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Businesses warned over modern slavery reporting duties

Approximately 6,200 UK businesses have been issued with a letter advising them of their transparency obligations under modern slavery laws and warned that they risk being listed as non-compliant in the new year.23 Oct 2018

The Modern Slavery Registry tracks compliance with the UK's Modern Slavery Act. In an effort to maintain a complete registry, it has sent the letter to businesses that it believes are subject to the Act and for which it does not yet have statements.

In the UK, organisations with a turnover or group turnover of £36 million or more which are either incorporated in the UK or carry on a business in the UK must report annually on the steps that they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains. That requirement is set out in the Modern Slavery Act.

Recipients of the Modern Slavery Registry's letter have been warned that they risk being included on a list of companies the Registry believes are not meeting their obligations under the Act that it will begin to publish in 2019.

In a separate statement issued late last week, the Home Office announced that it has also written to the chief executives of 17,000 UK companies telling them to "open up about modern slavery in their supply chains". Businesses that fail to do so will be publically named, it said.

According to the Home Office, only around 60% of UK companies subject to the Modern Slavery Act have so far published the required statement under the Act. The department said that while it had seen "examples of good practice", some of the statements that have been published "are poor in quality or fail to even meet the basic legal requirements".

Modern slavery compliance expert Neil Carslaw of Pinsent Masons, the law firm behind Out-Law.com, said: "This outreach by the Modern Slavery Registry, and the statement of the Home Office, has brought the requirements of the Act into focus for many and the letters arrive at a time that similar legislation is being enacted or considered around the world. Companies in receipt of a letter should determine if they, or other companies in their group, are required to report and remedy any failings to provide a statement. There are numerous potential contractual, reputational and other consequences of being found to not have complied with the Act."

In a statement, the Modern Slavery Registry said: "The Modern Slavery Registry is a free and transparent resource that not only tracks compliance with the Modern Slavery Act in the absence of a government run registry, but also provides guidance and the latest analysis on company reporting. We also track whether companies are showing year-on-year improvements in their actions to tackle modern slavery."

"The findings these past three years have been disappointing and companies have failed to meet expectations. Companies should be aware that the Home Office is considering options to drive compliance including tougher sanctions. The Home Office also plans to publish a list of non-compliant companies next year," it said.

The Modern Slavery Registry is operated by the charity the Business & Human Rights Resource Centre. It aims to provide a central registry of statements published under the Modern Slavery Act and currently holds around 7,000 published statements. Current and historic statements of companies are listed, in order that progress in the area can be tracked.

In the summer, the UK government commissioned a review of the Modern Slavery Act. The review will in part look at "what more can be done to strengthen" the corporate reporting requirements and "minimise the risk that the goods and services available in the UK are produced through forced labour and slavery", the Home Office said at the time.

In August, the Crown Prosecution Service (CPS) in England and Wales reported that there had been a 27% rise in the number of cases in which charges were brought against people suspected of modern slavery offences last year.