Recent statistics indicate that only 50 per cent of organisations required to publish a statement in accordance with section 54 of the Modern Slavery Act have done so, and many of the published statements are deficient. Businesses that have so far adopted a minimum compliance approach should be under no illusion that the current focus on modern slavery and human trafficking will diminish.
The UK led the way with the introduction in 2015 of the Modern Slavery Act, which was introduced both to tackle the issue and to consolidate a number of previous offences relating to trafficking and slavery.
A key element of the Act is private sector engagement with the issue. Section 54 requires large commercial organisations to publish a slavery and human trafficking statement at the end of each financial year. The statement must either describe what steps the organisation has taken during the last financial year to ensure that slavery and human trafficking is not taking place anywhere in its business and supply chains, or that no steps have been taken.
A key criticism of section 54 is the lack of monitoring of compliance and enforcement action by the Government. The Act does provide that the Government can compel a commercial organisation that has failed to publish a statement to do so by obtaining an injunction, but at present the Government does not monitor compliance. At the moment, the policing of section 54 is undertaken by not-for-profit organisations who keep their own registers. The key risk for organisations who don’t comply is therefore reputation and brand damage.
On 4 October the UK Government published updated guidance on section 54. The amendments indicate that the Government is seeking to improve the way organisations comply with section 54, and to improve the quality of information contained in slavery and human trafficking statements. The guidance now encourages organisations which fall below the turnover threshold to voluntarily publish a statement. It also states that an organisation ‘should aim’ to include certain information in its statement and to publish the statement ‘at most’ six months after their financial year-end.
The guidance emphasises the expectation that the statements will show a year-on-year progress in tackling the risks and incidence of slavery and human trafficking in its business and supply chains. The quality of statements has been variable since section 54 came into force, and organisations producing their second statement face the additional challenge of demonstrating how their efforts have developed. In its guidance the Government recommends that organisations keep historic statements available on-line so stakeholders can monitor progress.
It is clear the Government is making efforts to encourage the level and quality of compliance with section 54. But many query whether that is enough. Currently working its way through the House of Lords is a private members bill introduced by Baroness Young: the Modern Slavery (Transparency in Supply Chains) Bill 2017. The Bill seeks to implement a firmer approach to compliance with section 54 through a number of new obligations – including making it mandatory for a statement to contain certain information, placing an obligation on the Government to publish a list of those commercial obligations that have complied with section 54, requiring those that publish a ‘no steps’ statement to explain why, and change public procurement rules so that organisations that have not complied with section 54 cannot participate.
Businesses should therefore take note that the focus on what action organisations have taken is only likely to increase. Negative consequences for those who do not engage with the issue will range from negative press and damaged commercial relationships to potential exclusion from tender exercises.
Sarah Ozanne is an employment lawyer with CMS
