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Business and Trade Committee calls for a strengthened Modern Slavery Act

In a recent report entitled “Make Work Pay” (the ‘Report’) - which was produced as part of an inquiry on the new Employment Rights Bill - the Business and Trade Committee (the 'Committee') called for strengthening the Modern Slavery Act 2015 (the ‘Act’) and for the UK to adopt measures to improve due diligence and block products made with forced labour. In this Quick Read, we look at the Committee's findings, including how the Act has performed and recommendations to the Government on how to enhance it. (Our previous article reviews recommendations from a House of Lords Select Committee to the Government on how to improve the Act and bring it in line with international best practice.)

Brief background

The Act is the UK’s main legal framework for assessing forced labour issues in supply chains. Under section 54 of the Act, the purpose of which is to encourage greater transparency, companies supplying goods and services with more than £36 million in turnover are required to produce a “slavery and human trafficking statement” each year in which they state the steps they have taken to ensure that slavery and human trafficking is not taking place in their business and supply chains, or that they have taken no such steps. Though section 54 lists six areas that a company may cover, such as its due diligence processes in relation to slavery and human trafficking, it is not obligated to do so. The Government is currently considering how it can strengthen the section 54 regime.

The Report’s findings

1. Performance

The Report concludes, based on case studies, that there is significant inconsistency in the transparency of Modern Slavery Statements among companies. As a result, it is difficult for consumers to make informed decisions on the source of their products when companies are not taking the same approach and providing adequate information.

Although the Report does address reporting success stories, other corporate statements are called out for their brevity and lack of salient detail. 

2. The impact of no drafting changes

The Report notes that the UK could be at risk of becoming a ‘dumping ground’ for products made with forced labour if changes are not made to the Act to keep up with its global partners on legislative reforms to combat modern slavery. For example, the EU has introduced the Forced Labour Regulation (FLR) in order to prohibit the sale, import and export of goods made using forced labour (see further here).

3. Align to international standards

The Report cites examples of other jurisdictions which are leading the way on tackling modern slavery and further states that the UK is at significant risk of falling behind those on the world stage. The Report advises the Government to align with recognised best practice, prioritising the introduction of mandatory human rights due diligence requirements for companies and introducing an import ban on products made with forced labour. 

5. Recommendations to Government

The Report advises the Government to review the Act and make changes to section 54 to improve transparency. In particular, these changes include: 

  • prescribe mandatory areas of reporting for section 54 statements;
  • removing the ability for businesses to state they have taken ‘no steps’ to address modern slavery;
  • introduce penalties and a ‘name and shame’ scheme for non-compliance; and
  • consider creating a ‘failure to prevent’ offence.

Final thoughts

Although the UK was among the first jurisdictions to impose requirements on companies in connection with modern slavery, there is a growing consensus that the current Act is not up to the scale of the challenge. A growing chorus of voices – including leading companies – are calling for an upgrade to drive up standards and level the playing field. 

We will be keeping a close eye on this to see if any enhancements will ultimately be made to the Act. In the meantime, the Home Office has recently released updated statutory guidance to the Act, on which we will write more in our next Quick Read on this topic.

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