What is the Modern Slavery Act?
The Modern Slavery Act is an Act of the Parliament of the UK. The Act received royal assent on 26 March 2015 and came into force on 29 October of the same year. It is the first piece of UK legislation – and the first in Europe – to focus on prosecuting and preventing acts of modern slavery in supply chains.
Modern slavery covers an array of issues including human trafficking, child labour and cases of debt bondage. In practice, the Modern Slavery Act makes companies accountable for cases of labour abuses and slavery across the entire value chain.
The Act was introduced to ensure that no form of slavery is linked to UK services and products and to show investors, employees and consumers that more transparent and proactive stances are being taken by businesses to tackle modern slavery. The UK Home Office has said it is not acceptable for any eligible companies to avoid the Act, and statements of compliance must be issued annually.
Why is the Modern Slavery Act important?
The Act ensures that UK businesses are not benefitting – willingly or otherwise – from modern slavery. The International Labour Organisation (ILO) estimates there are more than 21 million people across the world suffering from some degree of forced labour – the term used to describe all forms of modern slavery.
In the UK alone, an estimated 13,000 people are working under modern slavery conditions across an array of sectors ranging from brothels and cannabis farms to the agriculture and hospitality sectors. According to the UN, modern slavery is the second-largest criminal industry in the world, and the ILO claims that $150bn in annual profits are sourced from it.
Who does the Modern Slavery Act apply to?
Any business or business subsidiary with a global turnover of £36m or more that supplies goods and services to the UK, or is based in the UK, now has to publish an annual statement of compliance with the Modern Slavery Act.
Foreign companies and subsidiary arms that carry out business actions or transactions in the UK will also have to comply with the legislation, along with any overseas arm of a UK company.
How does the modern slavery statement process work?
Businesses that are covered by the Act will have to publish an annual slavery and trafficking statement. The business must ensure the statement is made visible on an easily-accessible and prominent part of the company website, and it must be signed off at the boardroom level.
There is no rigid template for any company to follow when producing a statement, but it must set out the steps that a business has taken to ensure that modern slavery isn’t present in any part of its operational business and supply chain.
What are the benefits of complying with the Modern Slavery Act?
The Modern Slavery Act is an effective piece of legislation for raising corporate awareness of modern slavery. The fact that the modern slavery statement must be approved at boardroom level means the issue – which may have previously been overlooked – will gain the attention of the individuals responsible for setting the business agenda.
In an era of heightened public scrutiny – epitomised by the strong reaction to a recent TV programme highlighting human rights abuses found in supply chains of high-street retailers – the Act can help to enhance a company’s reputation. Embedding a modern slavery statement as best practice could also lead to greater trust from consumers, suppliers and the workforce.
What happens if a company fails to comply with the Modern Slavery Act?
Companies that fail to comply with the Modern Slavery Act could be subjected to a High Court injunction that orders them to comply, which would be accompanied by a fine.
An ‘unlimited’ fine is possible if a company does not submit an annual modern slavery statement. However, the Home Office – the body that oversees the statements – is yet to issue any legal enforcements, meaning the risks up to this point have been entirely reputational.
These reputational risks are of great importance, though, as any company that fails to produce a statement or produces one with minimal or no level of ambition could face external pressure from campaigners for avoiding the issue or treating it as a ‘tick-box’ exercise.
Companies that reach out to consultants to help them produce a modern slavery statement could also suffer reputational risks if they don’t move beyond compliance. Consultants may offer the same, standardised template to numerous companies, leaving little difference in the statements of various businesses across different sectors which will again appear to be a ‘tick-box’ approach.