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A critical reassessment of the Modern Slavery Act from the House of Lords

In October 2024, a House of Lords Select Committee—appointed to consider the Modern Slavery Act 2015 (the “Act”)—published its report, The Modern Slavery Act 2015: becoming world-leading again (the “Report”).

When passed, the Act was described as world-leading and ground-breaking in combatting modern slavery. However, since then, the world has changed and international practice has developed. The Committee now describes the Act as “too limited to have a significant practical impact”.

The Government published its  response to the Report in December 2024, describing the Committee’s series of recommendations for reform as “valuable in steering the Government as it brings forward a reformed modern slavery system”.

We have reviewed the Report along with the Government’s response and summarised some key takeaways below.

Impact of immigration legislation

The Report highlights that recent immigration legislation has limited the access to support for victims of human trafficking and modern slavery, with particular reference to the Nationality and Borders Act 2022, the Illegal Migration Act 2023 and the Safety of Rwanda (Asylum and Immigration) Act 2024. The Committee describes a link that can be drawn between immigration policy and the development of a hostile environment towards these victims. The Committee recommends that the difference between people who come to the UK willingly and those who are trafficked as victims of modern slavery “should lie at the heart of government policy and any future legislation about illegal migration”.

In its response, the Government recognises the distinction between migrants and those who are trafficked as victims of modern slavery. Accordingly, it has moved the modern slavery portfolio to sit underneath the Minister for Safeguarding and Violence Against Women and Girls, as opposed to the Ministers responsible for immigration, emphasising their victim-centred approach.  The Government also confirms that the migration partnership with Rwanda will end and any legislative plans resulting from this decision will be published in due course.

Enforcement

The Committee calls on the Government to create an “arms-length Single Enforcement Body” to ensure stronger compliance with relevant labour rights and standards. This body would act as a single point of contact for labour exploitation across all sectors. The Committee recommends that it be designed from the perspective of workers and victims, ensuring a helpline acts a single point of contact.

The Government agrees that “the UK’s labour market enforcement system is fragmented and ineffective”. It notes that action is underway to establish a Single Enforcement Body known as the Fair Work Agency (FWA). The FWA will act as the principal body ensuring compliance with labour rights and standards across all sectors. It will integrate the three current enforcement bodies: the Gangmasters & Labour Abuse Authority (GLAA), Employment Agency Standards (EAS) Inspectorate and HMRC’s National Minimum Wage team. The FWA will be a single point of contact for reporting labour exploitation and related concerns with a focus on victims of labour exploitation.

Supply chain transparency

Annual statement on slavery and human trafficking

Under section 54 of the Act (“s54”), companies of a certain size (i.e., £36 million in turnover) that are supplying goods or services in the UK have to publish a “slavery and trafficking statement” for each financial year. At present, the statement must be of “the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place (i) in any of its supply chains and (ii) in any part of its own business”, or state that the organisation has taken no such steps.

The Committee considers that the current s54 disclosures are not sufficiently extensive, detailed or prescriptive to allow for a proper assessment of a company’s approach to supply chain due diligence or to provide a basis on which to hold them accountable for their transparency. Accordingly, the Committee recommends expanding s54 to prescribe topics that the statements must cover and require their mandatory publication on a registry.

The Committee also notes that there are currently no meaningful sanctions in place to enforce s54 and calls on the Government to introduce proportionate sanctions for organisations that do not comply.

In its response, the Government described the modern slavery statement registry as a “powerful tool for transparency”. In April 2024, the Home Office announced a number of improvements to the registry to increase the number of statements being uploaded voluntarily. This included, for example, email reminders to registered companies every year and changes to the statement summary pages. The Home Office is planning to introduce further improvements to those that were announced in April 2024, including development of a dashboard that will provide more data to the public and updates to the s54 statutory guidance.

In addition, the Government responded by informing the Committee that the Home Secretary can seek an injunction to require compliance if an organisation fails to comply with s54 (albeit this has not been used to date). The Government recognises that there will need to be legislative and non-legislative change in order to strengthen penalties for non-compliance and will  set out next steps in due course.

Due diligence

As the Committee highlights, recent developments in mandatory human rights due diligence legislation in the EU suggests that the UK as “fallen behind” in this area. The EU Corporate Sustainability Due Diligence Directive (CSDDD) entered into force in July 2024. Under CSDDD, large companies operating in the EU are required to identify, prevent, mitigate and account for the potential and actual adverse impacts of their activities on human rights and the environment. The Committee recommends the introduction of legislation—compatible with the standards of the international landscape—that requires companies meeting a threshold to undertake modern slavery due diligence in their supply chains and to take reasonable steps to address problems.

