Modern Slavery Act: The toothless tiger grows fangs and gets ready to roar

The Bill is short, to the point and explosive: 

1. The Commissioner is given the power to issue formal warnings to commercial organisations who fail to meet the requirements of the Act concerning disclosure and transparency.
   
   
2. The Bill introduces requirements to:  
   • publish and verify information about the country of origin of sourcing inputs in the supply chain; 
   • arrange for credible external inspections, external audits and unannounced spot checks; and 
   • report the use of employment agents acting on behalf of an overseas government.
3. The Bill proposes two criminal offences:
   
   • The offence of knowingly or recklessly providing a modern slavery and human trafficking statement that is false or incomplete in a material particular. This offence focuses on the person or persons responsible for the statement. It carries a custodial sanction on indictment of up to two years imprisonment and on summary conviction of up to a year and a fine on indictment amounting to 4% of annual global turnover capped at £20m. 
   • The offence of continuing to source items from suppliers or sub-suppliers which fail to show minimum standards of transparency following a formal warning from the Commissioner. The sanction in this case is a fine not imprisonment and the fine is the same as for the above offence.
4. There is a get-out-of-jail card for persons responsible for the statement if it is knowingly or recklessly false or incomplete. That needs the person to have taken all reasonable steps to ensure the statement is corrected and to have informed the Commissioner asap on finding the relevant statement to be false or incomplete.

If the Bill is enacted largely as drawn, and it is hard to see who would challenge the proposal and on what grounds, minds will clearly be focused. No longer is lip service or plain disobedience an option with custodial sentences and GDPR level fines replacing the not very alarming threat of the Secretary of State bringing proceedings for specific performance. The stick has been unveiled and it’s a pretty impressive one! 

The addition information requirements and the requirement for credible external inspections, external audits and unannounced spot checks potentially puts a material burden on MSA compliance obliged organisations and in turn their supply chain who are pulled into compliance by their MSA obliged customers. The requirement on origin of source will dictate specific notification and disclosure obligations being introduced to supply contracts to gather the necessary information and businesses will need to keep track on their use of employment agents acting on behalf of overseas governments – no doubt we will have more guidance on what that element is focused at in due course. For the time being, I suspect it is a measure to address government condoned operated forced labour. Also in need of some guidance is the inspections, audit and spot checks requirement – surely some level of proportionality must apply and some lead is needed on the geographic scope of the obligation and the depth in the supply chain it might apply to. If I am checking Mrs Miggins Pies do I send my inspection team into her kitchen? To the farm she sources her beef from? To the cattle feed agent that supplies the fodder for the cattle? To the detergent supplier and manufacturer in regards Mrs M’s washing up detergent? To the plastics supplier to the plastic bottle supplier to the detergent manufacturer? and so on and so forth. 

If the Modern Slavery (Amendment) Act 2021 is close to the Bill the hitherto rather lackadaisical approach to Modern Slavery Act compliance is presumably over. I predict a deal of businesses looking at their statements with an interest and degree of attention for the most part not seen to date.  

Find out more:

Webinar: Modern slavery and Ethical, Social and Corporate Governance: The advantages to businesses in doing the right thing

Article: Modern Slavery in retail sector supply chains: dealing with investigations