The government has revealed that it plans to introduce a Modern Slavery Bill during this parliamentary session.
Announced in the Queen’s Speech on 10 May 2022, the primary aims are to:
- increase the levels of protection and support available to victims of human trafficking and modern slavery;
- make companies and other organisations more take more responsibility for eliminating modern slavery from their supply chains; and
- reduce the prevalence of modern slavery in supply chains through increased transparency from businesses and public bodies.
The Bill would bring into effect changes to section 54 of the Modern Slavery Act 2015 (MSA). These changes were first announced by the government in September 2020.
While the proposed Bill is yet to be published, we expect to see a strengthening of requirements in the following areas:
1. The Modern Slavery statement publication requirements will be extended to public bodies
It is not yet clear whether (as previously announced) the published Bill will require that:
- when Section 54 MSA 2015 reporting is extended to public bodies, those who will be required to publish a statement are those with an annual budget of £36m or more. We expect that the government will produce guidance to help public bodies determine if they will be subject to this requirement;
- public sector statements be approved by the senior management body and signed off by the accounting officer, chief executive or equivalent role.
It also remains to be seen if public bodies will be allowed to publish ‘group statements’ – so that, for example, a central government department may publish a group statement with its arm’s length bodies. We also expect that the government will publish guidance to help public bodies decide when and how to report as a group.
2. The introduction of civil penalties for organisations that do not comply with the Modern Slavery statement requirements
We are waiting for clarification as to whether the introduction of these penalties is tied to the introduction of the Single Enforcement Body (see below), or if they will be brought in earlier.
3. Content categories of Modern Slavery statement to be made mandatory
The six areas that an organisation’s statement currently ‘may’ cover will become mandatory, required areas.
- The structure of the required statement areas may be (re)designed in conjunction with the development of the government-run reporting service (see below).
- We anticipate that the government will publish updated guidance, including best practice approaches to reporting against the newly required areas. That guidance is expected to highlight the importance of transparency, risk-based action and industry-level collaboration to address shared challenges.
- At present, it’s unclear whether the government will also:
- add additional topics for reporting in Modern Slavery statements; or
- if an organisation has taken no steps within a reporting area, it will be required to state this clearly and to provide reasons as to why not.
4. Mandatory publication on government-run Modern Slavery statement reporting service
- There is now a central government-run Modern Slavery statement reporting service.
- Organisations will be required to publish their Modern Slavery statements on the new service.
Other areas not yet stated to be included in the Modern Slavery Bill, but may be added to new guidance:
Single reporting deadline
- We wait to see if there will be a single reporting deadline. It had been proposed that organisations would have a shared 12-month reporting period of 1 April to 31 March, and would have six months from then to prepare their statements. This would result in a single reporting deadline of 30 September for all organisations in scope for reporting.
Clarity and accountability: Approval, sign off and group statements
- The government may amend the MSA 2015 to require:
- modern slavery statements to state the date of board (or equivalent) approval and director (or equivalent) sign off; and
- group modern slavery statements to name the entities covered.
- It had been announced that a single enforcement body will be able to impose financial penalties for non-compliance with section 54 MSA 2015, but so far we do not have the planned separate legislation for this.
A recent report published by the Financial Reporting Council in April 2022 stated that Modern Slavery statements are moving up the UK’s political and legislative agenda, while shareholder and investor initiatives around them are increasing.
The report stated:
‘Overall, however, modern slavery statements remain largely descriptive and superficial, with little attempt to critique performance and highlight areas of concern. Many companies opted for broad-brush statements rather than precise descriptions on issues such as their policy on withholding wages or imposing recruitment fees. The lack of detail and critical assessment of performance is particularly evident for reporting on training, due diligence processes, risk assessment, and policy effectiveness.’
In readiness for these significant mandatory changes and their enforcement through civil penalties, corporates may want to turn their urgent attention to the area of Modern Slavery statements.
Download our PDF: Modern Slavery Act statement – giving you the comfort of compliance.