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Focus on Regulation

UK Modern Slavery Act – are tougher disclosure requirements on their way?

Disclosure requirements under the UK Modern Slavery Act 2015 (‘MSA’) have pushed many businesses operating in the UK to gather and interrogate information about human rights risks across their operations and supply chains – but for some advocates of the MSA and campaigners, the new disclosure regime has fallen short.

The shortcomings are addressed to some by updated guidance published by the government, and by a private members’ bill currently in the House of Lords. Even if the bill does not secure government support at this stage, it may still influence the future development and strengthening of the requirements. There remains pressure from civil society and within parliament for more fundamental changes to the disclosure regime.

Experience and shortcomings

Campaigners claim that the disclosure requirement is too weak inherently because it says only that a company ‘may’ disclose six specified categories of information. Monitoring and enforcement mechanisms are said to be inadequate, resulting in low levels of compliance (some reports claim that less than half of all obligated companies have published a statement).

Earlier this year, the UK’s anti-slavery commissioner, Kevin Hyland said that most statements failed to comply with the basic legal requirements and that “even statements that do legally comply have a lot of room for improvement with many simply being reiterations of generic human rights policies.”

In July, the Parliamentary Joint Committee on Human Rights echoed these concerns and said that “many statements do not reveal much, if anything, about the practical steps being taken to tackle modern slavery“. The Committee highlighted the absence of a central repository for reports, and suggested that the scope of the MSA might be broadened to cover other human rights matters.

Updated guidance

In October 2017, the UK Government released updated guidance (available here). Whilst it does not change the legal requirements under the MSA, the new guidance:

  • instead of saying that a statement ‘may’ include six categories of information, says that companies ‘should aim to include’ such information (although the MSA itself still says ‘may’);
  • encourages companies with a turnover of less than £36m to publish a statement (even though they are not legally required to do so);
  • includes a definition of child labour based on that used in ILO conventions (although the guidance adds that ‘child labour will not always constitute modern slavery’); and
  • includes ‘best practice’ guidance in relation to approving and publishing a statement, which says that statements should be published as soon as ‘possible’ (rather than ‘reasonably practicable’) after the financial year end.

Although these changes are not particularly significant, it was difficult for the government to go further without amendment to the MSA itself. However, the updated guidance does not attempt to provide further clarity of the meaning of terms currently used in the MSA, and in particular the meaning of ‘carrying on business’ in the UK, which has probably caused the most confusion and uncertainty for businesses.

Private members’ bill

The Modern Slavery (Transparency in Supply Chains) Bill, introduced by Baroness Young of Hornsey as a private members’ bill, had its first reading in the House of Lords on 12 July 2017, and is awaiting a second reading. The bill would amend the MSA to require:

  • statements to include the categories of information specified in the MSA;
  • a company that has not taken any steps to address slavery and human trafficking risks to explain why it has taken no such steps; and
  • the government to publish a list of all organisations subject to the disclosure requirements.

It is not clear whether the bill has sufficient government support to become law, although it is doubtful how much difference in practice these amendments would make. Most statements published so far include the information that the MSA currently says ‘may’ be included, and few if any have said that no steps to address slavery and human trafficking risks have been taken.

The bill is similar to a bill introduced by Baroness Young in the last parliament which had passed to the House of Commons and was supported by the Parliamentary Joint Committee on Human Rights. Although private members’ bills do not usually become law, it is worth bearing in mind that the current disclosure requirements were first proposed in private members’ bills introduced in the House of Commons in 2010 and 2012, and Baroness Young played an active and influential role in the development of the MSA.

The future

Although both the current bill and the update guidance are less ambitious than they might have been, there remains pressure from civil society and within parliament for more fundamental change. Business should be prepared for further requirements relating to human rights due diligence and disclosure, and the increasing importance of having a full understanding of supply chain risks. Businesses should also be aware that under the existing MSA guidance, there is an expectation for statements to show progress each year.

A number of other jurisdictions have implemented similar disclosure requirements relating to modern slavery and other human rights risks in supply chains (including California, Australia, France, and the Netherlands) and other jurisdictions are thought to be considering similar regimes.