Global Modern Slavery Developments (Part I): A Critical Review of the UK Modern Slavery Act - By Shamistha Selvaratnam

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands and a contributor to the Doing Business Right project of the Asser Institute. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

Over the past couple of years, there has been an international trend towards greater regulation and transparency with respect to modern slavery in corporate supply chains as reports of gross human rights violations in corporate supply chains have entered the public spotlight. For example, over the past couple of years there has been extensive media attention in relation to the use of slaves trafficked from Cambodia, Laos, Bangladesh and Myanmar to work on Thai fishing boats to catch fish to be sold around the globe, with the boats considered to be ‘floating labor camps’. As a result of events such as this, there has been increased pressure on businesses to take steps to address modern slavery in their supply chains through processes such as through conducting risk assessments and due diligence.

As the Ethical Trading Initiative notes, key risks facing companies in their supply chains include the use of migrant workers; the use of child labour; recruitment fees and debt bondage; the use of agency workers and temporary labour; working hours and wages; and the use of subcontractors. In 2016 the Global Slavery Index reported that 40.3 million people are living in modern slavery across 167 countries, and in 2014 the ILO estimated that forced labour in the private economy generates US$150 billion in illegal profits per year.

In March 2015, the UK Government passed the UK Modern Slavery Act 2015 (the Act), game-changing legislation that targets, inter alia, slavery and trafficking in corporate supply chains. The UK Government also published guidance explaining how businesses should comply with the Act.

This first blog of a series of articles dedicated to the global modern slavery developments provides an overview of the main elements of the Act and how businesses have responded to it. It will be followed by a review of the proposed Australian MSA, and a final piece on the developments in other jurisdictions that are considering introducing legislation regulating modern slavery in the corporate context.


Global businesses and modern slavery: The challenges

There are a number of challenges associated with modern slavery in a globalised economy. As Genevieve LeBaron and Andreas Rühmkorf[1] state there are in particular a number of regulatory gaps surrounding labour standards in corporate supply chains. Firstly, there is no binding international instrument or framework in place ‘that addresses the conduct of companies in global supply chains, and companies are not considered to be duty bearers in public international law’.[2] Secondly, there are gaps in the regulation and enforcement of labour standards by states. Thirdly, ‘the legal structure of global supply chains makes it difficult to hold multinational enterprises liable for violations that occur.’[3] Fourthly, the principles of extraterritoriality often result in host states’ laws applying rather than home states’ laws. As Shuangge Wen notes the notion of the extraterritorial application of legislation ‘remains alien to most of the civil law body’.[4] Another challenge she recognises is that the doctrine of separate legal personality which ‘effectively shield[s] [corporate] group members from being sued or liable’.[5] These doctrinal and practical obstacles to holding businesses accountable for modern slavery provide the wider backdrop to the Act and must be kept in mind when assessing its effectiveness.


Key Aspects of the Act 

Section 54 of the Act requires commercial organisations with a global annual turnover of at least £36 million to prepare a slavery and human trafficking statement annually through publishing a Modern Slavery Statement on their webpage in a prominent place.

What is ‘modern slavery’?

While there is no globally agreed definition of ‘modern slavery’ under international law, it does appear that modern slavery is an umbrella term that covers a range of exploitative practices. As summarised by Anti-Slavery International, human exploitation characterised by only one of the following features is classed as ‘modern slavery’: (i) coercion to work through either mental or physical threat; (ii) being owned or controlled by an employer, usually through mental or physical abuse or the threat of abuse; (iii) being dehumanised or treated as a commodity; or (iv) being physically constrained or with limited freedom of movement.

The Act does not specifically define ‘modern slavery’, however, its offences include slavery, servitude, forced or compulsory labour and human trafficking. While each of these practices has differences, they also have some similarities. So what are each of these practices?

