This article is Part One in a two-part series on modern slavery. Read Part Two here.
In recent years, investigations of industries across the globe have highlighted instances of modern slavery and its link to, for example, the fresh produce we buy from the supermarket, the clothes we wear and the smartphones we use. In Australia, issues of underpaid workers, bonded labour and abuse of overseas workers show that Australian industries are not immune.
The potential for reputational damage and economic loss resulting from a journalist finding forced labour or modern slavery along a company's supply chain was reason enough for large companies to dig further than assessing the price and appearance of the products shipped to their warehouses. Now, with the introduction of the Federal Modern Slavery Bill 2018 (the Bill) and the newly assented NSW Modern Slavery Act 2018 (the NSW Act), few Australian companies in few industries will be immune from having to looking at their own procurement systems, their supply chains and business operations to assess risks of modern slavery.
What is Modern Slavery in Australia?
Modern slavery refers to exploitative practices such as wage exploitation, human trafficking, servitude, forced labour, debt bondage and deceptive recruiting, and includes where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception.
Australian examples resulting in significant financial and reputational damage have included the Fair Work Ombudsman's investigation into 7-11's underpayment of employees; the 2016 exploitation of fruit pickers in Mildura; and the labour hire issues with Queensland's Seasonal Workers Program in early 2017.
Between January 2004 and 30 June 2012, the Australian Federal Police carried out 346 domestic investigations into suspected cases of human trafficking, slavery and slave-like practices, referring 46 individuals for assessment for prosecution, which resulted in 15 convictions.
The Australian Legislative Response
The Commonwealth and NSW State Parliament’s action in drafting Modern Slavey legislation reflects the growing international commitment to eradicate these exploitative practices and the corporate social responsibilities of companies.
The Joint Standing Committee on Foreign Affairs, Defence and Trade's report (The Report), Hidden in Plain Sight, made 49 recommendations, aligned with the 'Protect, Respect and Remedy' framework of the UN Guiding Principles on Business and Human Rights, to improve Australia's efforts to combat modern slavery here and around the world. The Committee recommended that any Federal Bill should contain:
- establishment provisions for an independent Anti-Slavery Commissioner
- supply chain reporting requirements for entities operating in Australia
- support for victims (including a national compensation scheme)
- criminal justice responses (including training for frontline officials), and
- protections for workers vulnerable to exploitation (including changes to Australia's visa framework and establishing a national labour hire licensing scheme).
Federal Modern Slavery Bill
The Federal Bill was introduced into the House of Representatives on 28 June 2018 and referred directly to the Senate Legal and Constitutional Affairs Committee for report by 24 August 2018. The Federal Bill is expected to affect 3,000 companies operating in Australia, responding to modern slavery practices criminalised under Commonwealth law.
In developing the Federal Bill, reference was made to the United Kingdom's Modern Slavery Act 2015 (the UK Act) and The Report.
Feedback from the business community on the Bill has indicated that the primary driver for compliance will be investor pressure and reputational costs, however, the Bill has been criticised for a lack of the necessary enforcement measures, and a lack of fines or penalties, making the system a voluntary system by default. The Law Council of Australia has also criticised the Bill for not implementing all of the Report recommendations notably, that the Bill should include access to a national redress scheme for victims, and that an anti-slavery commissioner should be established to enforce the legislation. The Law Council also suggested that the revenue threshold should be lowered to $60 million.
NSW Modern Slavery Act 2018
Assented to on 27 June 2018, the Act sets out a new definition of modern slavery and a number of offences which meet this definition in Schedule 2 against the Crimes Act 1900 (NSW) and the Commonwealth Criminal Code. These offences include slavery, servitude and forced labour offences under the Criminal Code, as well as sexual servitude and human trafficking offences under the Crimes Act.
Unlike the Bill, the NSW Act has been praised for implementing the penalties for failing to report on implementation of modern slavery initiatives in the company supply chain and putting in place provisions to address all recommendations from the Report.
Snapshot of the Newly Introduced Bill and Act
Modern Slavery a Compliance Driver for Companies?
The NSW Act and the Federal Bill should not be the only compliance driver for companies, despite the fact that once the Federal Bill becomes law, companies could be liable under both regimes if they operate in NSW. The Federal Bill creates some significant anomalies with the NSW Act and, as it is still under debate, could be amended to bring it more into line with the NSW requirements, however, the NSW Act states that the reporting provisions do not apply if another regime is in place.
Companies should instead be looking to implement robust human resources, WHS and whistleblower programs to begin tackling modern slavery now. In particular, entities caught by either piece of legislation outlined above should be thinking about:
- mapping supply chains by identifying suppliers and contractors and where they operate
- identifying who within their organisation will be responsible for compliance with modern slavery provisions
- identifying those areas of their business where there may be a risk of modern slavery
- identifying what staff training will be needed for those employees involved in procurement and supply chain management and for staff more generally and how this might be provided, and
- identifying whether contracts with suppliers and contractors ought to include appropriate provisions regarding their own procedures.
The reputational damage which organisations face if exposed as having slavery within their supply chain has been well documented. Companies risk losing consumer conﬁdence and market share if they are found to be sourcing from suppliers which use exploitative labour. It has been suggested that such consumer action against companies linked to slavery costs those implicated billions a year. Any proposed solution to eliminating modern slavery from supply chains ironically does not need to start with looking at the suppliers, but needs to begin with an internal review of a company's procurement department or division. Change must come from within and the resource, Tackling Modern Slavery in Supply Chains, provides a good starting point for most companies.