Posted by David Israel, Partner
Changes to modern slavery statements
The issue of modern slavery has frequently been in the news, and is a compliance issue for many companies. Those compliance steps are now increasing and companies should be aware of what they need to do to ensure their actions are future proof.
Modern slavery statements, which confirm that slavery and human trafficking is not taking place in its business or supply chain, apply to companies that supply goods or services in the United Kingdom and who have an annual turnover of £36 million or more.
There are complicated rules regarding who meets the £36 million turnover threshold, but it is worth noting that it will in most cases include the turnover of subsidiary companies.
The Government registry
On 11 March 2021, the Government launched a modern slavery statement registry online, which provides a platform for organisations to publish their modern slavery statements.
The Government has also started to issue letters to companies who may not have issued a modern slavery statement regarding the new government registry, and an encouragement to publish such a statement on the digital registry.
Whilst companies are “strongly encouraged to submit their most recently published statement on the registry to demonstrate that they have reported”, there is currently no requirement to use this registry. However, that will change. As the government website says:
“If your organisation is required to produce a statement under section 54 of the Modern Slavery Act, in future it will be mandatory for you to submit your statement to the registry as part of the proposed changes to strengthen the reporting requirements to the Act. These measures require legislative change and will be introduced as soon as parliamentary time allows”
So, the changes will become mandatory.
Other proposed changes
The Government has issued a response to the consultation it undertook, and has said that it is now proposing to make the following changes to strengthen the reporting requirements under the Act.
- That the information required under the Act becomes mandatory, rather than voluntary.
- Rather than reporting on action undertaken in the last financial year, the government intends for a consistent reporting period of 1 April to 31 March, with the statement to be published by 30 September.
- It will become a legal requirement for statements to include the date of board approval.
- The Government is also considering penalties for non-compliance.
It is a common requirement for companies to be able to demonstrate corporate and social responsibility, regardless of any separate statutory need. It may be imposed by the client when offering contracts; it may be the adverse publicity garnered by any failures.
It makes commercial sense for smaller companies, not currently caught by the statutory regime, to produce a statement voluntarily. With the focus on modern slavery compliance only going one way, now is the time for companies to mitigate against reputational and legal risk. Companies should ensure that they are complying with the current processes and start to plan for the procedures they need to have in place to ensure compliance going forward.
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