Has the UK missed an opportunity with the new Modern Slavery Act Guidance?

Introduction 

On 27 March 2025 the Home Office published an update to its statutory guidance on supply chain transparency under s54 of the Modern Slavery Act (MSA). The guidance arrives at the tenth anniversary of the MSA.  Introduced at the close of the Cameron government, the legislation was described by then Home Secretary Teresea May as ‘world leading’ . However, a House of Lords select committee recently concluded that ‘the world has changed and best practice has moved on’ and that transparency measures are now regarded as ‘too limited to have significant practical impact’. It is estimated that over a third of eligible firms in the UK are failing to comply, and that this is largely attributable to uncertainty surrounding their reporting obligations, delays to the issuing of statutory guidance,[1] and limited enforcement mechanisms. 

The development of more robust due diligence laws in Europe has accentuated the shortcomings of the UK approach. The German ‘Supply Chain Due Diligence Act’ (Lieferkettensorgfaltspflichtengesetz) and the French Duty of Vigilance Law (Loi de vigilance) have introduced extensive due diligence obligations and mechanisms to deal with non-compliance.  The European Corporate Sustainability Due Diligence Directive will transpose similar obligations into the national law of member states by 2026, developments that will no doubt impact British businesses with ties to the continent. These are evidently reactions to the persistence of modern slavery conditions. The Global Slavery index estimate that 50 million people were living in modern slavery on any given day in 2021, an increase of 10 million people since 2016. The number of people identified as potential victims of modern slavery in the UK has also been rising, with over 19,125 people referred to the Home Office last year. 

In this context, new statutory guidance is intended to assist organisations to comply with the ‘letter and spirit’ of the MSA, but what consequences will that have for eligible businesses? Does a new reading of the statutory conditions give rise to additional obligations, or increase exposure to penalties for non-compliance? 

Modern Slavery Statements 

Eligible businesses are required to produce an annual  ‘modern slavery statement’. The new guidance sets out updated expectations for reporting, and provides further criteria to support business. It also seeks to position the UK alongside regional and international developments on due diligence, including the UN Guiding Principles on Business and Human Rights (UNGP), the OECD Due Diligence guidance for Responsible Business Conduct and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. However, the precise content of modern slavery statements remains discretionary, and section 54 continues to lack enforcement mechanisms short of an injunction for specific performance (a remedy that has not been used to date). 

Despite these shortcomings, a failure to engage with the new guidance may pose significant risks for a business of any size. This includes exposure to money laundering offences under the Proceeds of Crime Act (POCA), civil and criminal liability arising from breach of director’s duties, breach of fiduciary obligations, through to allegations of false accounting or fraud. Developments in the law of tort for parent companies over the activities of their foreign subsidiaries must also be kept in view. In addition, the risk of reputational damage for a business failing to comply with the guidance is a factor often that cannot be ignored.

Who is required to comply with s54?

Companies with an annual turnover above £36 million and carrying out a business (or part of a business) supplying goods or services in the UK, are required to prepare a Modern Slavery Statement. This statement must include the steps the organisation has taken to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its own business. This annual document must be approved by the board (or equivalent management body) and ensure it is signed by a director or designated member. 

However, the content of the modern statement is not mandated by the MSA. Instead, section 54 provides a list of six suggested topics a modern slavery statement might address, including:

1. information about the organisation's structure, its business and its supply chains; 
2. organisational policies; 
3. due diligence processes in relation to slavery and human trafficking in its business and supply chains; 
4. steps it has taken to assess and manage that risk; 
5. monitoring and evaluation; and
6. training. 

The new guidance provides step-by-step recommendations for how to address each of these topics. It includes signposts to the relevant parts of the OECD due diligence process and the relevant UNGPs, a list of what information an organisation can include in a modern slavery statement to achieve ‘good’ and ‘best’ practice, a brief explanation as to why these recommendations are important for an organisation. It also encourages enhanced transparency requirements, thorough disclosure of modern slavery incidents and better engagement with civil society. The new guidance underscores that a failure to identify any risks or incidents of modern slavery may constitute insufficient due diligence rather than a lack of exposure to risk. 

Does the MSA represent best practice? 

The obvious and persistent weakness of the MSA is that engagement with these topics remains discretionary. In this way, the MSA differs from the Australian Modern Slavery Act, the California Transparency in Supply Chains Act and Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act which all mandate that specific topics must be addressed in annual reporting. 

