Modern slavery transparency failings to lead to UK fines

Out-Law News | 20 Jan 2021 | 10:40 am | 1 min. read

Businesses that fail to publish annual 'modern slavery' statements are to face potential financial penalties in the UK, foreign secretary Dominic Raab has confirmed.

Speaking in parliament last week, Raab confirmed the UK government's intentions to "introduce fines for businesses that do not comply with their transparency obligations".

Raab said that the level of potential fines will be outlined in legislation. He said UK home secretary Priti Patel would introduce the new laws "as soon as parliamentary time allows".

'Modern slavery' is an umbrella term which includes the offences of human trafficking, slavery, servitude and forced or compulsory labour, including sexual or criminal exploitation.

The Modern Slavery Act sets out corporate transparency requirements applicable to organisations with a turnover of £36 million or more, including that of subsidiaries, that carry on a business or a part of a business in the UK; and that provide goods or services. Those organisations 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.

No penalties can be imposed for non-compliance under the Act currently, though it is open to the UK government to seek court injunctions against businesses that fail to meet their obligations under the legislation.

The UK government's move to introduce new financial penalties for non-compliance with the requirements of the Modern Slavery Act is part of a package of measures it announced to address alleged human rights abuses in Xinjiang, China. Raab also said that the Foreign, Commonwealth & Development Office will work with the Cabinet Office "to provide guidance and support to UK government bodies to exclude suppliers, where there is sufficient evidence of human rights violations in any of their supply chains".

Neil Carslaw of Pinsent Masons, the law firm behind Out-Law, who helps companies to comply with their requirements under the Act, said: "This move towards financial penalties for a failure to produce modern slavery statements arrives at a time when the Act is due to become harder on corporates following a consultation."

Last autumn the UK government confirmed its intention to extend the modern slavery reporting requirements to UK public bodies with a budget of over £36 million. That confirmation was provided in a Home Office response to a 2019 consultation on transparency in supply chains consultation.

The Home Office said that public bodies, including government departments, will be able to report as a group or individually within a ‘family’ of organisations. Also proposed was an obligation on public and commercial organisations to publish modern slavery statements on a new digital reporting service, with a set April to March reporting period and a deadline of 30 September to complete reports. The structures of statements are also to be tightened.