In its response, the Government says that it supports voluntary due diligence approaches taken by UK businesses in line with the Organisation for Economic Co-operation and Development’s Guidelines on Multinational Enterprises (the “OECD Guidelines”).  The OECD Guidelines are a set of voluntary principles and standards for responsible business conduct in areas such as employment, human rights and the environment. The UK National Contact Point (“NCP”) plays a pivotal role in promoting the OECD Guidelines and offers a platform for resolving issues that arise when companies are not meeting the standards set out therein.  If a concern is raised the NCP assesses the validity of the complaints and, if appropriate, facilitates a dialogue and mediation.

The Government also highlights its support for the UN Guiding Principles on Business and Human Rights (“UNGPs”). The UNGPs provide a global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity. They outline how businesses should implement the “Protect, Respect and Remedy” framework to ensure that companies respect human rights in their operations. The Foreign, Commonwealth & Development Office (FCDO) is undertaking a National Baseline Assessment to gauge the UK’s current implementation of the UNGPs. This will help to identify existing policies that align with the UNGPs and to determine areas where further action is required.

The Government does not promise or express its support for a mandatory supply chain due diligence regime in the UK. Rather, it says it “supports voluntary due diligence approaches taken by UK businesses to respect human rights and the environment”. This is something the Government will continue to assess by consulting interested stakeholders and considering any further action that will need to be taken.

Import bans

The Report highlights a risk that the UK is becoming a “dumping ground for tainted products”. It refers to import bans in other jurisdictions, including the US and Canada (though it does not refer to the EU’s more recently enacted Forced Labour Regulation, on which we previously wrote about). In the US, the Uyghur Forced Labour Prevention Act (UFLPA) prohibits the importation of goods mined, produced or manufactured whole or in part in the Xinjiang province of China or by entity on the UFPLA Entity List. The Committee recommends the introduction of similar import laws which ban goods being brought into the UK if they are “produced by certain companies known to use forced labour” and are not targeted at any particular countries. This would seem to differ from the approach taken in the EU’s Forced Labour Regulation which will ban goods if forced labour has occurred anywhere in the supply chain. The EU regulation will commence in 2027 and is intended to operate alongside the CSDDD.

The Government’s response to this recommendation is non-committal. It will continue to assess and monitor the effectiveness of the UK’s existing measures, alongside the impact of new policy tools that are emerging.

Implications for businesses

The regulatory complexity of diverging and developing regimes creates challenges for businesses with a footprint in both the UK and the EU (and elsewhere), increasing the cost of compliance. Through the implementation of the CSDDD, the EU has moved toward mandatory human rights due diligence laws while UK businesses may not be subject to the same requirements. An international company may not be able to take a single global approach and will have to be mindful of varying regimes.

Competing companies being subject to different requirements on supply chain due diligence creates  an uneven playing field. UK companies that are required to adhere to more stringent EU standards (because the size of their EU operations brings them within the scope of CSDDD or because an EU commercial counterparty demands compliance as a condition of doing business), face higher costs in respect of enhanced due diligence. While this investment can mitigate risks and boost brand and reputation, these companies may still perceive themselves to be operating at a disadvantage. In light of this, some companies have lobbied the UK Government to implement more stringent regulation in this area: in April 2024, for example, over 150 businesses and investors called on the UK Government to create human rights and environmental due diligence legislation that is aligned with international standards.

What’s next?

The Committee’s recommendations have prompted a critical reassessment of the Act and the UK’s placement as a “world-leader” in developing this legislation. The Committee’s Report and the Government’s response signifies a move toward strengthening enforcement mechanisms and improving transparency in supply chains. However, the Government’s stance preferring voluntary supply chain due diligence, in contrast to the EU’s regulatory approach, suggests a divergent path that may pose challenges for businesses operating across these jurisdictions.  

As of now, there is no anticipated timing as to when any changes to the Act will be proposed. The Government notes however that the Committee’s conclusions will be taken into consideration as part of the Government’s strategic approach to carry out more significant and sustained reform. We will continue to monitor any developments in this area.

For further or tailored advice as needed on the Act or any of the other regulations discussed in this article, please get in touch with your usual Charles Russell Speechlys contact.

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