Anti-slavery compliance by businesses continues to be an area of focus for the UK and Scottish Governments.

New guidance materials have been published to help raise awareness and provide practical advice on the requirements of the Modern Slavery Act 2015 and the Human Trafficking and Exploitation (Scotland) Act 2015.

Significantly, both UK and Scottish Ministers have announced that they will write to and demand action from major companies who appear not to have fulfilled their duty to publish a Slavery and Human Trafficking Statement.

Non-compliant (or non-existent) statements

MSA 2015 places a "transparency" responsibility on certain businesses to issue a public statement every year showing what steps it has taken to ensure that slavery and human trafficking is not taking place in any part of its business or in its supply chains. If no such steps were taken then the organisation must make that clear in its statement.

Organisations will be caught by the obligation to publish a statement if they (1) supply goods and services in any sector; (2) carry out any part of their business in the UK (regardless of place of incorporation) and (3) have an annual group turnover of at least £36million.

However, according to research from the Modern Slavery Registry, only 19% of the over 7,000 Slavery and Human Trafficking Statements which it has compiled in its registry meet the basic legal requirements for statements as set out in MSA 2015. And that's not including the large number of UK companies which meet the threshold but have failed to publish a statement. Nor does it include the estimated thousands of large companies worldwide which have some form of business footprint in the UK market and who should therefore also be publishing a statement.

UK Government developments

The UK Home Office last year updated its Transparency in Supply Chains guidanceto make clear that, while organisations caught by MSA 2015 must still publish a statement "as soon as possible" after their financial year end, this should in fact be "at most" within six months of the financial year end. Similarly, while MSA 2015 lists information which "may" be included in a statement, the updated UK Guidance states that organisations "should aim" to include the various categories of information set out in the legislation and the Guidance.

In October the UK Government released its 2018 UK Annual Report on Modern Slavery, detailing action that it, the Scottish Parliament and the Northern Irish executive have taken to combat modern slavery in the past year. There was a clear recognition that more action is required in terms of transparency in organisations' supply chains. As a result, the Home Office is now writing directly to the chief executives of some 17,000 businesses in scope of MSA 2015 "with very clear instructions to support effective reporting" under the legislation.

And all of this is in the context of the UK Government's ongoing independent review into the operation and effectiveness of MSA 2015 generally, which is due to report in March 2019, and which may result in more stringent statement requirements and sanctions for non-compliance.

Scottish Government Guidance

The Scottish Government has now published its own suite of guidance, Slavery and Human Trafficking: Guidance for Businesses in Scotland, which it says is "designed to complement UK Government guidance, and other relevant resources".

The Scottish guidance was developed in consultation with the Scottish Government's Slavery and Human Trafficking Corporate Group (with members across industry) and it provides practical steps for businesses of all sizes to take - not just those meeting the MSA 2015 threshold of £36million annual group turnover.

For businesses meeting or exceeding that turnover threshold, the Scottish guidance sets out helpful practical advice on risk assessment and targeted follow-up actions, including:

  • mapping of suppliers;
  • auditing of workforces;
  • interrogating bids for contracts which are too low-cost to ensure labour is being properly paid; and
  • training frontline staff in spotting the signs of potential slavery and human trafficking.

Voluntary publication by organisations that do not meet the MSA 2015 criteria is encouraged, in the interests of being open and transparent, and reflecting that the need to address slavery and human trafficking is a responsibility of businesses of all sizes. With that in mind, Part 3 of the Scottish guidance suggests measures that smaller businesses can take and highlights that employees of any business can identify and help to tackle human trafficking and exploitation.

On the horizon

Against this background, and parallel to the UK Government's review of the legislation, sweeping changes to MSA 2015 have been proposed in the Modern Slavery (Transparency in Supply Chains) Bill (the "Bill") currently working its way through the UK Parliament. The Bill, if enacted in its current form, would strengthen enforcement mechanisms to include:

  • amending MSA 2015 to require any organisation stating that it has taken no steps to combat modern slavery in its business and supply chains to publicly explain why it has not done so;
  • expressly including public authorities within the scope of reporting obligations;
  • requiring the UK Government to "name and shame" non-compliant organisations; and
  • compelling public authorities to exclude from procurement processes those operators who have not published a statement when they ought to have .

Compliance checklist

Statements should be published within six months of financial year end and should be checked to ensure compliance with the MSA 2015 requirements on content, visibility and approval. It must be borne in mind that the MSA 2015 duty to publish a statement is a continuing one: it requires publication of the steps taken in each financial year.

The review, the guidance materials and the Bill demonstrate the increasing onus on responsible businesses to take steps to ensure there is no modern slavery in their operations or their supply chains. Governments north and south of the border are being increasingly pro-active, and overall scrutiny will only increase. The "honeymoon period" of vague aspirations and commitments to anti-slavery compliance appears to be over.