What Is the UK Modern Slavery Act & How to Comply with It

What Is the UK Modern Slavery Act?

The UK Modern Slavery Act 2015 is a sweeping piece of legislation that seeks to regulate and address the issues of modern-day slavery in business operations and their global supply chains.

It is estimated that 25 million people worldwide are victims of human trafficking, forced labor, and child labor. This unacceptable figure drives $150 billion dollars in profit annually, emphasizing the severity of this human rights violation.

In this article, we will review the history of the Modern Slavery Act 2015, explore who it applies to, examine what it seeks to achieve, and finally look at what companies can do to remain compliant.

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Modern Slavery Act 2015 Requirements

The Modern Slavery Act currently impacts over 12,000 companies in the United Kingdom.

The Modern Slavery Act 2015 applies to UK companies and subsidiaries that have an annual turnover of £36 million. The UK-based companies that fit this criterion have annual reporting requirements to the UK government that include a Transparency in Supply Chain (TISC) clause.

This act has an extraterritorial effect too, meaning it also applies to commercial organizations (no matter where they were formed in the world) if they do business in any part of the UK and hit the annual turnover threshold.

Companies under the Act must do their due diligence to eliminate modern-day slavery in their business operations and supply chains.

This includes an annual report within 6 months of their financial year-end. These statements are published annually, are required to be on the company’s website, and must include:

• A human trafficking statement.
• Due diligence processes.
• Risk assessment and management in their operations, organization structure, and supply chains.
• Key performance indicators to measure actions taken to prevent modern slavery.
• Staff training on modern slavery and human trafficking.

Note: With the proposed Modern Slavery (Amendment) Bill, companies that fail to meet these requirements may face financial penalties and reputational damage. Additionally, criminal offenses for falsifying statements are being considered. 

1. Risk Assessments of Human Trafficking and Slavery in the Supply Chain

UK companies must undertake their own risk assessment, reviewing their own operations and global supply chains.

This entails mapping out their supply chains and identifying areas (countries and industry sectors) where there is the potential for human trafficking and slavery to occur (e.g. Uyghurs in Xinjiang).

Teaching staff to identify signs of modern slavery and ensuring supplier communication through questionnaires are key compliance steps.

Companies are encouraged to adopt a victim-cantered approach in line with the UK Government’s 2024 recommendations to protect individuals impacted by modern slavery.

 

2. Maintain Systems of Corrective Actions

Companies must maintain corrective action systems to address slavery- related issues in their supply chain.

Under the Modern Slavery Act, corrective actions should be included in annual statements, and whistleblowing policy which protects whistleblowers and anyone that notices any potential issues. These people should be able to report on the transgression without fear of repercussions.

This policy includes when the policy should be used, how an issue is to be raised, and what happens when an issue dealing with slavery is uncovered.

Proposed amendments now emphasize the importance of accurate and verifiable reporting.

 

3. Conduct Audits to Find Supplier Noncompliance

Part of the modern slavery statement of each company needs to explain how they conduct audits and how they identify supplier noncompliance.

Companies are responsible for making sure their suppliers and service providers are not in violation of the Modern Slavery Act. Companies need to ask their suppliers to provide a copy of their Modern Slavery statement and conduct rigorous audits on those that fall into high-risk categories.

Operations, the sourcing of labor and materials, and suppliers further down the supply chain all need to be investigated and examined for any potential threats and violations.

Failure to update modern slavery statements or demonstrate compliance could lead to reputational damage, public scrutiny, and regulatory penalties.

4. Uphold a Supplier Code of Conduct

Companies must also have a Supplier Code of Conduct and make it available to their business suppliers. It is based on the requirements of the International Labor Organization and the United Nations Guiding Principles on Business and Human Rights.

This statement outlines the principles which a company expects its suppliers to uphold. It covers things like a zero tolerance policy for forced labor (labor should be entered into out of the person’s own free will) and that working conditions should be safe and accompanied by an appropriate living wage.

One of the mitigation steps could be for a relevant supplier to answer a self-assessment questionnaire every financial year as part of an assessment to determine the risk of modern slavery in their supply chain.

5. Perform Due Diligence Within Supply Chain Risk Management 

One of the requirements is that companies perform appropriate due diligence within their supply chain risk management processes.

In the supply chain (the flow of goods and services from businesses and locations), there are many opportunities for modern slavery violations to occur. By performing due diligence, the pressure is put on the companies to prove that they are taking all necessary steps to identify and prevent any incidences of modern slavery in their operations and supply chains.

