses liable for conducting due diligence on both the conditions within their own organisation and supply chain, and reporting on the same, will result in proper checks being implemented, consequently improving the identification of modern slavery or human trafficking, as well as the potential risks or signs of such criminal conduct.
Businesses who do not take any steps to tackle modern slavery and human trafficking equally have an obligation to provide a statement. However, organisations who publish a statement confirming they have taken no action run the risk of being assumed to be indifferent to tackling modern slavery and human trafficking. They, therefore, face both reputational and financial damage through negative publicity and potential loss of business where clients or other businesses chose not to be associated with them on this basis.
It is important to note that those businesses excluded from the obligation to provide a statement are by no means prohibited from doing so - the government would encourage businesses to publish a statement in any event so that they can demonstrate transparency to their consumers and investors. It is worth bearing in mind that even if a business does not have to publish a statement under section 54 MSA 2015, it still must still comply with the law. Therefore, it is strongly advised that all businesses consider how slavery and forced labour might be involved in their business, or supply chain, and how they can deal with this.
There is also support for businesses going above and beyond the minimum reporting criteria, and it is hoped that statements from businesses will evolve over the years with them being required to produce this each annum, so the reporting in this area will improve over time and provide even further protection. The current review by the House of Lords Committee will hopefully assist with this.
What steps should businesses take, which can be included on the statement?
In terms of the steps businesses should consider taking, these could include action to:
- monitor and verify the processes undertaken within their own business, but also their supply chain, to ensure if any modern slavery and human trafficking is occurring, this is identified;
- implement and/or amend policies and procedures throughout the chain to ensure they adequately deal with and deter modern slavery and human trafficking; and
- consider any training necessary to increase knowledge and awareness of modern slavery and human trafficking, and consequently help with wider identification of such acts.
Are there requirements for submitting/publicising the statement?
Guidance suggests that the statement should be published as soon as possible following a businesses’ financial year end, and within six months of this time at the latest.
It is important to make sure the statement has first been approved by the board of directors and has been signed and dated by a director. The statement should clearly state the date of board approval and should indicate which director signed it and when (though there is no need to show an actual signature on an online version).
Where a business forms part of a group of companies, they have flexibility to publish a statement which covers more than one group company (provided that the statement clearly sets out what each company is doing to tackle slavery and trafficking). It is important to ensure that each group company which falls within the scope of the MSA 2015 is covered by a statement, if this is intended to be the case. The Home Office has confirmed that it is sufficient for a statement to list all the companies covered, and to be approved by the board of the parent or group company that prepared the statement.
In terms of publicising the statement, business must ensure that their website includes a prominent link on the homepage of each company that is covered by the statement. In the event an organisation does not have a website, it must provide a copy of the statement to anyone who requests it within 30 days of such a request being received.
Risks of non-compliance
If a business is identified to have failed to comply for a particular financial year, the Security of State is able to seek an injunction against them requiring them to comply. In the event that the business still fails to do, they risk being in contempt of court and a hefty fine.
Any businesses that have the obligation imposed on them to produce a statement and fail to comply also risk reputational damage through public/consumer backlash, and there are proposals to potentially introduce direct financial penalties for non-compliance.
Further assistance
Therefore, it is imperative that businesses understand their obligations under section 54 of the MSA 2015 and take their responsibilities seriously. Guidance has been provided by the Home Office to assist businesses with producing both accurate and complete statements in respect of modern slavery and human trafficking - “Transparency in Supply Chains: A practical guide”. This guidance provides, inter alia, steer on the process of preparing the statement, how to publish the statement/ who should take on this responsibility and what business should do it they identify modern slavery or human trafficking within their supply chain.
Whether your business’ turnover is over £36 million per annum or not, we can help in providing an Employment and HR policy on Anti-Slavery, to be included within your Staff Handbook, alongside our Commercial Team who can assist with the drafting of a section 54 statement.
