Background

The Modern Slavery Act 2015 ("MSA") became law in March 2015. Among other provisions, the MSA states that companies which supply goods or services and have a total annual turnover of not less than £36m must produce a 'slavery and human trafficking' statement for each financial year. The statement must set out the steps the company has taken to make sure such prohibited practices are not present in their business and supply chains.

Whilst the government believes the MSA is having some beneficial effects, the House of Commons and House of Lords Joint Committee on Human Rights ("the Committee") has identified shortcomings of the MSA[i]. It has therefore urged the government to facilitate the passage of Baroness Young of Hornsey's Modern Slavery (Transparency in Supply Chains) Bill ("TSC Bill") and, failing that, recommended that the government introduce its own legislations to rectify these problems.

Shortcomings of the MSA

The Committee identified the following problems with the MSA:

  • Inadequate reporting requirements – many statements do not reveal much or anything about the practical steps being taken to tackle modern slavery, with some statements silent on their risk assessment processes and others not signed off by the company director. This is blamed on the MSA's weak requirement which says only that companies 'may' include a number of details in their reports.
  • No central repository of reports – there is no list of companies that are required to report and no requirement for businesses to upload their statements onto a central database. As a result, it is hard for the public, investors and the Government to monitor compliance and put pressure on companies that have not met their obligations.
  • Scope – the MSA has been criticised for focusing only on slavery, without addressing other human rights issues that may arise in supply chains. Some have called for it to address other rights, such as freedom of association and collective bargaining for labourers.
  • Lack of awareness among businesses and not including public bodies – research has indicated that whilst large companies have been aware of the MSA many smaller businesses do not know of its existence. In addition, there has been criticism that the MSA does not apply to public bodies despite the fact that many of them exceed the £36m annual turnover threshold.

What next?

The Committee has advocated the government to implement the TSC Bill as it amends the MSA so that it:

  • includes public bodies in the transparency in supply chains requirements of the MSA;
  • requires companies and public bodies to publish their statements in their company reports and lodge them with the appropriate bodies, e.g. Companies House or the Charity Commission;
  • requires the Secretary of State to compile a list of all companies that are compliant with the MSA to more easily allow the public, NGOs and other bodies to monitor compliance; and
  • prevents public bodies from procuring services from companies that have not conducted due diligence.

At the time of writing, the TSC Bill had been passed by the House of Lords but has since paused after its first reading in the House of Commons. It remains to be seen if it will progress after the general election.

Conclusion

Irrespective of whether the TSC Bill becomes law, the Committee has made it clear that further amendments to the MSA are required. It is likely therefore that businesses should be prepared for further obligations to be imposed on them in this area, either through the TSC Bill or alternative subsequent legislation. No company should be prepared to ignore the existence or possibility of slavery within its business structure.