Tom Stocker

Under s.54 of the Modern Slavery Act 2015, companies which carry out business in the UK and with a turnover of £36 million or more, are required to publish a public statement on their website that outlines the measures they have taken to prevent modern slavery within their own business and supply chain.

The statement must be approved by the board, signed by a director and published with a prominent link on the company’s homepage. The obligation has encouraged greater preventative measures and corporate transparency.

However, it has been criticised for not imposing penalties on companies that fail to comply, resulting in a large number of businesses resorting to publishing generic statements that do not change substantively from one year to the next.

While some companies disclose the findings of risk assessments and due diligence audits, others report only their policies without providing detailed information on the risk of modern slavery in their supplier chain.

Public sector organisations are also not currently in scope of the requirements, exacerbating concerns that there are significant gaps that undermine the objective of s.54, which is to encourage organisations to police their service providers and suppliers.

Within the Immigration and Asylum Bill, which was introduced to Parliament on 30 June, the government has now signalled its intention to strengthen the requirements of s.54 with significant new duties.

These include increasing reporting requirements, including mandatory requirements to report the outcome of risk assessments and due diligence, introducing  financial penalties for compliance failings, and a specific “name and shame” mechanism for companies that fail to publish modern slavery statements.

The proposed changes, if signed into law, would be significant. Penalties are now proposed, along with a requirement for parent company certification of a subsidiaries statement.

This will move modern slavery statements from almost being a discretionary compliance topic to a mandatory compliance topic, requiring deeper thought and resource allocation.

The bill also proposes extending the s.54 obligation to public authorities that meet certain budget thresholds, mandating the inclusion of certain contents in a modern slavery statement.

While the provisions do not yet mandate due diligence in supply chains, which will be of disappointment to some, they do go some way towards addressing the recent criticisms.

In particular, organisations in scope must give details of their modern slavery risk assessments and mitigation measures as well as their modern slavery policies and procedures, or specifically say that risk assessments, due diligence and policies are not in place.

The bill also proposes to strengthen enforcement with provisions to impose financial penalties for failure to comply without “reasonable excuse”, up to a maximum of either £1 million or one per cent of turnover or budget.

Modern slavery statements and preventative measures will inevitably need to be given more thought and resources going forward.

Tom Stocker is a partner at Pinsent Masons