Modern Slavery Act Guide for Employers

The Modern Slavery Act 2015 sets out the UK Government’s legal requirements for how organisations must address and report on modern slavery.

The Act aims to make modern slavery more difficult by requiring larger businesses to disclose the actions taken during each financial year, to ensure modern slavery is not a part of their business or part of their supply chain in an annual statement.

 

What is Modern Slavery?

 

Slavery in its wider definition still happens every day, including within supply chains of businesses. It includes:

 

• Forced work, through physical or mental threat
• Being owned or controlled by an employer through actual or threatened mental or physical abuse
• Being treated as a commodity or being traded as property
• Being physically constrained or having restrictions placed on freedom of movement
• Human trafficking

 

The requirements under the Modern Slavery Act are designed to improve transparency throughout supply chains to eradicate the use of slave labour.

 

Modern Slavery Act requirements

 

The Modern Slavery Act 2015 places obligations on businesses with a turnover of £36 million or over to ensure that their business, and the supply chains used by the business, are free from modern slavery. The Act requires businesses to include an annual “modern slavery statement” in each annual report. A link to the statement must also be included on the website of the business. In order to provide this statement, a business needs to ensure that it has carried out appropriate due diligence on its supply chains to enable it to accurately reflect risk and identify appropriate mitigation strategies.

 

Which organisations have to comply with the requirements?

 

An organisation is covered by the duty to prepare a statement if it:

 

• Is a body corporate or partnership, wherever incorporated or formed
• Carries on a business, or part of a business, in any part of the UK
• Supplies goods and services
• Has a total turnover of at least £36 million per year

 

It does not matter which sector you operate in or whether you are based outside of the United Kingdom. If your business operates within the United Kingdom and fits the other criteria above, your business will need to comply with the Act.

Even though the reporting obligation does not apply to smaller businesses, many are choosing to publish a statement or instead introduce a modern slavery policy to outline its approach in helping to tackle human trafficking and related offences. While this may not be legally required, it will be important to customers and suppliers who may ask for a written document.

 

What do organisations need to do?

 

The Modern Slavery Act collates all the offences related to human trafficking and it also brings in a significant obligation for all large employers to produce an annual statement on these issues.

The statement will need to explain steps taken that year by the organisation to identify, prevent and mitigate modern slavery in their operations and supply chains.

The contents of the statement are not legally prescribed and the statement can simply state that no steps have been taken to deal with modern slavery risks. However, the statutory guidance suggests that the following areas are covered:

 

• Organisation structure and supply chains
• Policies in relation to slavery and human trafficking
• Due diligence processes
• Risk assessment and management
• Key performance indicators to measure effectiveness of steps being taken
• Training on modern slavery and trafficking

 

Whilst the six areas are guidance and not requirements, it is advisable for statements to cover all these areas, such as the details of policies and procedures, a description of the training provided to staff, and commercial agreements your organisation has in place regarding obligations on suppliers to comply with minimum standards and ethical practices. This will help you avoid the reputational risk associated with the perception that a Statement is ‘incomplete’.

If an organisation is unable to report on any area, they will have to include an explanation on why this is the case. Organisations will need to publish their statements by 30 September each year, on the online UK Government registry. Statements will have to include the date of corporate board approval and director sign-off

Group statements will need to identify every entity within the remit of the UK Act, or within the remit of the Group.

To demonstrate that the business has met the minimum legal requirements, it has to:

 

• Update the modern slavery statement every year to include the details of how the organisation met the criteria for the preceding financial year; it should be published within six months of the business’ financial year end
• Publish the modern slavery statement on your UK website; you can also register your most recent statement on the Government’s modern slavery statements registry portal
• Get approval from the board of directors (or equivalent management body) and clearly state this and the date it was obtained on the statement
• Get sign off from a director (or equivalent) or designated member (for LLPs)

 

While it is not a requirement, it is expected that a business will be able to build on and improve the quality of information in each successive statement to showcase how it is acting transparently, targeting actions where they can have the most impact and making year on year progress.

 

Registry

 

UK businesses required to produce an annual modern slavery statement should publish this in a new online registry operated by the Home Office.

The Modern Slavery Statement Registry is designed to make it easier for consumers and investors to search for statements, and to compare the actions that businesses subject to the requirements are taking to identify and address the risks of modern slavery in their operations and supply chains. Publication in the registry is currently voluntary, but the government intends to legislate for mandatory reporting under planned changes to the regime.

The registry, which replaced a previous voluntary initiative run by the non-profit Business and Human Rights Resource Centre, followed a recommendation of the independent review. The government published its own modern slavery statement of March 2020 in the registry and encouraged businesses in scope to submit their most recently published statement “to demonstrate that they have reported”.

 

Penalties

 

The government may issue civil proceedings to require an organisation within scope to produce a statement if it does not do so. It cannot currently impose monetary penalties for non-compliance. An organisation can comply with the letter of the law by publishing a statement that it has not taken any steps to ensure there is no slavery or human trafficking in its business or supply chains.

Following an independent review of the Act, published in May 2019, the government consulted on measures to strengthen the regime. This includes extending the reporting requirements to public bodies which have a budget of £36m or more, including local authorities in England and Wales; mandating the content of modern slavery statements and requiring director sign-off; and introducing civil penalties for non-compliance in line with the development of a planned single enforcement body for employment rights.

 

How to comply with modern slavery obligations

 

Whilst there are specific policies which may assist, it is a general culture of strong disclosure and communication across different departments, particularly in larger or more decentralised businesses, which will help your business to comply with the Act.

In terms of practical actions which can be taken, it would be advisable to consider working groups whose specific purpose is to look at how the Act should be complied with. It is important to remember though, that any actions or policies should be proportional to the risk and resources of the business and so it is reasonable to consider this when putting measures in place to comply with the Act.

