The final report of the Independent Review of the Modern Slavery Act 2015 carried out by Frank Field MP, Maria Miller MP and Baroness Butler-Sloss, has been published. It is available here (https://www.gov.uk/government/publications/independent-review-of-the-modern-slavery-act-final-report). Should the government take up the proposals, the Modern Slavery Act could be significantly amended to become more robust. There are over 80 recommendations across the four areas the report considered: the role of the independent anti-slavery commissioner, transparency in supply chains, independent child trafficking advocates and the legal application of the Modern Slavery Act.
The Act has been criticised for not requiring anything more than a statement from qualifying companies setting out what they have done to investigate and address modern slavery in their supply chains. There are a number of measures which are designed to put “teeth into this part of the Act so that all businesses take seriously their responsibilities to check their Supply Chains”. It is estimated by the government that around 40 per cent of eligible companies are currently failing to comply with the legislation in its current form.
The recommendations, should they be adopted, are wide reaching, and for those companies that do only the bare minimum to comply at the moment, the proposed changes could require significant additional resources to be dedicated to ensuring compliance going forward.
For companies that tender for and carry out large public sector contracts, there is the potential to have to invest in fulfilling the correct form of reporting specified by the public body or risk being excluded from future contracts.
The recommendations, which are designed to mandate the form and detail of the statement, will also make it much easier for customers, investors and NGOs to compare efforts companies are taking to tackle human rights issues in the supply chain.
The recommendations for transparency in supply chains fall under six main subcategories in the report and are detailed below:
1. Clarifying the companies in scope
a) Government should establish an internal list of companies in scope of section 54 of the Act and check with each company whether it is covered by the legislation.
b) Individual companies should remain responsible for determining if they need to produce a slavery and human trafficking statement. Non-inclusion in the government’s list should not be an excuse for non-compliance.
2. Improving the quality of statements
a) Section 54(4)(b), which allows companies to report they have taken no steps to address modern slavery in their supply chains, should be removed.
b) In section 54(5) “may” should be changed to “must” or “shall”, with the effect that the six areas set out as areas that an organisation’s statement may cover will become mandatory. If a company determines that one of the headings is not applicable to their business, it should be required to explain why.
c) The statutory guidance should be strengthened to include a template of the information organisations are expected to provide on each of the six areas.
d) Guidance should make clear that reporting should include not only how businesses have carried out due diligence but also the steps that they intend to take in the future.
e) The Independent Anti-Slavery Commissioner should oversee the guidance available to companies.
f) The legislation should be amended to require companies to consider the entirety of their supply chains(current the Act is silent on the matter) . If a company has not done so, it should be required to explain why it has not and what steps it is going to take in the future.
3. Embedding modern slavery reporting into business culture
a) The Companies Act 2006 should be amended to include a requirement for companies to refer in their annual reports to their modern slavery statement. Section 54 should be amended to impose a similar duty on non-listed companies that meet the £36 million threshold but would not be captured by the Companies Act 2006 reporting requirements.
b) Businesses should be required to have a named, designated board member who is personally accountable for the production of the statement.
c) Failure to fulfil modern slavery statement reporting requirements or to act when instances of slavery are found should be an offence under the Company Directors Disqualification Act 1986.
4. Increasing transparency
a) There should be a central government-run repository to which companies are required to upload their statements and which should be easily accessible to the public, free of charge.
b) Statements should be dated and clearly state to which 12-month period they apply.
c) The website hosting the repository should also clearly outline the minimum statutory reporting requirements.
5. Monitoring and enforcing compliance
a) The Independent Anti-Slavery Commissioner should monitor compliance.
b) Government should make the necessary legislative provisions to strengthen its approach to tackling non-compliance, adopting a gradual approach: initial warnings, fines (as a percentage of turnover), court summons and directors’ disqualification. Sanctions should be introduced gradually over the next few years so as to give companies time to adapt to changes in the legislative requirements.
c) Government should bring forward proposals to set up or assign an enforcement body to impose sanctions on non-compliant companies. Fines levied for non-compliance could be used to fund the enforcement body.
6. Government and the public sector
a) Section 54 should be extended to the public sector. Government departments should publish a modern slavery statement at the end of the financial year, approved by the department’s board and signed by the permanent secretary as accounting officer. Local government, agencies and other public authorities should publish a statement if their annual budget exceeds £36 million.
b) Government should strengthen its public procurement processes to make sure that non-compliant companies in scope of section 54 are not eligible for public contracts.
c) The Crown Commercial Service should keep a database of public contractors and details of compliance checks and due diligence carried out by public authorities. The database should be easily accessible to public authorities for use during the procurement process.
The government has said it is considering the review’s recommendations and will respond formally in due course.