  • As set out in the Slavery Convention, slavery is ‘the status or condition of a person over whom any or all of the powers attaching to the right of ownership are exercised’.
  • Servitude is similar to slavery; however, the person responsible for the situation does not exercise the powers of ownership over the other person.
  • As defined in the ILO Forced Labour Convention 1930 (No. 29), forced or compulsory labour is ‘all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.
  • ’Human trafficking is defined in the Act as occurring when a person arranges or facilitates the travel of another person (for example, through transporting, transferring or recruiting) with the view of that person being exploited.

Who is required to report?

The term ‘commercial organisations’ is defined as a body corporate or partnership that carries on a business, or part of a business, in the UK wherever that organisation was incorporated or formed. Such an organisation is required to report under s 54 if it supplies goods and services and has a total turnover of at least £36 million. Accordingly, the Act will apply to businesses regardless of its geographic location, so long as it carries on at least a part of its business in the UK.

The term ‘carries on a business’ is not defined in the Act. The guidance provided by the UK Government states that a ‘common sense approach’ should be applied in determining whether a body corporate or partnership is carrying on a business in the UK. However, ultimately, the ‘courts will be the final arbiter as to whether an organisation ‘carries on a business’ in the UK taking into account the particular facts in individual cases.’ As at the date of this blog, there have been no court cases in which the court has had to consider whether a particular commercial organisation is carrying on a business in the UK.

Organisations that do not meet the definition of ‘commercial organisations’ can voluntarily produce a Modern Slavery Statement. 

What are commercial organisations required to report on?

Commercial organisations are required to report on the steps they have taken to ensure that slavery and human trafficking is not taking place in any of their supply chains and in any part of their business, or that they have taken no such steps. The Act sets out optional criteria which statements may include information about, namely:

  • (a)   the organisation’s structure, its business and its supply chains;
  • (b)   its policies in relation to slavery and human trafficking;
  • (c)   its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • (d)   the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • (e)   its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  • (f)     the training about slavery and human trafficking available to its staff.

Accordingly, the Act is not prescriptive about the content of Modern Slavery Statements. The guidance provided by the UK Government provides tips on how to write a Modern Slavery Statement (for example, it is suggested that companies keep the statement succinct but cover all relevant points) and how to structure the statement

Who is responsible for reporting?

The Board of directors will bear the ultimate responsibility for Modern Slavery Statements with the Act requiring the Board to approve the statement and a director to sign the statement. As the UK Government guidance notes, this ‘ensures senior level accountability, leadership and responsibility for modern slavery and gives it the serious attention it deserves.’ For limited liability partnerships, the statement must be approved by the members and signed by a designated member.

What happens if commercial organisations do not report?

In the event that a commercial organisation that is required to report under the Act does not report, the Secretary of State may seek an injunction from the High Court requiring the organisation to comply (or, in Scotland civil proceedings for specific performance of a statutory duty under section 45 of the Court of Session Act 1988). If the injunction is not complied with, the organisation will be held in contempt of a court order, which is punishable by an unlimited fine. In a public hearing held earlier this year, the UK Home Office commented that the UK Government did not go down a ‘more punitive route’ with respect to enforcement ‘to avoid pushing businesses away from transparency’ and that its approach so far has been to ‘work in partnership with business, to share best practice, to raise awareness and to encourage transparency’.

The UK Government guidance notes that it will be for ‘consumers, investors and Non-Governmental Organisations to engage and/or apply pressure where they believe a business has not taken sufficient steps’, suggesting that the Government will not take action on its own volition.


How have businesses responded?

As at the date of this blog, 6102 companies have published 7302 statements. The statements can be found on the Modern Slavery Registry website. This stands in stark contrast to the UK Home Office’s estimate of the number of companies required to report under the Act, being between 9,000 and 11,000 entities. However, as noted at the public hearings earlier this year, no injunctions have been taken against non-complying companies so as not to ‘discourage transparency’.

