Modern Slavery Act 2015 (Procurement Obligations)

Modern slavery encompasses forced labour, human trafficking, debt bondage, and other forms of severe labour exploitation. The Modern Slavery Act 2015 was landmark UK legislation that created new criminal offences, enhanced law enforcement powers, and placed transparency obligations on large businesses. In public procurement, the Act's transparency requirements have become an important dimension of supply chain due diligence, and the government has moved to make modern slavery compliance a formal part of the procurement process.

What are the Modern Slavery Act 2015 procurement obligations?

Section 54 of the Act requires commercial organisations that supply goods or services in the UK and have an annual turnover of 36 million GBP or more to produce a slavery and human trafficking transparency statement for each financial year. The statement must confirm the steps the organisation has taken during the year to ensure that slavery and human trafficking are not taking place in any of its supply chains or in any part of its own business. If the organisation has taken no steps, it must say so.

The statement must be approved by the board of directors (or equivalent), signed by a director, and published on the organisation's website. There is no prescribed format, but the Home Office guidance sets out six areas that statements should ideally address: the organisation's structure, business, and supply chains; its policies in relation to slavery and human trafficking; its due diligence processes; the parts of its business and supply chains where there is a risk of slavery and human trafficking, and the steps it has taken to assess and manage that risk; its effectiveness in ensuring that modern slavery is not taking place; and the training available to staff.

In procurement, contracting authorities have moved beyond simply asking whether suppliers have a transparency statement. Procurement Policy Note 02/23 introduced requirements for central government to exclude suppliers from procurement competitions if they cannot demonstrate compliance with section 54 (where applicable) or cannot show equivalent due diligence for organisations below the turnover threshold. This made modern slavery compliance a mandatory element of public procurement qualification in central government for the first time.

The Procurement Act 2023 reinforces this approach by providing clearer grounds for excluding suppliers with poor records on labour rights and human rights more broadly. Debarment provisions in the new Act can apply to suppliers who have been found to have violated fundamental rights in their supply chains.

For European suppliers, modern slavery due diligence requirements are becoming increasingly prevalent across the continent. EU Directive 2022/2464 on corporate sustainability reporting and the proposed EU Corporate Sustainability Due Diligence Directive create comparable obligations, meaning that the UK's Modern Slavery Act framework is part of a broader European trajectory toward mandatory supply chain transparency.

Why it matters for bidders

Any supplier seeking to compete for UK central government contracts must be able to demonstrate modern slavery compliance. For organisations above the 36 million GBP threshold, this means having a published section 54 statement that genuinely addresses the six recommended areas and reflects actual due diligence activity, not boilerplate text.

For suppliers below the threshold, the expectation is that they can demonstrate equivalent due diligence. Buyers will commonly ask pre-qualification questionnaire questions about supply chain mapping, risk assessment processes, and supplier audit programmes. A supplier that has no answer to these questions is increasingly likely to be excluded or scored poorly.

Investors, institutional buyers, and major commercial customers are also scrutinising modern slavery statements independently of public procurement. The reputational and commercial risk of being associated with supply chain exploitation extends well beyond the public sector.

Example

A facilities management company with 50 million GBP annual turnover bids for a central government estate management contract. As part of the selection process, the buyer asks the supplier to confirm it has a compliant section 54 statement and to describe its due diligence process for cleaning and catering subcontractors. The supplier submits its published statement (which covers supply chain mapping, a supplier code of conduct, and annual audit requirements) and provides a summary of its subcontractor risk assessment methodology. This satisfies the compliance threshold and allows the bid to proceed to evaluation.

Frequently Asked Questions

What happens if a large organisation fails to publish a section 54 statement?

The Home Office can seek a court injunction requiring the organisation to comply. There is currently no financial penalty for non-compliance, though this has been the subject of ongoing policy debate. In procurement terms, failure to have a compliant statement is increasingly a ground for exclusion from public contracts.

Are charities and public bodies subject to section 54?

Section 54 applies to commercial organisations (those that supply goods or services in the course of a business). Charities that carry on a business and meet the turnover threshold are covered. Public bodies are not directly subject to section 54 in the same way, but they are subject to the PSED under the Equality Act 2010 and to their own modern slavery policies as employers and commissioners.

How does modern slavery compliance relate to the Public Services (Social Value) Act 2012?

Social value and modern slavery compliance address overlapping concerns about ethical supply chains. Some buyers include modern slavery risk management as a scored element within their social value evaluation framework, treating strong anti-slavery due diligence as a positive contribution to the social outcomes the procurement is intended to generate.