Review promises to bring more bite to the Modern Slavery Act by compelling businesses to take reporting obligations seriously

Posted: 05/02/2019

In July 2018, the Home Secretary announced a review of the Modern Slavery Act (MSA) to be chaired by Baroness Butler-Sloss, Frank Field MP and Maria Miller MP. In January 2019, the Home Office released the review’s second interim report, which looked at the question of increasing transparency in supply chains. Section 54 of the MSA currently requires businesses with a turnover of £36 million or more per year to publish annual statements explaining what steps, if any, they are taking to tackle modern slavery and human trafficking in their supply chains and operations. Many commentators have complained that section 54 of the MSA lacks ‘teeth’ but this may be about to change dramatically. The review’s game changing proposals include:

• businesses being required to have a named, designated board member who is personally accountable for the production of the statement. Failure to fulfil the reporting requirements or to act when instances of slavery are found should be an offence under the Company Directors Disqualification Act 1986;
• amending the Companies Act 2006 to include a requirement for businesses to refer in their annual reports to their modern slavery statement;
• the six areas setting out what a statement may cover should be strengthened so that all areas are mandatory reporting requirements. If a business considers that one of the areas is not applicable, it will have to explain why in its statement;
• strengthening the Government’s approach to tackling non-compliance by adopting a gradual approach: initial warnings, fines (as a percentage of turnover), court summons and directors’ disqualification;
• changing the Government’s public procurement processes to make sure that non-compliant businesses in the scope of section 54 are not eligible for public contracts;
• a new central Government-run repository to which businesses are required to upload their statements and which should be easily accessible to the public, free of charge.

The full review is due to be published in March 2019. In the meantime, it is noteworthy that in California two new laws to combat human trafficking by requiring training and notice posting have taken effect. We anticipate that they are also being considered under the UK Government review. 

The first new Californian law requires hotels and motels subject to the Fair Employment and Housing Act to provide at least 20 minutes of classroom or other effective interactive training and education regarding human trafficking awareness to employees who are likely to interact or come into contact with victims of human trafficking. The mandatory training and education needs to cover:

• the definition of human trafficking and commercial exploitation of children;
• guidance on how to identify individuals most at risk of human trafficking;
• the difference between labour and sex trafficking specific to the hotel sector;
• guidance on the role of hospitality employees in reporting and responding to this issue;
• the contact information of appropriate agencies.

The second new Californian law requires a variety of businesses and other establishments to post a compliant notice regarding human trafficking in a conspicuous place in clear view of the public and employees. The businesses and establishments affected include:

• primary airports;
• intercity passenger rail or light rail stations;
• bus stations;
• truck stops;
• emergency rooms within general acute care hospitals;
• urgent care centres;
• farm labour contractors;
• privately operated job recruitment centres;
• roadside rest areas;
• hotels, motels, and bed and breakfast inns.

According to the US National Human Trafficking Hotline, California had the most human trafficking cases reported in 2017. Whilst Californian employers will appreciate that these new laws indicate that Californian agencies will increase scrutiny for evidence of forced labour crimes within their business operations, many commentators in the UK are looking to the UK Government to do likewise. Regretfully, certain businesses have not helped themselves by failing to demonstrate a commitment to human rights. According to a 2017 report from Business & Human Rights Resource Centre, 43 of the top 100 UK listed companies were assessed as having failed to meet the minimum requirements of the MSA. It is apparent from the UK Government’s review proposals that the consequences for continued non-compliance may become far more serious.

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