Modern Slavery Act: The UK’s Government review of Transparency in Supply Chains continues
April 01, 2019
On 30 July 2018, the Home Office announced an independent review of the Modern Slavery Act 2015 (“the Act”). Two of the key aims of this review were to improve transparency in the supply chains of businesses and to strengthen enforcement for failure to comply. As detailed in our previous blog (published 7 January 2019) the initial stage of this review, specifically regarding section 54 and transparency, saw the Home Office write to approximately 17,000 organisations in October 2018. The Home Office wrote to every company it considered caught by the Act to produce a modern slavery statement (“Statement”). The deadline for following the instructions in those letters expired yesterday (31 March 2019).
As of today (1 April 2019) the Home Office will take stock of the progress that has been made to date and begin an audit of the 17,000 organisations’ statements. They will then issue further correspondence to those companies who have not acted on or responded to their letters. We understand that the Home Office will not ‘name and shame’ any non-compliant companies without first contacting them with a view to resolving the issue.
This audit is just one part of the Home Office’s wider review of the Act. It is envisaged that upon completion of the audit they will have a better understanding of where Statements are consistently falling short and areas where the Act is simply too weak. Such concerns, along with remediatory recommendations were outlined in the review team’s second interim report published on 22 January 2019. If the Home Office opts to follow these recommendations we can expect the following changes to be rolled out when the Act is updated:
More clarity: Creation of a list of companies who must publish a Statement and a more proactive method for identifying those companies. Statements will be publicly available via a central repository. Such increased transparency may lead to increased scrutiny for those companies who fail to take appropriate measures thereby increasing the risk of negative publicity.
Statement’s content: The Six Principles (supply chains, policies on modern slavery, due diligence processes, risk assessment, measuring effectiveness and staff training) which are currently only recommended as the framework for companies’ Statements will become mandatory. It may also be a requirement for those entities which have obligations under the Act to include their Statement in their annual report.
Stronger Enforcement: The Act would grant the regulator with a range of enforcement powers ranging from initial warnings to financial penalties (potentially a percentage of business turnover), court summons, exclusion from public contracts and potentially even the disqualification of directors, should an event of slavery be found in a company’s business or supply chain).
How we can help
Should the above recommendations be adopted into the Act, many companies will need to revisit their Statement and potentially the steps they took to prepare it. Our multidisciplinary team can help your business to conduct a modern slavery ‘health-check’ including undertaking a risk assessment of your supply chain. This may include a review of: your Statement; your approach to supplier risk assessments; a review of relevant clauses in precedent suppliers/third party agreements; and/or recommendations for streamlining and filtering the supplier due diligence processes to allow an increased focus and identification of potential risks.
We will continue to monitor the progress of the independent review and update you on any material developments.