You may already be aware that the UK Modern Slavery Bill was introduced to the House of Commons on 10 June 2014 and is working its way through Parliament.
Last week, Provisional Notices of Amendments were published that include significant new proposals for large commercial organisations doing business in the UK to report on the steps they are taking to eradicate slavery and human trafficking in their businesses and supply chains. These amendments include what appear to be two competing proposals: one from the Secretary of State, Theresa May, and the other from three Labour MPs, Diana Johnson, David Hanson and Phil Wilson, who are part of the Public Bill Committee scrutinising the Bill.
At a glance, the key points are as follows:
The Secretary of State’s proposal: “Transparency in supply chains etc.”
- This proposal would require large companies and partnerships carrying on business in the UK to prepare a slavery and human trafficking statement for each financial year and post the statement on its website or make it available on request.
- A commercial organisation would be caught by this requirement if it supplies goods or services and has a sufficiently large turnover (yet to be prescribed).
- The statement would set out the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any part of its own business or in its supply chains, or state that the organisation has taken no such steps.
- The Secretary of State may issue guidance about the duties imposed on commercial organisations to make a statement, including guidance about the kind of information which may be included by the organisation in the statement.
- The duties imposed on commercial organisations would be enforceable by the Secretary of State bringing civil proceedings in the High Court (for an injunction, or in Scotland, for specific performance).
- There is no specific mention of when this proposal would come into force.
Labour MPs’ proposal: “Duty on large UK companies to report efforts to eradicate modern slavery and forced labour”
- This proposal is for the Secretary of State to make regulations under section 416(4) of the Companies Act 2006 or explain to Parliament why no such regulations have been made, in each case by 5 October 2015.
- The regulations would require the directors’ report of a company to contain information about modern slavery and forced labour in the supply chain for which the company is responsible.
- The regulations would need to be in force in relation to quoted companies, by 6 January 2016, and in relation to large private companies, by 2 January 2018.
- The regulations would contain provisions on the company’s reporting of work in certain specified areas:
- accountability (including policy commitments and due diligence processes);
- investigating, monitoring and auditing of relevant risks in the UK and throughout the company’s global supply chains;
- support and access to remedy for victims of forced labour and modern slavery; and
- training of staff and suppliers, access to expertise and advice.
- Although not explicit in the proposal, compliance would presumably be enforced by the Financial Reporting Council, consistent with Section 419(4) of the Companies Act 2006.
Potential implications for UK businesses
There has been extensive debate on whether the Bill should contain provisions requiring UK companies to report on slavery and human trafficking in their businesses and supply chains and what form these requirements should take.
The Bill will be discussed and debated in both Houses of Parliament before it passes into law. While its final form remains unclear, the legislation will probably contain some form of corporate reporting requirement.
These and other proposals in the Bill would have far reaching implications for UK businesses and their supply chains across all sectors.