UK Supply chain transparency: New modern slavery duties and penalties

Please note that, at the time of writing, it is unclear if the change in Prime Minister will result in amendments to the Bill. Affected businesses and public authorities should stay updated on its progress this autumn when Parliament returns. 

Changes to the annual reporting duty

The Bill proposes changes to the current annual reporting duty, introduced by the Modern Slavery Act 2015, including:

• extending the reporting requirement to certain public authorities
• introducing a power to impose financial penalties for non-compliance, capped at £1 million or 1% of annual turnover (regulations will set the actual amounts) – this is a significant change as currently there are no effective penalties in place
• making specified reporting topics covered within a statement mandatory, rather than optional requiring annual statements to contain an accuracy declaration, and be approved and signed by the appropriate senior person within the organisation
• powers to require the use of the modern slavery statement online registry
• introducing a six-month time limit for statements to be published after the end of the financial year
• providing for subsidiaries to report as part of a group

Annual statements: mandatory topics

The Bill provides that annual statements must contain information on the following matters: 

• a description of the organisation's structure, operations and supply chains
• identification of areas within operations or supply chains where slavery or trafficking risks exist. Alternatively, organisations must state either:
  • that no such risks were identified; or
  • that no assessment was carried out, with reasons
• where risks are identified, organisations must explain steps taken to assess, reduce or eliminate them. Where no risks are identified, organisations must still explain the assessment work undertaken
• details of anti-slavery and trafficking policies in place during the year
• details of due diligence processes used to address slavery and trafficking risks
• details of slavery and trafficking training provided to the organisation’s own staff
• information must also be provided, where reasonably available, on training offered to workers within the supply chain
• an assessment of how effective the organisation has been in preventing slavery and trafficking in its operations and supply chains, as measured against appropriate performance indicators
• under items 4-8 above, if no assessment has been undertaken, or no relevant details given, reasons must be provided

If passed, this is a fundamental change. It would transform the existing generic duty to describe steps taken to tackle modern slavery, with businesses able to exercise discretion over how and whether they describe those steps under optional reporting topics, to specific reporting duties under mandatory disclosure topics, supported by ‘comply or explain’ (i.e. if a business has nothing to report, it must give reasons why). 

Timing

Parliament will resume deliberation of the Bill this autumn. If it receives Royal Assent, the new reporting duties will require further secondary legislation, including commencement orders, before they are implemented. As a result, timing is uncertain and  any new laws may not be in force until 2027.

In conclusion

The Bill aims to transform the current largely principles-based transparency regime into a mandatory, standardised reporting framework covering both larger private-sector organisations and qualifying public authorities, backed by electronic filing requirements, prescribed content, director-level certification and potentially substantial financial penalties for non-compliance. 

If the Bill’s provisions are implemented, it will require those teams responsible for supply chain labour standards, contractor/agency worker vetting, and third-party labour audits to formalise, document and verify anti-modern slavery processes. Statements would then need to be certified by senior leaders. The prospect of significant new financial penalties and associated reputational risk underlines the need to ensure that statements are accurate and defensible.

Further information

For a recent EU development in this area, read our update. On 14 December 2027, businesses will become legally responsible for ensuring products made with forced labour are not placed on the EU market, made available within it, or exported from it. On the same date, regulators gain the power to investigate and enforce that prohibition.