Changes ahead for the UK Modern Slavery Act?

When the Modern Slavery Act became law in March 2015 it was considered a landmark piece of legislation; the first of its kind in Europe and one of the first in the world to address modern slavery and human trafficking.

Other countries soon followed suit, France introduced the Devoir de Vigilance in 2017, Australia passed its own Modern Slavery Act in 2018, and other European countries such as The Netherlands and Switzerland are also working on legislation to eradicate modern slavery at work. Campaigns have started in other European countries such as Finland, and in Hong Kong, they are all calling for the adoption of similar anti-slavery laws.

Other initiatives to address forced labour are taking place in countries as diverse as Brazil, which publishes a dirty list of employers caught using forced labour, and Qatar which entered in a three-year technical cooperation programme with the ILO to achieve respect for fundamental rights at work in Qatar. 

Four years on

Four years on, the UK government has reviewed whether its own law is really working. Weaknesses have emerged, most notably for businesses around compliance with Section 54.  According to the government an estimated third of eligible businesses have not published modern slavery statements. Too many of those that have been produced are felt to be poor.

Analysis of modern slavery statements by the Business & Human Rights Resource Centre in November 2018 found that 73 per cent of FTSE 100 companies were failing to report sufficient measures to tackle modern slavery, leading to the conclusion that for many businesses, compliance is simply a ‘tick-box’ exercise.

Perceived failings

Seeking to address some of these perceived failings, in particular the lack of sanctions for non-compliance with Section 54 and the confusion over reporting obligations, an independent review of the Act was commissioned by the Home Office. Published earlier this year, the review contains a series of recommendations aimed at strengthening and enhancing the current legislation, with a view to ensuring compliance and driving up the quality of the statements.

It contains seven key recommendations, most notably making the six reporting criteria published in the government’s guidance on the Act mandatory; amending the Companies Act 2006 to include a requirement for companies to refer to their modern slavery statements in the annual report and introducing tougher monitoring and compliance enforcement. This would become part of the remit of the Anti-Slavery Commissioner and could include an escalating approach to sanctions from warnings, through to fines and disqualification.

In addition, the review also recommends that companies are no longer given the option to say that no steps have been taken to address slavery. Moreover, companies would be expected to publish the steps they intend to take in the future to mitigate any abuses. Greater accountability is also called for with the suggestion that companies make a board director responsible for their modern slavery statement. The failure to fulfil the requirements should become an offence under the Company Directors Disqualification Act, according to the review.

Companies would be required to consider the entirety of their supply chain, explaining why if this is not done and the steps to be taken the future.

Lack of clarity

Some stakeholders have reported that there is a lack of clarity over which companies are in scope for Section 54. In response to this, the review recommends that the government should establish an internal list of companies in scope and check with the companies to clarify whether they are covered. This would replicate the process employed by the Government Equalities Office for gender pay gap reporting.

The review clearly addresses some of the perceived weaknesses of the UK’s anti-slavery legislation. If enacted, it would raise the bar for anti-slavery legislation such that paying lip service to the Act’s obligations would no longer be an option. Indeed, the review states that, ‘Failure to comply with modern slavery obligations should be viewed as on the same level as failure to file accurate accounts or prevent bribery and corruption’.

Recommended steps

While Brexit is clearly occupying a significant amount of parliamentary bandwidth, businesses should see this review as a clear indication of the likely direction of travel. Those wishing to stay ahead of future legislative changes should consider taking the following steps: –

  • Carry out a company-wide human rights risk assessment to ensure that the salient human rights issues are properly identified in the organisation’s own operations and throughout its entire value chain.
  • Conduct a supply chain risk-mapping exercise to identify the high-risk suppliers and prioritise mitigation actions.
  • Review the organisation’s human rights-related policies and processes to ensure that appropriate systems and mitigation measures are in place to address the salient human rights issues.
  • Assess human rights impacts in operations with a focus on higher-risk activities, business partners and/or geographical areas.
  • Identify the steps that have been taken over the last 12 months and map out the plan for the coming years, with top management’s endorsement.
  • Develop a monitoring system to assess the effectiveness of the systems in place to mitigate human rights abuses so that progress can be measured and reported on annually.
  • Make grievance mechanisms available to any potentially affected stakeholders, including workers and communities, to remedy potential adverse impacts and develop appropriate processes to prevent their re-occurrence.

GoodCorporation has considerable experience assessing and advising on human rights. We have conducted human rights assessments in multiple jurisdictions, including high-risk locations; conducted gap analyses and risk-mapping exercises and run risk-assessment and training workshops. Contact us to find out more about our work in this area.

Posted April 2019