Peters & Peters

Government issues new statutory modern slavery guidance for companies

On 27 March 2025, following the Modern Slavery Act consultation in October 20241 and the Government’s response in December 20242, the Home Office published statutory guidance3 on section 54 of the Modern Slavery Act 2015 (MSA), entitled ‘Transparency in supply chains.’

 

Large commercial organisations are required to produce annual statements setting out the steps taken to prevent modern slavery in their business and supply chains, in accordance with section 54. The purpose of the new statutory guidance (the Guidance) is to assist companies comply with the letter and spirit of section 54, to produce high quality modern slavery statements and to develop effective approaches to tackling modern slavery.

 

The Guidance emphasise the importance of these statements, with the risk that non-compliance could cause reputational damage, restrict business opportunities and affect an organisation’s market position. For example, under the Procurement Act 2023, the authorities have wide powers to exclude suppliers from public procurement where there is sufficient evidence of modern slavery within their supply chain. Companies may also be subject to higher insurance premiums or be altogether refused coverage unless they can show they have effective due diligence in place.

 

Which organisations must publish a statement?

 

Pursuant to section 54, a commercial organisation is required to publish an annual modern slavery statement if it satisfies that all of the following apply:

 

 1. An annual turnover of £36 million or more;

 

 2. A ‘body corporate’ or partnership;

 

 3. Carries on a business, or part of a business, in the UK; and

 

 4. Supplies goods and services.

 

The Guidance provides further clarification on the requirements, including that turnover includes the turnover of any subsidiaries. It also helpfully sets out which entities in a group structure must prepare the statement.

 

If an organisation in a group structure meets the requirements, it must produce a statement; however, parent companies may produce a single statement for the group if it covers all required steps for each entity. The position is different for franchises, where the franchisee must produce its own statement if it meets the requirements. The Guidance advises that if organisations within the group structure operate in different sectors, it would be best practice to produce separate statements.

 

If a subsidiary does not meet all the conditions (for example, it does not carry on a business or part of a business in the UK and is instead based and operates entirely overseas), then there will be no requirement for it to prepare its own statement, although the parent company will need to include in its own statement steps taken to protect against modern slavery in the subsidiary if it forms part of its supply chain or business.

 

The Guidance provides further clarification on holding companies, charities and investments trusts.

 

Content of the modern slavery statement


The Guidance emphasises that responsible organisations are those that acknowledge the risks and seek to identify and mitigate these.


There are two key international frameworks relevant to how businesses should tackle modern slavery in their operation and supply chain, namely the UN Guiding Principles on Business and Human Rights (UNGPs) and the Organisation for Economic Co-Operation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct (OECD Due Diligence Guidance).


The Guidance sets out in greater detail the content to be included under the following categories:

 

 1. Organisational structure, its business and supply chains;

 

 2. Organisational policies;

 

 3. Assessing and managing risk; 

 

 4. Due diligence in relation to modern slavery;

 

 5. Training; and

 

 6. Monitoring and evaluation.

 

Under each section, the Guidance signposts the relevant parts of the OECD and UNGPs; lists ‘good’ (Level 1) and ‘best’ (Level 2) practice information to include; sets out why the recommendations are important; and what processes or consideration can be undertaken to achieve meaningful action.


The Guidance makes clear that development and continual progress is key. For example, each section repeats the importance of including how the organisation’s approach has developed since the previous statement and outlining any plans to improve in the future.


We have summarised below the key aspects covered by the Guidance for each section:

 

1. Organisational structure, its business and its supply chains (section 54(5)


Organisations need to understand their business and supply chains to produce effective statements. This includes their primary value chains (such as the goods or services provided) and secondary value chain (activities supporting the primary chain).


Organisations should describe their structure, including size, operational countries, and trading entities, and provide an overview of their supply chain structure. The Guidance recommends a detailed map of organisational structures and relationships with suppliers and subcontractors, and organisations should explain unknown aspects of their supply chains and describe their main products, services, and sectors. The statement should also include a high-level profile of direct and indirect suppliers, including location and industry.


The modern slavery risk management governance should be made clear including the responsible individuals or departments.
The statement should describe the information gathering process undertaken to respond to legislative requirements, and should list the external organisations engaged to map supply chains.

 

2. Organisational policies (section 54(5)(b) of the Act)

 

The Guidance emphasises how crucial policies are in preventing and addressing modern slavery, demonstrating commitment and ensuring coordinated action. Internal operating policies relevant to modern slavery should be summarised, including codes of conduct, recruitment, and responsible purchasing practices, and these policies should align with international standards like the UN Guiding Principles and OECD Due Diligence Guidance.


