Modern slavery

Both sides of the Australian Parliament have recently announced their support for a Modern Slavery Act.  The Foreign Affairs and Aid Sub-Committee has now tabled its final report in Parliament.  Given the likelihood of the Government introducing new laws in the near future, employers should consider how this may impact on their businesses.

What is modern slavery?

According to the Global Slavery Index, it is estimated that 4,300 people are trapped in some form of slavery in Australia.¹  While definitions vary, modern slavery includes “situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, abuse of power or deception”.²

Changes in the law

With cross-party support for modern slavery legislation, the likelihood of new laws being implemented within the next 12 months is high.

The purpose behind the proposed legislation is to create more transparency about what organisations are doing to tackle the problem of modern slavery in their business supply chain.  It will give consumers, investors and charities access to more information so they can be aware of and put pressure on companies that are perceived to not be doing enough to eliminate slavery.

The Government’s proposed Act is modelled on similar legislation in the United Kingdom, the first country to introduce such laws.

What will businesses be required to do?

The proposed laws require large businesses (defined to cover businesses that meet the revenue threshold of $50 million) and Australian businesses under a global brand (even if the Australian contribution is only a small portion) to publish an annual Modern Slavery Statement setting out what risks the business faces and the actions taken to ensure its operations and supply chain are slavery-free.

Under the new Act it will be incumbent on businesses to investigate modern slavery as far as possible and require its suppliers to provide undertakings that they do not engage in any form of modern slavery.  Businesses will also be required to put reasonable steps in place to respond to risks of slave labour being used in their supply chains.

Businesses will be required to evidence their actions by providing reports on anti-slavery measures taken and providing a proof-of-origin for their products and materials to ensure that they do not have relationships with entities that are engaging in exploitation in the form of slavery, servitude, forced labour, debt bondage, or deceptive recruiting for labour or services.  This may appear burdensome to business leaders, but it is also suggested to be an opportunity for businesses to fulfil their responsibilities as corporate citizens by contributing to the reduction of modern slavery.

While a Perth business is unlikely to be engaged directly in modern slavery in their own operations, there may be potential risks in their supply chain and labour hire agreements.  By way of example, a cleaning contractor engaged to clean a firm’s offices may underpay their workers, or the firm’s computers may include components manufactured in another country using slave labour.  This may result in businesses opting to deal with their supply of labour internally to manage the risks, or being more selective in their supply relationships.

If businesses are required to provide a report of anti-slavery measures taken and proof-of-origin of products and materials, and it can be proven that slave labour has been used at any point in the production of those products or materials, the business may lose contracts and potentially suffer a badly tarnished reputation.  The government will be monitoring and reporting on compliance, leaving those that do not comply open to reputational damage.  Furthermore, it is suggested that the Australian Government and local governments only procure goods and services from entities that complete a Modern Slavery Statement.

Lavan comment

Given the inevitability of a Modern Slavery Act in the near future, it is important for Australian businesses to start preparing now and consider what steps are necessary for them to comply.  This will not only put businesses in good stead for future compliance with the new law, but also reflects good business sense to avoid business relationships that benefit from slavery.

If you have any questions about how your business can ensure it is ready for, and compliant with, an imminent Modern Slavery Act in the future, contact Lavan’s Employment and Safety Team.