The UK Labour government has flagged that any proposal for legislative change needs to be considered as part of a wider review. However, the MSA has already been the subject of extensive evaluation, and options for reform are at hand. These include: 

1. the 2019 Independent expert review  which recommended that the six areas of reporting should be made mandatory, and urged the  adoption of a gradual approach to sanctions: initial warnings, fines (as a percentage of turnover), court summons and directors’ disqualification;
2. a 2021 private members bill which recommended the introduction of criminal offences for the falsification of slavery and human trafficking statements and prohibitions on the use of supply chains which fail to demonstrate minimum standards of transparency; 
3. the 2024 House of Lords select committee report which recommended the introduction of mandatory due-diligence requirements and proportionate sanctions for non-compliance.

Had these recommendations been seriously considered, the MSA may have kept up with developments abroad. The Joint Committee of Human Rights has recently announced an  inquiry into forced labour in UK supply chains, signalling that the issue remains on the table.

Where does this leave UK business?

Businesses may be exposed to a host of serious offences should they not engage with the statutory guidance. This can arise from domestic employment conditions, accounting malpractice or conduct in the supply chain abroad. By way of example:

1. Individuals or employers that engage directly in modern slavery practices can be prosecuted under s1 and 2 of the MSA. Alternatively, a company’s officers can be held personally, jointly and severally liable to its employees as victims of modern slavery (Antuzis v DJ Houghton Catching Services Ltd [2021] EWHC 971 (QB)).
2. The submission of false or misleading modern slavery statements could give rise to allegations of false accounting, fraud, breach of directors’ duties or breach of fiduciary duty.
3. The failure to conduct due diligence over a supply chain, particularly those engaging high-risk regions and high-risk industry, could give rise to money laundering offences under POCA. Last year, the Court of Appeal in World Uyghur Congress v. National Crime Agency [2024] EWCA Civ 715 found that reliance on the ‘adequate consideration’ exemption did not cleanse criminal property (here, cotton exports derived from modern slavery) when transferred up a supply chain. It will remain ‘criminal property’. This means that even if a business acquires goods produced by modern slavery for adequate consideration, further dealings may expose a person to serious criminal penalty. 

Finally, there may be scope for the extension of tort for human rights violations by foreign subsidiaries. In  Vedanta Resources Plc & Anor v Lungowe & Ors [2019] UKSC 20 residents in Zambia brought civil proceedings against Vedanta Resources Plc, a UK incorporated parent company, and Konkola Copper Mines Plc (KCM), its Zambian subsidiary, claiming that waste discharged from the Nchanga copper mine - owned and operated by KCM - had polluted the local waterways, causing personal injury, damage to property and loss of income. The UK Supreme Court observed that while the parent neither owned the mine licence nor controlled the material operation, a duty of care was arguable on the basis of (amongst other factors) the parent company’s policies, provision of health, safety and environmental training and release of public statements emphasising its commitment to address environmental risks. These findings are of obvious interest to industries exposed to modern slavery in the supply chain.

Conclusion 

Eligible businesses must ensure that they are sufficiently familiar with the new statutory guidance, and that their conduct, and reporting is compliant with the MSA. In addition, corporate liability for human rights violations continues to develop at pace, and businesses should operate with strong insight into the regional, and international instruments concerned with supply chain transparency. 

Businesses affected by s.54 of the MSA include manufacturers, suppliers of workforces or equipment for large projects. In addition, ancillary liability may land at the door of IT companies, financial institutions providing funding for or arranging transfers of funds to non-complaint entities in the supply chain of the companies subject to s.54, and fund managers investing or recommending investment in such companies.

The careful, thorough and accurate preparation of modern slavery statements is essential in order to protect UK businesses from complicity in serious criminal offences, and to enhance human rights outcomes for vulnerable workers. Business should also recognise that there is a  reasonable likelihood that more stringent due-diligence requirements will be mandated in the near future, and that proportionate sanctions for non-compliance could also arise. For example, pages 60-64 of the guidance may be seen as too lenient to subsidiaries of multinationals.

We encourage businesses to read the new statutory guidance alongside the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence guidance for Responsible Business Conduct and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. These resources are particularly important given the developing scope of corporate criminal offences, civil penalties and tort. 

The Doughty Street business and human rights team continues to monitor this environment, and provides specialist advice in this area. 

[1] There are two areas where the Secretary of State must issue guidance; first, concerning slavery and trafficking risk orders, which was issued in 2017; and second, the identification of victims and their support. Guidance on this topic was not issued until 2020, a delay roundly criticised in R (K) v Secretary of State for the Home Department. The issue of statutory guidance concerning transparency in supply chains remains discretionary. It was first issued in 2015, and was subject to only minor adjustments until 2025.