In fact, the Joint Committee on Human Rights of the UK Parliament published a report recommending that “reporting on due diligence for all human rights” be mandatory for large companies. This includes having a process for monitoring and enforcing consequences if a company is found to be noncompliant.

The world is watching and further demanding that large companies uphold professional business conduct. 

Due diligence is increasingly under scrutiny. Companies are encouraged to use advanced tools and independent verification to ensure thorough supply chain transparency and risk mitigation.

 

6. Recent Developments and Proposed Amendments

The Modern Slavery (Amendment) Bill, introduced in the House of Lords in 2021, aims to strengthen the existing legislation. Key proposals include:

• Criminalizing the falsification of slavery and human trafficking statements.
• Prohibiting the use of supply chains that fail to demonstrate minimum standards of transparency.
• Establishing mandatory minimum transparency standards for businesses.

Additionally, the UK government’s response to the House of Lords’ 2024 report, “The Modern Slavery Act 2015: Becoming World-Leading Again,” emphasized:

• A victim-centered approach, ensuring policies do not conflate immigration control with victim support.
• Separating immigration policy from modern slavery protections to better support victims (UK Government – Modern Slavery Act Report).
• These changes indicate a shift towards stricter accountability for companies and greater protection for victims of modern slavery.

 

What You Can Do to Remain Compliant

Every year companies need to provide a modern slavery statement to remain compliant. The statement is an explanation of how a company took steps to prevent human trafficking and modern slavery from occurring in their business operations and supply chains during the previous financial year.

Actions such as doing their due diligence, conducting audits and risk assessments of their operations and supply chains, working with stakeholders and the board of directors to ensure that every measure that is being undertaken is appropriately reported.

The UK Government has commissioned an independent review of the Modern Slavery Act and December 2021, produced a final report focused on mandating as opposed to guiding activities. It looks to introduce potential financial penalties. 

Failure to comply may now result in financial penalties, as outlined in the proposed amendments. Furthermore, companies must ensure their statements are accurate and updated annually, as outdated or false reporting may lead to legal repercussions.

 

Emerging Legislation and Why Proactivity Is Key

A growing number of jurisdictions globally are enhancing their supply chain-related regulations to combat forced labor and modern slavery. The European Union’s Forced Labour Regulation (FLR), adopted on 19 November 2024, introduces a framework to ban products made with forced labor from being sold in or exported from the EU market. This regulation applies universally to all companies active in the EU, regardless of their size or sector, marking a significant expansion of corporate responsibility. The FLR is expected to take effect by late 2027 or early 2028, allowing member states and companies time to implement compliance mechanisms (Skadden, 2024).

In the UK, the regulatory landscape is also evolving. In October 2024, the House of Lords’ Select Committee published its recommendations for strengthening the Modern Slavery Act 2015. Proposed changes include the introduction of due diligence obligations, enhanced enforcement mechanisms, and potential penalties for non-compliance. The Committee’s recommendations align closely with the EU’s approach, reflecting an international trend toward mandatory due diligence in supply chains (Skadden, 2024).

 

Secure Your Supply Chain With Exiger

If your company does £36 million in annual revenue, and you do business in the UK, you are legally required to comply with these regulations. Fortunately, Exiger can help you navigate these waters and mitigate your risks while complying with the Act.

1Exiger is an AI-powered platform that allows companies to quickly identify threats to their global supply chain management with just one click, thus allowing you to focus on the required mitigation measures.

A key feature of Exiger’s AI technology is multi-tier supply chain visibility, enabling companies to trace components like aluminum or critical minerals from their source to the final product. The transparency delivered through Exiger’s platform analyzes supply chain tiers all the way to the hole-in-the-ground origin of materials. This level of clarity about item-level provenance is essential for informed decision-making and building resilience.

Exiger’s Proactive Intelligence capabilities also assess macro-dynamics in supply chains to foresee potential shortages, helping industries prevent disruptions. It also analyzes supplier resilience, allowing stakeholders to evaluate suppliers’ capacities and financial health, among other third-party and supply chain risks. These features equip Exiger customers with the necessary tools to combat modern slavery, leveraging powerful AI to drive significant change.

Don’t put your company in jeopardy. Protect your business by working with Exiger to audit your entire supply chain and keep your business protected, compliant and profitable. Contact us to learn how Exiger’s advanced tech solutions can help ensure ethical sourcing in your organization.