Section 54 of the UK Modern Slavery Act 2015 (MSA 2015) requires large businesses to produce a statement each year setting out the steps they have taken to ensure that their business and supply chains are slavery free, or a statement that they have taken no steps to do this. Legislative reform of some kind has been some time in the offing, particularly since the Government’s response in September last year to the 2019 “Transparency in supply chains consultation” (see our previous Legal Update).

On 15 June 2021, the Modern Slavery (Amendments) Bill was introduced into the House of Lords. The Private Members Bill seeks to amend the MSA 2015 (i) to make it a criminal offence to supply a false modern slavery statement, (ii) to establish minimum standards of transparency in supply chains in relation to modern slavery and human trafficking; and (iii) to prohibit companies using supply chains which fail to demonstrate minimum standards of transparency. This would certainly raise the stakes.

The Bill proposes two criminal offences.

Offence one: false or materially incomplete information in MSA statement – a person who is responsible for a slavery and human trafficking statement commits a criminal offence if information in the statement is false or incomplete in a material particular, and the person either knows it is or is reckless as to whether it is (new section 4ZA).

A “responsible person” is defined as:

  • A director (or equivalent) of the organisation if it is a body corporate other than a limited liability partnership.
  • A member of the organisation if it is a limited liability partnership.
  • A partner of the organisation if it is any other kind of partnership.

The Bill provides a defence if the person takes all reasonable steps to ensure that the slavery and human trafficking statement is corrected, and informs the Independent Anti-slavery Commissioner as soon as practicable after becoming aware that the statement contains information that is false or incomplete in a material particular.  An individual who is convicted on indictment for this offence could face a fine amounting to 4% of global turnover of their commercial organisation (up to a maximum of £20 million) and/or up to 2 years’ imprisonment.

Offence two: continuing to source from supply chain participants after a formal warning – a commercial organisation commits a criminal offence (new section 54ZB) if it continues to source from suppliers or sub-suppliers that fail to demonstrate minimum standards of transparency after having been issued a formal warning by the Independent Anti-slavery Commissioner (new section 41(3)(g)).  A commercial organisation could face a fine amounting to up to 4% of its global turnover (up to a maximum of £20 million).

In addition, the extent of transparency to be demanded of companies will be increased in as much as (new section 41 (5A)) companies will have to:

  • Publish and verify information about the country of origin of sourcing inputs in its supply chain,
  • Arrange for credible external inspections, external audits, and unannounced external spot-checks, and
  • Report on the use of employment agents acting on behalf of an overseas government.

This is a Private Members Bill, so may not be adopted – at least in its current form – but at a minimum it is indicative of some of the thinking that will influence future legislative steps in the UK and elsewhere.

Read more of our Business and Human Rights perspectives here.