According to the Modern Slavery Registry, of the statements published, only 19% met the minimum requirements set out in the Act, namely: (1) the statement is published on the business’ website with a link on the home page; (2) the statement is signed by a director or equivalent; and (3) explicit approval by the Board is included in the statement. Further, the Business & Human Rights Resource Centre’s analysis of the Financial Times Stock Exchange 100's quality of reporting in the first reporting year across six reporting areas (as summarised in its report titled ‘Modern Slavery Reporting: Case Studies of Leading Practice’) showed that:

  • 34% of companies complied with the organisational and supply chain structure reporting area;
  • 38% of companies complied with the company policies reporting area;
  • 46% of companies complied with the due diligence processes reporting area;
  • 38% of companies complied with the risk assessment reporting area;
  • 16% of companies complied with effectiveness of measures in place reporting area; and
  • 38% of companies complied with the training reporting area.

Given the low level of compliance, as stated by the Business & Human Rights Resource Centre, it appears that a ‘vast majority of companies are failing to take effective action and must do more to address modern slavery.’ As Radu Mares notes, the quality of reporting demonstrates ‘paper compliance’ whereby companies are using a ‘tick-box approach’ to satisfy the requirements in the Act ‘without providing substantive or meaningful information.’[6] For example, in 2016 Ergon Associates reported that 35% of statements did not mention risk assessment procedures and two-thirds did not identify priority risks.

Modern slavery statements published by businesses to date highlight a number of key challenges and barriers facing business in addressing modern slavery. As the Ethical Trading Initiative notes, these include the following challenges:

  • The complexity and length of supply chains.
  • The insufficient resources they have to conduct due diligence and support supplier improvements.
  • The extent to which they should provide transparency around their modern slavery risks and practices.
  • Pressure from buyers to secure low prices from suppliers.
  • Lack of leverage with suppliers in order to work with them to improve their practices.

The Ethical Trading Initiative states that the following is crucial to ensure modern slavery action is taken by commercial organisations: senior leadership engagement, organisational culture change, including ‘communicating and clarifying the values, attitudes, and understanding of modern slavery to help embed policies and make them effective’; and collaborations and partnerships amongst different stakeholders, including other companies.


The many academic critiques of s 54 of the Act

As LeBaron and Rühmkorf, note that although the Act is considered to be public regulation, it is indeed ‘fully dependent on private governance tools, standards, and enforcement mechanisms to meet its aims’ and does not introduce any new public standards.[7] Accordingly, it ‘blurs the binary frequently posited between ‘hard’ and ‘soft’ law in the governance of labour standards’.[8] Further, they argue that compliance with the Act does not actually require a business to take steps to address modern slavery in its supply chain – all that is required is that a statement be published on a company’s webpage signed by a director and approved by its Board. This is strengthened by the fact that the Act does not require businesses to report on mandatory criteria – rather it suggests criteria that a business can (but is not required to) report on, providing little incentive for companies to detail the actions they have taken (if any) to prevent and address modern slavery particularly given the lack of penalties for non-compliance.

As Shuangge Wen notes the absence of penalties and the call on the general public to use the information contained in statements is unlikely to encourage change within businesses. In other words, it is likely to have a limited ‘pragmatic effect’.[9] This is possibly the reason why there have been such low levels of compliance with reporting. She further argues that the Act leaves business responsibilities with respect to respecting human rights and preventing and addressing modern slavery up to the ‘individual organizations’ discretionary interpretation’.[10] However, as Radu Maries notes the Act’s requirement that directors sign off on statements has ‘raised the profile of modern slavery issues within companies’ and, as a result, had an ‘internal effect on risk management’ and lead to top-level leadership with respect to modern slavery issues.[11]

As Justine Nolan and Gregory Bott state that the Act fails to ‘set mandatory standards for what due diligence must encompass’ and does not hold companies ‘directly legally accountable for any actual adverse human rights impacts connected to their operations’.[12] Accordingly, they argue that it is unlikely to encourage businesses to take proper action to address modern slavery in their supply chains. They contend that an ‘improved approach’ is required that ‘links reporting with due diligence, requires detailed disclosures, has regulatory consequences for a failure to report, and utilises both public and private mechanisms and the shared leverage of all relevant stakeholders’ in order to effect change with respect to combatting modern slavery.[13]

