Modern Slavery Act: Transparency Reporting Gets Teeth

What the Immigration and Asylum Bill 2026 means for your supply chain reporting obligations

Currently, section 54(5) of the MSA lists topics a statement "may" include but leaves content to the organisation's discretion. An organisation can lawfully produce a statement that addresses none of them. The Bill replaces this with a mandatory content framework in a new Schedule 4ZA to the 2015 Act, covering six areas: organisational structure and supply chains, risk identification and mitigation, policies, due diligence, training, and effectiveness. This brings the UK Act into closer alignment with both the Canadian and Australian modern slavery reporting requirements.  For many organisations, the mandatory categories will be familiar, reflecting the same voluntary categories of information as are already in the MSA, and which more fulsome reports will at least consider.

The proposed model is "comply or explain". An organisation is not required to have implemented particular policies or processes, but it must either describe its current approach in respect of each mandatory pillar, or transparently state that it has no relevant policy, approach, training and so on, and explain why. It is not open to an organisation to simply omit any given section and allow the reader to infer "no action taken".

In general terms, a good "explanation" (in contrast to a "compliance") will typically reflect a considered decision taken by the organisation against a particular measure, for example because an alternative approach might work better in its sector. In respect of modern slavery prevention, "explanations" will require thoughtful formulation, because even low risk, office based businesses will employ service providers – particularly agency or sub-contracted staff - who may be more susceptible to modern slavery. A board being asked to sign off on a statement that reads "we have not assessed whether slavery exists in our supply chains because we did not consider it necessary" will likely ask questions of management that the current regime does not prompt.

The Secretary of State retains power to make regulations adding to, amending or removing content requirements following consultation. The framework can therefore be tightened over time without primary legislation.

The existing enforcement mechanism (a civil injunction brought by the Secretary of State) has never been used. The Bill introduces financial penalties with a statutory cap at the higher of:

• 1% of the relevant amount (turnover for commercial organisations, total budget for public authorities); or
• £1 million.

Only one penalty may be imposed per statement per financial year. A "reasonable excuse" defence is available. The regulations must also provide for warning notices and representations before a penalty is imposed.

The cap is material without being disproportionate. A company with £2 billion turnover faces a theoretical maximum of £20 million, though first penalties under comparable regimes tend to land well below the ceiling. The "reasonable excuse" defence and graduated enforcement procedure suggest the Government intends a proportionate approach rather than immediate resort to maximum penalties.

The critical detail (what triggers enforcement, how amounts are assessed, who exercises the function, what appeals look like) sits in regulations yet to be published. Until those regulations are drafted, it is difficult to gauge the practical severity of the regime.

Notably, the penalty regime is not limited to failure to publish a statement. It applies to failure to comply with any duty under Part 6, which could include content deficiencies, missing the publication deadline, or failing to submit electronically in the prescribed form. The range of potential triggers is broader than it might first appear.

The Bill introduces a hard deadline: publication within six months of the end of the relevant financial year. This replaces the current position, where there is no statutory deadline at all but it is recommended that statements should be published as soon as possible, but no later than six months, after the financial year end.

Certification is also tightened. At present, modern slavery statements must be approved by the board of directors and signed by a director, or equivalent in each case. According to the Bill, statements would need to include a declaration by the signatory that the content is accurate to the best of their knowledge and belief, and must specify dates of approval and signature. The Bill permits a parent undertaking to certify a subsidiary's statement, which may suit groups operating a consolidated approach, though it moves sign-off responsibility upward in respect of policies and processes that the signatory may not have full sight of.

The Bill does not create a personal offence for the signatory, but rather acts as a governance mechanism. The personal nature of it, however, may require tightening of internal assurance processes so that the signatory can be comfortable that what they are signing is accurate.

The Bill extends the reporting duty to public authorities meeting a budget threshold to be prescribed by regulations. "Public authority" is defined broadly as any person with functions of a public nature, though the intelligence agencies are excluded.

For asset managers with public sector mandates, and for corporates supplying goods or services to government, this is an important development. Public authority clients will likely push due diligence demands down the supply chain as they seek to populate their own statements. This change in scope also levels the playing field in sectors (including facilities management, construction, care staffing, logistics) where public and private operators compete for the same contracts and workforce.

The practical impact depends entirely on which authorities are brought into scope when the budget threshold is decided. A high figure captures only large departments and major NHS trusts. A lower figure brings in hundreds of smaller bodies including local councils, many of which may be reluctant to divert already-constrained resources to corporate reporting.

The Bill has attracted significant criticism from other angles. It has been described as reducing assistance for modern slavery victims, including by imposing a timeframe for victims to disclose exploitation, and expanding the grounds for disqualification. Immigration and asylum aspects have also been widely criticised, including a right for the Government to claw back support payments made to asylum applicants prior to a decision being made. Despite this controversy, the Bill passed its second reading in the House of Commons on 13 July, with Prime Minister-in-Waiting Andy Burnham supporting the Bill.

The modern slavery reporting aspects are, in comparison to the immigration aspects, technical and unlikely to gather much press or Parliamentary attention. This makes it more likely that if the Bill passes at all, these provisions may remain unamended.

The changes to the MSA reporting requirements will not come into force immediately, but on a future date to be decided by secondary legislation. However, the power for the Secretary of State to make regulations (on penalties, electronic submission, public authority budgets) is exercisable as soon as the Bill is passed, meaning that secondary legislation could be developed during parliamentary passage and ready to enter into force shortly afterwards. Conversely, the MSA amendments may sit on the statute books for months or even years without being brought into effect.

Many businesses with financial years aligning to the calendar year will recently have completed their annual modern slavery statement. At this early stage, when planning for next year, businesses may want to start thinking about some of the following actions:

• Gap analysis: Compare current statement content against the six mandatory areas in Schedule 4ZA. Identify where additional internal processes may need to be implemented, or internal evidence gathering is needed, in order to make a complete disclosure.
  
  
• Governance and timing: Ensure board approval timelines can accommodate the accuracy declaration, the post-year-end signing requirement, and the six month deadline. Given six months is already the recommended timeframe for disclosure, there is merit in regarding that as a hard deadline, to the extent it is not already.
  
  
• Risk appetite: Consider the appetite of the board to sign off a statement which highlights gaps in the company's approach. It is not yet possible to predict whether market practice will make this acceptable, or whether companies will rapidly toughen up their approaches to modern slavery to avoid statements that they do not identify, assess, manage or measure certain aspects of modern slavery risk.
  
  
• Supply chain documentation: The requirement to identify risk areas (or explain why no assessment has been conducted) places a premium on documented diligence. Review whether existing supplier audit and monitoring programmes generate sufficient evidence, or what medium term changes might be needed. These may take time to agree and implement.
  
  
• Engage with consultations: The penalty regulations will determine how this regime works in practice. Follow or consider responding to consultations when published, potentially through industry associations.

We will continue to monitor the Bill's passage and the development of secondary legislation. Please get in touch if you would like to discuss how the proposals might impact your approach to MSA reporting.