The updated guidance does not contain any radical changes, and some points of difficulty under the 2015 Act remain unresolved. However, it makes a number of interesting points of which businesses should take note. These include:
Voluntary compliance. A new section has been included to encourage businesses that are not caught by section 54 (for example, because they have a turnover of less than £36 million) to comply with the reporting obligations voluntarily. The updated guidance notes that these businesses may be under pressure to address slavery and human trafficking from businesses that do need to report.
The updated guidance emphasises that businesses are encouraged to be open and transparent about their recruitment practices, policies and procedures in relation to modern slavery, and to take steps that are consistent and proportionate with their sector, size and operational reach.
Information to include. Stronger language has been used in relation to the six recommended categories set out in section 54(5). The section in the original guidance which noted that statements “may include” information in relation to all six of the categories now states that businesses “should aim to include” this information (see Briefing “Modern Slavery Act 2015 and beyond: putting the spotlight on human rights”). Linked to this, the previous explicit statement that it is not compulsory for businesses to include these six categories has been deleted.
Although the wording in the 2015 Act has remained unchanged, these changes to the guidance demonstrate the expectation that businesses should cover the six categories in slavery and human trafficking statements.
Scrutiny by external parties. The updated guidance contains new wording emphasising that statements will be assessed by the public, investors, the media and other external parties, which will expect to see year-on-year improvements in the way that businesses are addressing the risk of slavery and human trafficking in their operations and supply chains. The updated guidance also encourages businesses to keep historic statements online so that external parties can compare statements and monitor progress over time.
Approval and publication. The updated guidance now states that it is best practice for the director who signs the statement to sit on the board that approves the statement, and that the statement should include the date on which the statement was approved by the board or members, if the organisation is a limited liability partnership.
Timing of publication. The updated guidance places more emphasis on the timing of the statement’s publication, although the recommended deadline for publication remains the same, that is, within six months after the financial year end. Whereas the original guidance stated that businesses should seek to publish their statement as soon as reasonably practicable after the end of their financial year, the updated guidance specifies that businesses should publish their statement as soon as possible after their financial year.
New definitions of child labour. The updated guidance includes a definition of child labour with reference to the International Labour Organisation (ILO) standards, and also sets out the worst forms of child labour as defined by Article 3 of the ILO Convention No 182. While child labour will not always constitute modern slavery under the 2015 Act, this highlights that child labour is a challenging area for corporates and that children have particular vulnerabilities that should be taken into account when determining whether modern slavery is taking place.
Wider due diligence processes. Wording has been added to Annex E of the updated guidance emphasising the importance of human rights due diligence. The wording now states that, for many businesses, modern slavery due diligence is likely to form part of a wider framework around ethical trade, corporate social responsibility and human rights, and it should form part of a wider human rights due diligence process where possible.
Although a small addition in the updated guidance, this wording is significant. It acknowledges that there is no need for duplication of resources where businesses have already embarked on a human rights due diligence process. The addition suggests to businesses which are starting to address modern slavery that they consider expanding their modern slavery due diligence exercise to a wider human rights due diligence process. The reference to the UN Guiding Principles on Business and Human Rights in Annex E highlights the importance of the framework in setting a standard for conducting human rights due diligence (see News brief “Assessing and preventing human rights risks: ignorance is no defence”).