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How a Modern Slavery Bill would affect Australian exporters

How a Modern Slavery Bill would affect Australian exporters article image

About 15,000 people are trapped in modern slavery in Australia, the Global Slavery Index 2018 estimates. And according to the United Nations, some 40 million people are affected by slavery – with half of them located in the Asia Pacific region.

The Modern Slavery Bill, which could become law before the end of the year, prompts businesses to consider how they do business on a global scale, including within their supply chain. It is particularly pertinent for exporters/importers that have products manufactured in low cost labour countries in Asia. Workplace relations expert Rob Jackson explains why …

The federal government’s proposed Modern Slavery Bill was introduced to the Legal and Constitutional Affairs Legislation Committee at the end of last month for inquiry and report by August 24. It could be law before the year ends.

Slavery and slavery like offences are already covered by criminal law in Australia.

Despite this, the Modern Slavery Bill was promoted to prompt businesses to consider how they do business on a global scale, including within their supply chain. It also takes steps to eradicate any risk of modern slavery.

The UK’s experience has been slow and patchy to date with few prosecutions occurring since the introduction of their Modern Slavery Act 2015, despite the issue being a genuine concern.

The success of the Bill depends on the resources available, and the desire to prosecute in Australia.

The Hidden in Plain Site report released by the Commonwealth Government last December outlines a number of recommendations for companies to investigate their global supply chains.

This includes:

  • Only working with certified organisations
  • Implementing strong due diligence and remediation processes in relation to modern slavery
  • Mapping supply chains
  • Creating questionnaires to be completed by all suppliers to ensure a paper trail demonstrating enquiry into an entity’s operations
  • Physically visiting international suppliers to inspect operations

If it is found that modern slavery exists within supply chains, the company must decide on how they handle their response.

The options available to businesses who do uncover modern slavery practices in their supply chains (though often these practices are hidden in plain sight) include:

  • Stopping business operations with companies endorsing modern slavery practices
  • Creating a remediation plan consisting of corrective actions and follow up audits over a reasonable timeframe. This approach is particularly relevant when simply stopping work would result in broader ethical issues (e.g. people starving because they now have no work)
  • Mobilising vulnerable workers
  • Reporting on the discovered issue and the steps taken to rectify it within the MSM

If the Bill becomes law it will only require entities to file a report on their operations, it will not require businesses to actually improve their supply chains. This requirement is replicated in the NSW Act.

However, where the Commonwealth and New South Wales modern slavery laws differ, is that an entity can be fined up to $1.1 million in NSW, while there are no fines if an entity fails to comply with the Modern Slavery Bill.

That said, the filed reports will be made publicly available, giving knowledge to consumers to help inform their purchasing decisions.

Further, the procurement departments of companies and government agencies will have access to the same information to inform their respective purchasing decisions.

NSW Modern Slavery Act

NSW enacted its own Modern Slavery Act on June 21 this year. If a business has one employee in that State it will be covered by broadly equivalent provisions.

While it will overlap with the proposed Commonwealth Bill, there are some differences, including:

  • A business with a turnover of $50 million or more must file an annual modern slavery statement.
  • An Anti-Slavery Commissioner will be appointed to oversee and uphold the legislation, a feature that is absent from the Commonwealth initiative.

Under the federal Modern Slavery Bill, any entity that ‘carries on business in Australia’with an annual revenue greater than $100 million will be required report annually on the risks of modern slavery in their operations and supply chains.

This obligation is set out in the Modern Slavery Reporting Requirement which requires a reporting entity to file a Modern Slavery Statement (MSM) for any year that consolidated revenue is above $100 million.

The MSMmust consider operations on a global basis, not just Australia.

An estimated 3,000 businesses will be obliged to file an MSM, in addition to the Commonwealth Government and its agencies.

The Government committed $3.6 million in its 2018 budget to establish a dedicated Modern Slavery Business Engagement Unit within the Department of Home Affairs. The operation of the Act will be reviewed after three years.

Blend of skills needed

Business must develop an in-house capacity to create their own approach to defining due diligence within their supply chain. This requires a blend of skills from professionals with human resources, import/export, finance and procurement backgrounds to determine a tailored and effective approach.

The worst-case scenario to be avoided is complying with the obligation at face value, but for the media to then break a horror story in the supply chain that the company should have known about and could have acted on.

The most important ingredient will be leadership by the CEO and the Board to ensure the new legal obligations are satisfied.

Rob Jackson is an accredited workplace relations law and commercial litigation specialist and a Registered Migration Agent with Rigby Cooke Lawyers

www.rigbycooke.com.au

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