The tide is turning - navigating Modern Slavery and Forced Labour Regulations

In recent years, the issues of modern slavery and forced labour, and the regulation of businesses and their supply chains, have gained increasing attention, both in the UK and on the international stage. The direction of travel is towards change and more regulation. In January, a new inquiry was launched by the Joint Committee on Human Rights into forced labour in international supply chains, and in March just before the 10^th anniversary of the Modern Slavery Act, the Government published updated statutory guidance for businesses about how to tackle modern slavery in their business and supply chains.

Whilst the UK was once amongst the leaders, its legislative stance has now fallen behind other jurisdictions, in times where increasing ESG litigation and stakeholder action concerning forced labour issues in supply chains has pushed the focus onto this area. There are increasingly complex compliance and regulatory frameworks in the EU, including the Forced Labour Regulation coming into effect in 2027 which will ban products made with forced labour from being placed, imported or exported in the EU.  This means businesses wishing to operate in the EU market must address this issue. In this article we take a closer look at the UK legal position, recent cases and anticipated EU and UK developments.

Modern Slavery Act 2015

The Modern Slavery Act (MSA) 2015 consolidated the existing UK law in this area, aimed at preventing slavery, servitude, forced or compulsory labour, and human trafficking. Section 54 of the MSA imposes an obligation on certain larger commercial organisations to publish an annual modern slavery statement, which sets out the steps taken by the organisation during the relevant financial year to which the statement relates to combat modern slavery and human trafficking in its business and supply chains.

The statement should be published no later than six months after the organisation’s financial year-end, and should be posted to the organisation’s website (if it has one) with a clear link from the homepage. An organisation can also choose to submit the statement to the Government’s modern slavery registry. Our Law-Now article accessible here discusses the registry in more detail. Although organisations which are obliged to publish a statement have the option of saying that “no such steps have been taken”, this approach is generally only taken in businesses where there is a limited or no supply chain of goods or services.

Over the past decade, the response to section 54 from organisations where a statement is mandatory has been mixed, with some organisations being diligent in their efforts in this area, whereas others have favoured limited transparency treating it as a box ticking exercise.  Some have ignored it altogether.

Despite this, the Government has historically not taken any enforcement action against non-compliant organisations, and in reality, the policing has increasingly come from interested stakeholders, not-for-profit organisations and procurement requirements, as well as negative publicity for those businesses which have found modern slavery in their supply chains.

However, the tide is turning.  In recent years, the trend has been for more transparency about supply chain management, consistent with the aim of the MSA, with some businesses even voluntarily reporting.

The Government has also recently published updated statutory guidance which reinforces and clarifies the transparency requirements of section 54, outlining the key areas which should be included in a modern slavery statement. The guidance provides case studies and practical examples of disclosable information for each section of the statement, to achieve ‘good’ and ‘best’ practice. It also explains why the recommendations are important and suggests actionable prevention measures for organisations to adopt. For example, when demonstrating the organisational structure of a business and its supply chain, it is suggested to begin by mapping tier 1 (direct) suppliers, covering labour and materials both within and outside the UK. This approach enables organisations to accurately identify risks related to modern slavery and forced labour in their supply chains, while providing transparency on how goods and services are sourced, produced, and distributed.

As discussed in previous Law-Now articles regarding modern slavery in an ESG context and announcement of the Modern Slavery Bill in the Queen’s Speech in 2022, the previous Government indicated its intention to tighten the scope and enforceability of section 54 with the prospect of a single reporting date, mandatory statement contents and sanctions for non-compliance.

The recent 2024 report from the House of Lords Modern Slavery Act 2015 Committee acknowledged the UK had "fallen behind" in this area and made recommendations for improvement of the Act, including strengthening company accountability for modern slavery in supply chains and introducing legislation requiring larger companies to undertake mandatory modern slavery supply chain due diligence.  The Government response published in December 2024 noted some areas for change but detail on the next steps is still awaited.

Increasing stakeholder action

Whilst many wait for the Government to take concrete steps, there have been more notable developments in stakeholder action and litigation in this area. In the recent case of Dhan Kumar Limbu & Ors v Dyson Technology Limited & Ors, Nepalese and Bangladeshi migrant workers allege they were trafficked to Malaysia and subjected to forced labour while manufacturing components for the Dyson group. Claims are being brought against two English Dyson companies and the Court of Appeal has determined that England is a more appropriate forum than Malaysia for the claim, despite the Dyson group not employing the claimants or owning the manufacturing facilities in question. The issue on jurisdiction is currently being appealed to the Supreme Court.

