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Focus: Supply chains in the spotlight: Establishing an Australian Modern Slavery Act

21 February 2017

In brief: The Australian Government has announced the launch of a broad inquiry into establishing a Modern Slavery Act in Australia. The inquiry will consider whether the introduction of anti-slavery legislation would strengthen and improve Australia's current regime to combat slavery. If introduced, a Modern Slavery Act would have significant implications for Australian businesses and their suppliers abroad. Partner Rachel Nicolson (view CV), Associate Freya Dinshaw and Lawyer Shamistha Selvaratnam report.

 
 

How does it affect you?

  • As the Australian Government ramps up efforts to combat slavery and trafficking, mobilising businesses to support such efforts will be high on the agenda. The introduction of a Modern Slavery Act is likely to have significant implications for Australian companies in respect of how they address working conditions within their supply chains.
  • While all options are currently on the table, a Modern Slavery Act could require reporting on measures taken to ensure that no modern slavery exists in corporate supply chains, statements from the board of directors on slavery, and/or non-financial due diligence requirements, as have been seen in UK and French developments.
  • Businesses should use this opportunity to understand labour standards and respect for human rights in their supply chains both in Australia and abroad, in order to be prepared for possible incoming legislation.

Background

On 15 February 2017, the Attorney-General referred an inquiry into establishing a Modern Slavery Act in Australia to the Foreign Affairs and Aid Sub-Committee of the Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade (the Committee). The inquiry, which was formally announced on 17 February 2017, will focus on strengthening and improving Australia's current regulatory regime in order to prevent slavery occurring in Australia and in supply chains of Australian businesses operating overseas. It will also consider the nature and extent of slavery both in Australia and globally in order to determine whether national legislation should be introduced to combat it.

Strengthening Australia's current regime

Under Australian law, human trafficking, slavery and slavery-like practices are criminalised under the Criminal Code.1 The offences under the Criminal Code apply extra-territorially and can be attributed to companies. There are also other laws and regulations that provide for similar protections from human trafficking and slavery, including the Migration Act 1958 (Cth) and the Fair Work Act 2009 (Cth). However, the Australian Government is yet to introduce legislation specifically directed at addressing slavery and human trafficking in supply chains.2

The terms of reference for the inquiry indicate that the Committee will consider whether Australia's current regime should be supplemented by national legislation comparable to the Modern Slavery Act 2015 (UK) (the UK MSA). In considering this, the inquiry will look at the nature and extent of modern slavery (including slavery, forced labour and wage exploitation, involuntary servitude, debt bondage, human trafficking, forced marriage and other slavery-like exploitation) and its prevalence in both the domestic and global supply chains of businesses operating in Australia to determine the measures that Australia should introduce to address modern slavery. The inquiry will also look beyond the UK MSA to identify international best practice employed by governments, companies, businesses and organisations to prevent slavery in supply chains.

The introduction of a Modern Slavery Act in Australia could result in greater transparency in the domestic and global supply chains of Australian businesses and greater accountability in relation to their human rights impacts. Similarly to the UK, this may include the introduction of a mechanism requiring businesses to report on the steps they have taken to ensure that slavery and human trafficking is not taking place in their own operations and supply chains.

The UK's Modern Slavery Act

In March 2015, the UK Government passed the UK MSA which, among other things, targets slave labour occurring in the supply chains of companies. The UK MSA was the first legislation of its kind, and is likely to be highly influential in the consideration of any proposed Modern Slavery Act in Australia.

The UK MSA compels commercial organisations (being organisations that supply goods or services and exceed a total turnover of £36m) to prepare a public slavery and human trafficking statement each financial year.3 The statement must set out any steps taken to ensure that there is no slavery or human trafficking taking place in any supply chains, in any parts of the business.

While there is flexibility in the making of the statement, statements may include the following types of information:

  • an organisation's structure, its business and supply chains;
  • policies in relation to slavery and human trafficking;
  • due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • the parts of the organisation's business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • the organisation's effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
  • the training about slavery and human trafficking available to its staff.4

The statement must be signed by a director or a partner, and approved by the board of directors.5

Since the UK MSA has come into effect, over 12,000 companies have been estimated to be required to publish public statements on slavery and human trafficking. While the UK MSA has been criticised, in part, for failing to take a stronger approach against companies that may be linked to slavery, the uptake of reporting requirements by companies has demonstrated the wide impact that the legislation has had in its first years of operation.

Next steps

The Committee has called for submissions to be lodged by interested parties by 28 April 2017, following which it will conduct public hearings with selected individuals and organisations. The Committee will then prepare a report to be presented to the Federal Parliament.
In the meantime, Australian businesses should start preparing for how they may be impacted in the event that a Modern Slavery Act is adopted in Australia. Some key questions to consider are:

  • Has my company developed and implemented policies that address anti-slavery and trafficking in supply chains, including monitoring supplier practices for unlawful conduct?
  • Does my company have processes in place to conduct due diligence on its supply chains?
  • Does my company engage in non-financial reporting, including on human rights?
  • Has my company identified the risks that exist relating to slavery and trafficking, and taken steps to address these risks?
  • Have any complaints mechanisms been established for workers in businesses and supply chains to raise and resolve issues?
Footnotes
  1. Criminal Code Act 1995 (Cth) sch 1. The requirement to criminalise such practices arises from Australia being a signatory to the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children.
  2. The Australian Government has taken steps to address the issue of human rights in supply chains. In 2014, it established a Supply Chains Working Group to examine ways to address serious forms of labour exploitation in the supply chains of goods and services. The Australian Government has also implemented the National Action Plan to Combat Human Trafficking and Slavery 2015-2019.
  3. UK MSA, s 54.
  4. UK MSA, s 54(5).
  5. UK MSA, s 54(6).

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