 

Supplier agreements

 

When it comes to policymaking, developing new, modern slavery-specific policies or redrafting existing policies such as supplier codes of conducts – this might be a good place to start. Businesses would be well advised to integrate relevant legal conditions into supplier agreements, where possible, either at the beginning of the relationship or at an appropriate time in a contract, for example at re-tendering.

 

Risk assessment

 

You should also look at risk assessment and whether this is thorough enough. If you consider that any suppliers are ‘high risk’, further investigation into their practices, including a probing but relevant questionnaire can be sent to that supplier for completion.

We can assist you with not only reviewing your Statement and policies, but also with risk assessing your supply chain by drafting the questionnaire and sensitively investigating a supplier’s processes and practices and carrying out a thorough due diligence process either at the beginning of or during your relationship with a supplier.

Our specialist advisers can help you review the Statements released by your suppliers and look at what other information you need to ensure you are complying with the Act. We can also review relevant clauses in third party agreements and advise on how these might be amended in your business’ circumstances to better comply with the Act.

 

Modern Slavery Bill 2022

 

Announced in the Queen’s Speech on 10 May 2022, the government revealed plans to introduce a Modern Slavery Bill during this parliamentary session. 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).

While the proposed Bill is yet to be published, we expect to see a strengthening of requirements in the following areas:

 

Requirements extending 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.

 

New civil penalties for non-compliance

 

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.

 

Prescriptive content for statements

 

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.

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 is 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.

 

Enforcement

 

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 there is no planned separate legislation for this.

 

Need Assistance?

 

DavidsonMorris’ employment law specialists are on hand to advise employers on legal compliance, including meeting obligations under the Modern Slavery Act and changes to duties under the new Bill.  Combining legal expertise with substantial experience of HR best practice, we can support your organisation in ensuring optimal impact from your HR policies and procedures, while mitigating legal risk. For help and advice, contact us.

 

Modern Slavery Act FAQs

 

What is the Modern Slavery Act?

The Modern Slavery Act 2015 is a piece of legislation passed by the UK government to combat modern slavery and human trafficking. It requires businesses to take steps to ensure that slavery and human trafficking are not taking place in their operations or supply chains.

 

Which businesses are required to comply with the Modern Slavery Act?

Any commercial organisation operating in the UK with a total annual turnover of £36 million or more is required to comply with the Act, including the publication of a modern slavery statement.

 

What should be included in a modern slavery statement?

A modern slavery statement should outline the steps a company has taken to prevent modern slavery within its operations and supply chains. This may include information on policies, due diligence processes, risk assessments, and staff training.

 

When must a modern slavery statement be published?

A modern slavery statement must be published annually, typically within six months of the company’s financial year-end. The statement should be approved by the board of directors and signed by a director.

 

Are smaller businesses required to publish a modern slavery statement?

Smaller businesses with a turnover below £36 million are not legally required to publish a modern slavery statement. However, it is considered good practice, and many smaller companies choose to do so voluntarily to demonstrate their commitment to ethical business practices.

 

What are the consequences of non-compliance with the Modern Slavery Act?

While the Act currently does not impose financial penalties for non-compliance, failure to produce a modern slavery statement can lead to reputational damage and legal challenges. The government also has the power to seek an injunction to enforce compliance.

 

How can businesses ensure compliance with the Modern Slavery Act?

Businesses can ensure compliance by regularly reviewing and updating their modern slavery policies, conducting risk assessments, providing employee training, and maintaining transparent supply chains. Engaging with suppliers and stakeholders to raise awareness is also crucial.

 

What are the signs of modern slavery that businesses should be aware of?

Signs of modern slavery can include workers who are fearful or show signs of abuse, poor working conditions, unclear employment contracts, excessive working hours, and restrictions on movement. Businesses should be vigilant and report any suspicious activities.

 

Can employees report concerns about modern slavery within their company?

Employees are encouraged to report any concerns about modern slavery to their employer through internal reporting mechanisms. They can also report directly to the relevant authorities or seek advice from organisations such as the Modern Slavery Helpline.

 

Glossary

 

 

Term	Definition
Modern Slavery	The exploitation of individuals through forced labour, human trafficking, debt bondage, and other forms of involuntary servitude, where the person is unable to refuse or leave.
Human Trafficking	The illegal trade of humans for the purposes of forced labour, sexual exploitation, or other forms of exploitation.
Forced Labour	Work or service that is demanded from a person under the threat of any penalty and for which the person has not offered themselves voluntarily.
Supply Chain	The sequence of processes involved in the production and distribution of a commodity, from the sourcing of raw materials to the delivery of the final product to the consumer.
Modern Slavery Statement	A public document that outlines the steps an organisation has taken to ensure that slavery and human trafficking are not taking place within its business or supply chains.
Due Diligence	The process of investigating and assessing the potential risks associated with a business decision, particularly in relation to human rights and ethical business practices.
Risk Assessment	The systematic process of evaluating potential risks that could be involved in a projected activity or undertaking, including the risk of modern slavery in business operations.
Compliance	The act of adhering to legal requirements, regulations, and ethical standards, particularly in relation to the Modern Slavery Act.
NGO (Non-Governmental Organisation)	A non-profit organisation that operates independently of any government, often involved in humanitarian and advocacy work, including combating modern slavery.
Annual Turnover	The total income generated by a business within a financial year, which is used to determine whether the business is required to comply with certain legal obligations, such as the Modern Slavery Act.
Injunction	A legal order that requires a person or organisation to do or cease doing a specific action. In the context of the Modern Slavery Act, an injunction can be sought to enforce compliance.
Ethical Business Practices	Business actions and policies that are morally right, including treating employees fairly, ensuring safe working conditions, and avoiding exploitation.