This case highlights the exposure of UK companies to litigation in England and Wales in relation to issues in their international supply chains, and reflects a trend of similar novel jurisdictional challenges including substantial class actions.

From a different perspective, campaigners and action groups are becoming increasingly active in this space, with examples of steps they are taking including threatened legal challenges to prevent the listing on the UK stock market of an organisation that has alleged issues of modern slavery in its supply chain, and proposals by investor actions groups to use shareholder voting to reject an organisations’ plans at their AGMs if there is a belief that the organisations are not doing enough to identify and tackle issues of modern slavery in their business and/or supply chain.

Introduction of the EU Forced Labour Regulation

Along with other countries, the EU is moving ahead of the UK with the introduction of the Regulation on Prohibiting Products made with Forced Labour on the Union Market.

This regulation is expected to apply from December 2027 and will affect all companies, regardless of revenue or where they are incorporated. If a product is found to be produced using forced labour, it will be prohibited from being placed on, imported to or exported from the EU market, and the company must withdraw and dispose of the product.

The regulation sets out a risk-based investigation approach and enforcement procedures. To aid its response to an investigation into any of its products a company should ensure that it is complying with any applicable local legal requirements relating to modern slavery or forced labour, such as section 54 of the MSA in the UK. Companies should identify products and supply chains at risk, enhance due diligence, and also consider integrating compliance with other regulatory requirements such as the Corporate Sustainability Due Diligence Directive (CSDDD) taking into account the amended timelines set out in the Omnibus proposals discussed here. Non-compliance could lead to products being banned, penalties and reputational risk.

Against this backdrop of closer regulation in Europe, and the Uyghur Forced Labor Prevention Act in the United State of America, which prohibits the import of goods produced in the Xinjiang Uyghur Autonomous Region of China, in January 2025, the Joint Committee on Human Rights announced an inquiry into forced labour in UK supply chains.

The inquiry will consider the effectiveness of the MSA and other domestic legislation as well as examining the roles of public bodies such as the Independent Anti-Slavery Commissioner, the National Crime Agency and Border Force. It will focus on sectors that are at particular risk of forced labour in their supply chains and the responsibilities of companies, including whether organisations of all sizes should be required to manage the risk of forced labour. Other areas include the impact of forced labour exposure on consumer attitudes, whether public procurement attracts a higher risk of potential forced labour, and international approaches to forced labour, including lessons learned from the U.S. Uyghur Forced Labor Prevention Act and EU regulations.

Evolving Legal Landscape for Businesses

The increasingly evolving legal landscape surrounding modern slavery and forced labour has significant implications for businesses and their supply chains. It reinforces the importance of robust due diligence and compliance measures to mitigate potential legal and reputational risks associated with forced labour, as well as enabling organisations to respond to challenges from interested stakeholders. Businesses are advised to adopt strategies to ensure compliance with developing regulations and ensure that this issue is considered holistically across all parts of an organisation, ideally with the involvement of Procurement, HR, Compliance and Legal teams.

Key Takeaways for Organisations

• Ensure your organisation has this as a reoccurring issue on its compliance checklist, and that it is being considered at c-suite level
• Consider whether your organisation is caught by the requirement to publish a modern slavery statement or, even if not, whether it wishes to publish a statement voluntarily.
• Review and update your organisation’s modern slavery statement to reflect steps taken to combat modern slavery in accordance with section 54 of the MSA and the latest government guidance. 
• Implement and review your processes and underlying internal governance relating to modern slavery, including supply chain mapping and management, due diligence steps, policies and training and your approach to remediation, to identify and prevent incidents of modern slavery and forced labour.
• Assess and consider your organisation’s response to the upcoming EU Forced Labour Regulation.
• Keep informed on future legal developments by checking the CMS Law Now page.

CMS has a wealth of resources to support and help you on your journey in this area; please see our Modern slavery | ESG People Perspective | CMS UK page where you’ll also find details of our modern slavery e-learning module.