The Guidance also highlights that stakeholder engagement in policy development and implementation should be documented, including interactions with buying teams, suppliers, and NGOs. The statement should detail communication and enforcement strategies, as well as include translations into relevant languages.

 

3. Assessing and managing risk (section 54(5)(d) of the Act)

 

The Guidance notes that a modern slavery risk assessment is a systematic analysis of the likelihood of slave labour in goods or services provided by the organisation, and that it should cover both internal and external relevant workers, such as subcontractors and workers providing support functions such a cleaning and catering. The principle focus of the assessment should be on the risk to workers, rather than any risks to the organisation, such as reputational risks.


Organisations should disclose risk assessment frequency, governance, and methods for identifying and assessing risks. The highest priority risks to workers should be listed, including goods, services, regions, and worker vulnerabilities. Stakeholder engagement in risk identification and management should be evidenced, and details for continuous improvement plans should be outlined.

 

4. Due diligence in relation to modern slavery (Section 54(5)(c) of the Act)

 

Due diligence will often be part of a broader framework around ethical trade and human rights. The Guidance sets out the information businesses should include to demonstrate how they are implementing policies and responding to risks. Prevention and mitigating actions should be summarised, and evidence of supplier and worker engagement in developing and implementing the policies, beyond contractual compliance, should be provided. Human rights due diligence approaches and grievance mechanisms should be detailed, as well as remediation policies and processes.


Businesses should provide evidence that they have considered whether their business models could contribute or directly results in modern slavery within their operations and supply chains, and detail stakeholder engagement by showing participation in collaborative initiatives to share lessons and best practices.
A key requirement in this section is the inclusion of any incidents of modern slavery that have been found across the organisation’s operations and supply chain, and the remedial action taken.


Where remediation and/or mitigation is not possible, the business is encouraged to consider responsibly disengaging from a supplier or supply chain, taking into account what possible detrimental effect this may have on workers.


5. Training (section 54(5)(f) of the Act)


The Guidance notes that training should be developed to support the organisation’s response to modern slavery. Organisations should outline the training provided to both internal and external stakeholders to support the organisation’s response to modern slavery, with details provided on content, objectives, and outcomes of training delivered.


The Guidance includes further details on tailored training, highlighting that it should be tailored to different groups depending on their responsibilities and risk exposure, and that the training could take a number of different forms, ranging from detailed training courses to general awareness-raising programmes, such as posters and emails.

 

6. Monitoring and evaluation: understanding and demonstrating effectiveness (section 54(5)(e) of the Act)


The Guidance notes that organisations should set goals, provide outcome-focused key performance indicators, and disclose governance and data usage for monitoring and evaluation. The statement should also include evidence of outcomes and ‘success stories’, as well as information on engagement with stakeholders to ensure effective monitoring and evaluation. The guidance sets out in further detail the process to develops KPIs.

 

Practicalities


Under the MSA, a commercial organisation fulfilling all the conditions must produce a modern slavery statement for each financial year, within six months of the financial year-end, which should remain available online for comparison over time.


The MSA requires transparency, such that if an organisation has taken no steps to ensure modern slavery is not taking place, it must publish a statement stating this is the case.


Statements must be approved and signed by a director, designated member, or partner, ensuring senior-level accountability. The statements should be written in simple language, as they will be available to the public, and should be succinct, with links to relevant documents, specifying actions by country.


Statements must be published on the organisation’s website with a prominent link on the homepage. If an organisation does not have a website, it must provide a copy upon request.

 

Compliance

If an organisation fails to comply with section 54, the Secretary of State can apply to the High Court for an injunction requiring compliance. A company that continues to fail to comply will be in contempt of court and may be liable to pay an unlimited fine. A key point to note is that this is not a penalty for any substantive modern slavery offences, but a failure to produce a statement.


Perhaps surprisingly, the Government’s Response in December 2024 noted that since the MSA came into force the Home Secretary has never used its power to seek an injunction due to “the cost to the taxpayer of seeking injunctions and the difficulties assessing compliance within the current legislative framework”. Given the extensive detail contained in the new Guidance, we may start to see an increase in the number of commercial organisations under scrutiny for compliance with section 54.


A copy of the Guidance can be found here.

 

Footnotes

[1] UK’s response to modern slavery has not kept up with the advances of other nations – Committees – UK Parliament

[2] CP 1216 – Government response to House of Lords Modern Slavery Act 2015 Committee, Report of Session 2024-25 The Modern Slavery Act 2015: Becoming World-Leading Again

[3] Transparency in supply chains a practical guide