Slavery in the Supply Chain: The Federal Parliament’s Inquiry into Establishing a Modern Slavery Act in Australia

According to the Global Slavery Index, 45.8 million people around the world are trapped in various forms of modern slavery.

Increasingly, consumers and governments are looking to the business sector to do more to address this international problem. In the United Kingdom, the Modern Slavery Act 2015 (UK Act) has now come into effect. Here in Australia, a Parliamentary Inquiry is also currently investigating whether Australia should follow the UK and adopt similar legislation.

In this article, we look at how the UK Act works, what is happening in Australia and what Australian businesses should now be considering.

How does the Modern Slavery Act work in the UK?

The UK Act:

  • Introduced a number of new criminal offences relating to slavery and human trafficking.
  • Created new enforcement powers.
  • Implemented new measures to protect victims.
  • Established the office of the Independent Anti-slavery Commissioner to oversee prevention, investigation and prosecution of offences.

In the UK, the attention of the business sector has been especially focused on a new “supply chain transparency” requirement, set out in section 54 of the Act. This requires large commercial organisations to publish a statement on actions taken to ensure their business and supply chain are slavery free. If they have not taken any steps, they are required to report this fact.

The public statement requirement applies to a commercial organisation if it is:

  • A body corporate or partnership that carries on a business, or part of a business, in the UK, irrespective of where it is incorporated or formed.
  • Supplying goods or services and has a minimum group turnover of £36 million.

Where a public statement is required under the UK Act, the statement might include, for example, information about the organisation’s:

  • Structure, business and supply chain.
  • Policies on slavery and trafficking.
  • Due diligence processes undertaken in its business and supply chain.
  • Steps taken to assess and manage risk.
  • Effectiveness in ensuring that slavery and trafficking are eliminated, measured against appropriate performance indicators.
  • Staff training efforts.

The statement must be signed by a director or partner and be published on the organisation’s website. A link must be placed prominently on the website’s homepage to help people find the statement.

What’s happening in Australia?

On 15 February 2017, the Attorney General asked the Joint Standing Committee on Foreign Affairs, Defence and Trade (Committee) to inquire and report on establish a Modern Slavery Act in Australia. This follows the Committee’s earlier report in June 2013: Trading Lives: Modern Day Human Trafficking.

The terms of reference for the Committee include having regard to:

  • The nature and extent of modern slavery, in Australia and globally.
  • The prevalence of modern slavery in the supply chain of businesses operating in Australia.
  • Identifying international best practice.
  • Any implications for Australia’s visa regime.
  • Provisions in the UK Act that have been effective and whether similar, or improved, measures should be introduced in Australia.
  • Whether Australia should adopt a Modern Slavery Act.

Interested persons and organisations have until 28 April 2017 to make submissions addressing the terms of reference. Submissions can be made via the Committee website. The next stages will involve public hearings with relevant individuals and organisations, followed by a report to be presented to the Federal Parliament.

What should Australian businesses be doing now?

Although it is too early to pre-empt the outcome of the Inquiry, a Modern Slavery Act for Australia could lead to new measures, for example:

  • Mandatory board-level commitments for organisations to do more to support efforts to eliminate slavery and human trafficking.
  • Requirements to increase the standard of due diligence undertaken on suppliers.
  • Enhanced supply chain monitoring and reporting requirements.
  • More enforcement activity and stricter penalties.

The introduction of new legislation could have far-reaching consequences on how businesses manage their supply chain operations.

At this stage, businesses should therefore be tracking the Inquiry and monitoring any recommendations that are made. Australian businesses that have a UK-based commercial presence may already be subject to the UK requirement and have adopted appropriate processes to ensure compliance. Other organisations may have already adopted their own robust procedures that would satisfy similar legal requirements, if implemented in Australia.

For those organisations that have not previously addressed these issues, now may be a good opportunity to start becoming familiar with the nature of this global problem (see, for example, these previous blog posts from Thomson Reuters on ending modern slavery). Getting the issues on the corporate agenda, undertaking proactive risk assessments and reviewing current supply chain operations are all steps that will help put the organisation in a much better position to respond to the impact of any new legislation that might be adopted.

Michael Milnes is Head of Competition and Consumer Law at Practical Law. Before joining Practical Law, Michael worked as in-house counsel in the FMCG supply chain sector and at leading law firms in the UK, Europe and Australia. He has a broad range of experience advising on commercial law, consumer marketing, technology and strategic corporate projects and the management of legal service delivery. He holds an MBA from a leading UK business school, which included research and study of topics such as legal procurement, e-business and technology, automation, strategy and finance. Michael is also the Principal Lawyer at a boutique legal practice, Supplied Legal.

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