There is a good chance that you may have heard about Australia’s new Modern Slavery legislation, the Modern Slavery Act 2018. But there is also a good chance that you have disregarded it as not being applicable to you.
Please don’t be so hasty. It might well apply to you. The test is not your supply chain. The test is your revenue.
If your business is in the big end of town—turning over $100 million per year—then you must complete a Modern Slavery Statement. It’s a much higher threshold than in the UK, which is the equivalent of $60 million.
The good news is that being compliant is relatively easy if you already have a clear picture of both your business plan and your supply chain. The bad news is that a motherhood statement isn’t going to cut it.
About the Modern Slavery Act
The Modern Slavery Act is very new. It requires you to develop and publish a statement in line with the criteria (they are in the Act, which you can find here). The Act does not establish an independent commissioner, and nor are penalties attached. What it does is enact a public register, on which reports will be compiled and made available.
This is true across Australia right now, except in New South Wales. If your business is in NSW, you also have a state-based Modern Slavery Act. Unlike its federal counterpart, the NSW Act does have an independent commissioner, and does apply penalties for non-compliance. This article, however, only discusses the federal Act.
The potential for penalties to be introduced at a federal level exists. It would be foolish of me to advise you, as a new CEO, to assume that you will be free from sanctions forever. My recommendation to you is to behave as though sanctions exist, because you will be safer in the long-run.
So what IS Modern Slavery?
This definition of Modern Slavery is taken from Rao’s Modern Slavery and Supply Chain Reporting, released in April 2019:
‘Modern slavery’ is an umbrella term. It captures a range of exploitative conduct – slavery, servitude, forced or compulsory labour, the worst forms of child labour and any form of human trafficking. While all this conduct falls under the same umbrella, inherent variations on the themes of ownership and coercion distinguish each form of exploitation.
Rao goes on to point out that each of these forms of exploitation are unique, and are defined differently in international law. Because this is the case, your company must be very clear about what exactly you are trying to avoid in your operations and in your supply chain.
While the term ‘slavery’ is used in its traditional sense (as someone owned by someone else), you must be careful about how you approach your assessment. The notion of ‘servitude’ is someone who is ‘not free to cease’ doing something, because of some kind of pressure or coercion from someone else.
In an article published by the Sydney Morning Herald in May 2019, it was defined rather more simply:
The truth is that modern slavery refers to any kind of involuntary labour, performed under threat of punishment for reduced or no payment.
Slavery? In Australia?
You might be surprised to learn that slavery is a real issue in Australia.
According to the Business & Human Rights Centre, there are ‘about 4,300 slaves in Australia’; though the Global Slavery Index of 2018 suggests that there are many more: Approximately 15,000 people trapped in slavery conditions in Australia, or 4.5 people in every 100.
Some companies have gone on record with their experiences. Perhaps the most notable so far is the story of Fortescue Metals. Chairman Andrew Forrest was aghast at what he discovered, when he started digging into the Fortescue Metals supply chain:
He visited one of those suppliers in the Middle East, and discovered scores of foreign workers in shocking conditions.
“[They had] a life expectancy of five years and food which just kept them alive … 18 to a room which you wouldn’t call your larder … and not able to leave,” he said.
“That company ladies and gentlemen was supplying goods to us and to companies all over ..… Australia.”
At a glance, the Australian Modern Slavery Act 2018 appears simple to assess: Clearly it applies to you if you manufacture or purchase products, particularly from overseas, right? Well, it’s much more subtle than that.
The Modern Slavery Act 2018 forms a piece of your HR compliance requirements
The Act is a piece of your Human Resources compliance requirements. It covers, for example, ‘deceptive recruiting’. This applies to situations where people ‘are induced to enter into working arrangements for labour or services’, but have been deceived about the true nature of the employment.
One of the clearest examples of modern slavery was given by the Sydney Morning Herald. It points out that there are situations in which visitors to Australia (like backpackers or international students) may have stayed past their visa expiration dates. Those populations are vulnerable to exploitation by the unscrupulous, who can use the threat of retaliation against them.
Choice magazine gives numerous examples of situations that fall under the Modern Slavery Act: Prawns imported from Thailand; electronics imported from Malaysia; and other forms of exploitation in Australia’s agriculture, sex, and seafood processing industries. These are the country’s highest-risk industries. You can read more about those here.
Modern Slavery takes many forms, and some of them might exist right under your nose.
How to comply with the Modern Slavery Act 2018
To comply with the Modern Slavery Act 2018, you must meet reporting requirements. It involves submitting an annual report, called a Modern Slavery Statement. That statement describes what you have done to address the risks of modern slavery in your operations and your supply chain in the past year.
To complete the statement (full criteria are in Part 2, Section 16 of the Act), you must:
- Double-check whether or not you are obliged to comply. Even if you are not obliged to comply, you canvolunteer to do so. You are obliged to comply if your consolidated revenue is at or above $100 million.
- Have a clear picture of the structure of your operations and your supply chain.
- Conduct a complete risk assessment of both your operations and your supply chain, so that you understand where you might be at risk.
- Be able to describe the actions that your business has taken to assess and address those risks.
If you do nothing else today, one thing you can do right now is ask to see the latest Modern Slavery risk assessment. If your team can’t give you one, you will know immediately that your company might not comply.
What to do if you need help
While the Modern Slavery Act 2018 appears relatively simple, issues may arise when you start digging into your operations and your supply chain. For example, your labour supply chain may be unclear if you use services like Upwork, or employ virtual assistants in other countries.
For confidential advice about how you can get started in your assessments, particularly in relation to your human resources, contact Red Wagon by email. We’ll give you a call to discuss.
Want to be globally competitive? Consider meeting international standards
Meeting Australia’s Modern Slavery Act 2018 doesn’t automatically mean that your company will comply with international standards. However, you can strive to meet international standards if you want your business to stand strongly on a global stage.
If you wish to meet international standards, the requirements are much more specific.
While dealing with these is out of the scope of this article, what I can give you is the high-level view.
If you want to meet international standards, you must:
- Establish a policy, approved by the most senior level, such as your Board.
- Assign responsibility to those who are competent, knowledgeable and experienced in both the implementation and consistent application of the policy.
- Monitor the policy’s implementation.
- Communicate the policy to your teams and ensure it is fully aligned to your operations.
- Review the policy periodically.
- Communicate the policy to all partners and interested parties external to your business.
- Make it publicly available.
- Train your employees.
- Train all business partners in your supply chain.
- Incorporate it in your contracts.
- Incorporate Corporate Social Responsibility commitments and initiatives to support human rights.
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