Virginia Mantouvalou presents a number of interesting arguments to contend that the Act is a ‘weak’ mechanism to prevent and address modern slavery.[14] While she notes that the Act’s soft law approach’ to regulating modern slavery in corporate supply chains is ‘not necessarily problematic at a theoretical level’, she states that self-regulation present many challenges and may not be the ‘best way to deal with business misconduct’ by itself.[15] This is because self-regulation can be seen as ‘simply protecting businesses from reputational damage and for limiting their liability’, rather than encouraging businesses to take concrete steps to combat modern slavery.[16] She further argues that the Act is overly narrow in its focus, with the Act regulating slavery, servitude, forced and compulsory labour and human trafficking to the exclusion of other exploitative practices. This suggests that only a subset of exploitative practices are present in business conduct.

Mantouvalou contends that the corporate transparency provision in the Act has been designed in such a manner that ‘it cannot be effective’. The weaknesses of the provision include:

  • The lack of a central list containing the names of businesses required to report.
  • The lack of a mechanism to monitor compliance with the Act.
  • The lack of a central repository for statements that have been published by businesses.
  • The lack of penalties for non-compliance with the Act and remedies for victims of modern slavery in corporate supply chains.
  • The lack of awareness of the Act amongst businesses.

She does however note that the Act has ‘generated discussions by companies that might not otherwise have considered the problem of severe labour exploitation’.



Despite the criticism that the Act has received, it has nonetheless been widely recognised that it is a step in the right direction towards increasing corporate transparency with respect to modern slavery. However, as the UK Home Office acknowledged earlier this year, while there has been progress ‘there is absolutely more to do’. So where to from here?

Well, a couple of months ago, the UK Government announced that it would be launching an independent review of the Act. As stated in the terms of reference, the aim of the review is to ‘report on the operation and effectiveness of, and potential improvements to,’ the Act. With respect to s 54 of the Act, a specific issue that has been noted as requiring consideration is how to ensure compliance and increase the quality of statements produced by commercial organisations. This blog aims to contribute to the future work of the independent review by providing a quick overview of the key critiques raised against the Act. Furthermore, it is essential that other countries considering the introduction of similar legislation take careful stock of the important lessons learned from the UK experiment to design more efficient modern slavery legislations, but that will be the subject of our next blogs.

[1] Genevieve LeBaron and Andreas Rühmkorf, Steering CSR Through Home State Regulation: A Comparison of the Impact of the UK Bribery Act and Modern Slavery Act on Global Supply Chain Governance (2017) Global Policy 8(3), 15.

[2] Ibid, 19.

[3] Ibid, 20.

[4] Shuangge Wen, The Cogs and Wheels of Reflexive Law – Business Disclosure under the Modern Slavery Act (2016) Journal of Law and Society 43(3) 327, 335.

[5] Ibid.

[6] Radu Mares, Corporate transparency laws: A hollow victory (2018) Netherlands Quarterly of Human Rights 36(3), 189, 197.

[7] Genevieve LeBaron and Andreas Rühmkorf, Steering CSR Through Home State Regulation: A Comparison of the Impact of the UK Bribery Act and Modern Slavery Act on Global Supply Chain Governance (2017) Global Policy 8(3) 15, 17.

[8] Ibid.

[9] Shuangge Wen, The Cogs and Wheels of Reflexive Law – Business Disclosure under the Modern Slavery Act (2016) Journal of Law and Society 43(3) 327, 358.

[10] Ibid, 359.

[11] Radu Mares, Corporate transparency laws: A hollow victory (2018) Netherlands Quarterly of Human Rights 36(3), 189, 198.

[12] Justine Nolan and Gregory Bott, Global Supply Chains and Human Rights: Spotlight on Forced Labour and Modern Slavery Practices (2018) Australian Journal of Human Rights 1, 10.

[13] Ibid, 11.

[14] Virginia Mantouvalou, The UK Modern Slavery Act 2015 Three Years On (2018) The Modern Law Review (2018) 81(6) 1017, 1017.

[15] Ibid, 1038, 1040.

[16] Ibid, 1040.

Comments are closed