Whatever happens with Brexit or the outcome of the general election next month, there are other issues on the political agenda. Tackling modern slavery is one of them, with politicians from all parties engaging in the discussion. Changes are expected to the Modern Slavery Act 2015, following the publication of the government's response to the Independent Review on Modern Slavery earlier this year and its recent consultation on transparency in supply chains.
The hospitality and leisure sector is an industry at risk of perpetuating modern slavery; it often relies on agency workers and a large proportion of the workforce comes from overseas. This was highlighted in some of the written evidence submitted to the Environmental Audit Committee's recent inquiry into sustainable tourism, which we are following closely. Breaches of the law can occur directly within an organisation or its supply chain, or through the use of its premises, unbeknown to the business. As well as the legal risk, there are also commercial, reputational and ethical risks to non-compliance. As such, industry leaders or investors should ensure they keep up to date with legislation and policy, and any proposed changes to it, in order to protect their businesses and the individuals who fall victim to abuse.
Section 54 of the Act established a statutory requirement for commercial organisations carrying out trading in the UK with an annual turnover of £36 million or more, to publish an annual modern slavery statement. The statement must highlight what steps (if any) the organisation has taken to remove slavery from its business and supply chain. Our overview of the Act sets out the main criteria.
The Independent Review made no fewer than 20 recommendations concerning section 54, and the Government only rejected three of them outright in its response. The Government's consultation on transparency in supply chains includes questions in relation to:
- Content – the Government is considering making some of the areas covered in the modern slavery statement mandatory (albeit with a potential 'comply or explain' approach), and has invited comment as to which areas should be compulsory;
- Reporting – the Government intends to introduce a central registry that will allow the public easily to access and compare statements, and has asked stakeholders to respond to the way in which this may operate;
- Submission – the Government is considering introducing a fixed deadline for all businesses in filing the statement;
- Enforcement – the Government intends to introduce enforcement mechanisms designed to encourage timely and compliant reporting, including by way of financial penalties; and
- Extension – the Government is proposing to extend the reporting obligations to public sector organisations, and has sought views on the way in which this may be achieved.
The consultation closed in September and the Home Office is currently analysing the feedback. Despite the busy political period, our view is that changes to the law are coming. Businesses are likely to be faced with increased reporting requirements, and tougher penalties if they fail to comply with those obligations. The hospitality industry should therefore be robust in its efforts to review, map and manage its supply chain and recruitment procedures and be ready to report on how the risks that modern slavery may pose are being mitigated – particularly as it appears to be a high risk industry when it comes to modern slavery. Investors in the industry should make sure that their target business is up to date on the latest movements in this area, and has a plan in place to react nimbly to any changes on the horizon.