Modern slavery statement changes: What will employers have to do differently?

Author: Stephen Simpson

The Government has confirmed that it is going ahead with major changes to the duty on large employers to publish an annual modern slavery statement. What changes will employers have to make to the content of, and process for publishing, their statement and which additional employers will be covered?

On 22 September 2020, the Government published its response to the consultation on transparency in supply chains, which ran from 9 July until 17 September 2019. The Government confirmed that it is going ahead with a number of changes that will apply in England, Wales and Scotland. These include:

• mandating the areas that a modern slavery statement must cover (rather than the areas to cover being recommendations only);
• introducing a single reporting period and annual reporting deadline for all employers covered; and
• requiring employers to publish their statement on a Government-run reporting website.

The changes will also bring large public-sector organisations in England and Wales within the scope of the duty to produce a modern slavery statement. Scotland is expected to consult separately on this proposal.

The proposals within the consultation do not apply to Northern Ireland, which is expected to consult separately with affected Northern Irish commercial and public-sector organisations.

The Government is expected to publish updated guidance for employers on the new requirements, with amending legislation being brought forward "when parliamentary time allows". However, we now know the following about the changes.

Extension of the duty to public-sector employers

What is the current requirement?

The duty to publish a modern slavery statement applies to organisations that carry on a business in the UK, supply goods and services, and have a total turnover of at least £36 million per year.

There is no exemption for public bodies or charities. Trading companies owned by public bodies or charities have to prepare a statement if they have sufficient turnover. The public body or charity itself has to prepare a statement if it has sufficient turnover and "carries on a business, or part of a business".

What is changing?

The duty to produce a modern slavery statement will be extended to cover public-sector organisations in England and Wales with a budget of at least £36 million per year. This includes local authorities, NHS bodies, police forces and central government departments.

Public bodies will be allowed to publish "group statements". For example, a central government department will be able to publish a group statement with their arm's length bodies.

Public-sector modern slavery statements will have to be signed off by the accounting officer, chief executive or equivalent role and approved by the senior management body.

The Government has said that it will produce guidance to help public bodies to:

• establish whether or not they will be captured by the duty; and
• decide when and how they can report as a group.

What employers can do to prepare

• Decide whether or not your organisation will be covered by the extension of the duty to the public sector. If you are not sure, look out for forthcoming government guidance, which should help your organisation to decide.
• If it is already obvious that your organisation will be covered, begin planning as soon as possible for the publication of your first modern slavery statement.

Other changes confirmed

The Government has said that it will:

• require statements to specify the date of board (or equivalent) approval and director (or equivalent) sign-off; and
• where more than one organisation publishes a group statement, require the organisations covered to be specified.
• Introduce a process for gathering and collating the anti-slavery activities of internal departments and external suppliers, for the purpose of drafting the statement.
• Ensure that the relevant departments liaise in the preparations, for example via a working group. This could include representatives from the HR, legal, ethical trade, risk management, procurement, facilities management and media/publicity departments.
• Ministerial government departments are already working on publishing their own individual modern slavery statements, following a commitment from the Government for them to do so voluntarily. Look out for these, as they may provide useful examples when drafting your own statement.

Areas that a modern slavery statement must cover

What is the current requirement?

Section 54 of the Modern Slavery Act 2015 does not dictate exactly what a modern slavery statement should cover. Section 54(5) states that it "may" include information about your employer's:

• structure, business and supply chains (area 1);
• policies in relation to slavery and human trafficking (area 2);
• due diligence processes in relation to slavery and human trafficking in its business and supply chains (area 3);
• business parts and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk (area 4);
• effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against performance indicators that it considers appropriate (area 5); and
• training about slavery and human trafficking available to its staff (area 6).

What is changing?

It will be mandatory for employers caught by the legislation to report on any areas set out in s.54 of the Modern Slavery Act 2015. If the employer has taken no steps in relation to a particular area, it will have to state this clearly and will be "encouraged to provide a reason for this".

