Corporate reporting – reforms to UK Modern Slavery Act to extend reporting duties and impose new penalties

The proposed amendments would see organisations facing stricter disclosure obligations and fines for non-compliance

The Immigration and Asylum Bill currently going through Parliament proposes significant changes to strengthen the Modern Slavery Act reporting regime.

In the UK, under section 54 of the Modern Slavery Act 2015 (MSA), bodies corporate or partnerships carrying on business in the UK (wherever incorporated or formed) are required to produce a slavery and human trafficking statement (MSA statement) each financial year if they supply goods or services and have a group-wide global annual turnover of not less than £36 million.

In-scope organisations must include in their MSA statement the steps they have taken (if any) to ensure slavery and human trafficking are not taking place in any part of their business or in any of their supply chains.
Changes that would be made by the Immigration and Asylum Bill for in-scope entities include:

• Mandating the topics to be covered in the statement – The MSA statement will have to cover the risk assessment across operations and supply chains; policies on slavery and human trafficking; due diligence processes; staff training; and an assessment of the effectiveness of steps taken during the relevant financial year.
• Board declaration and signature – The existing requirement for MSA statements to be approved by the board and signed by a director will be amended so that: (i) signatories will additionally be required to declare that the statement is accurate to the best of their knowledge and belief; and (ii) parent companies will be able to approve and sign statements on behalf of subsidiaries.
• Publication of the statement – Organisations will have to submit MSA statements to the Secretary of State by specified electronic means, as well as publishing the statement on the organisation’s website.
• Financial penalties – Organisations will face a financial penalty of up to £1 million or 1% of total turnover, whichever is the greater, for non-compliance.