The Government has not confirmed if there will be any tweaks to the six prescribed areas. It may be that:

• the structure changes, for example two or more areas are combined; and
• further areas may be added, with suggestions including:
  • steps being taken to remedy modern slavery issues (described as "remediation" - although it is likely that this is already covered by area 3);
  • future plans to tackle modern slavery;
  • disclosure of instances of modern slavery;
  • whistleblowing mechanisms; and
  • collaboration with external partners.

The Government will publish updated guidance for businesses and public-sector organisations that reflects any changes to the reporting areas.

What employers can do to prepare

• Where your organisation is already covered by the legislation, review the structure of your modern slavery statement to ensure that the six reporting areas are already covered where relevant.
• Where you expect your organisation to be covered when the legislation is changed, collate the steps your organisation takes in relation to the six reporting areas. This should make drafting your first modern slavery statement easier when the time comes.
• If you find an area where your organisation takes no steps, use this as an opportunity to think about why this is and whether or not this needs to be remedied.
• If there is a particular reason why no steps are taken in a particular area, be prepared to explain why when drafting your modern slavery statement.

One annual reporting period and deadline for all

What is the current requirement?

While employers must publish a modern slavery statement for each financial year, there is no strict timetable for publication. The Government recommends that the modern slavery statement be published within six months of the end of the organisation's financial year. This means:

• If your organisation's financial year runs from 1 January to 31 December, publication of the statement is expected by the end of the following June.
• If your organisation's financial year runs from 1 April to 31 March, publication of the statement is expected by the end of the following September.

While these timeframes are not legally enforceable, the Home Office has been known to audit organisations' compliance and send out letters to non-compliant organisations reminding them of their obligation to publish a modern slavery statement.

What is changing?

There will be a shared reporting period for all organisations covered by the legislation. Their modern slavery statement will have to cover the period from 1 April to 31 March.

There will be a single annual reporting deadline of 30 September, which gives organisations six months from the end of the reporting period to prepare their report.

The Government is mooting the introduction of monetary penalties for non-compliance. It is possible that enforcement could fall within the remit of the proposed new single labour market enforcement agency to enforce employment rights.

What employers can do to prepare

• While there is very little indication as to when these changes will come into force, your organisation could proceed on the basis that, under the new rules:
  • the first reporting period could be 1 April 2021 to 31 March 2022; and
  • the first reporting deadline could be 30 September 2022.
• If your organisation is new to modern slavery statements, it could publish a voluntary statement, covering 1 April 2020 to 31 March 2021, as a trial run in mid-to-late 2021.
• Take any learning points from your organisation's experiences of gender pay gap reporting, which also has a strict deadline for publication. Think about anything that could have been done better, for example when:
  • gathering the information;
  • getting the right departments involved as early as possible;
  • leaving time to get sign-off from senior management; and
  • not leaving publication to the last minute.
• Given the increased public scrutiny that a single reporting deadline is likely to bring, liaise with your media/publicity department to ensure that your modern slavery statement, and the publicity around it, conveys the right messages. Making clear what steps are being taken to tackle modern slavery can enhance your organisation's reputation.

Central reporting website for modern slavery statements

What is the current requirement?

Employers must publish the modern slavery statement on their website and include a link to the statement in a prominent place on the homepage.

What is changing?

The Government will create a central online registry for the publication of modern slavery statements. It will be mandatory for organisations covered by the legislation to publish their statement on the registry.

This is likely to work in a similar way to the gender pay gap reporting duty, under which employers must publish their report through a portal on the GOV.UK website, as well as on their own website. All the data is then available in one place on the GOV.UK gender pay gap service.

What employers can do to prepare

• Keep an eye out for the launch of the registry, which could be in advance of the legislative changes.
• Employers that have their modern slavery statement ready could upload it to the registry on a voluntary basis, prior to this becoming compulsory.