Modern Slavery laws : Are you ready? And is this heading in the right direction?

Ok, Australia’s Modern Slavery laws are here, and for businesses operating on a 30 June financial

year end, the first reporting year will be 1 July 2019 to 30 June 2020 with your modern slavery statement due by 31 December 2020.

But will compliance with these new laws by Australian businesses actually improve lives for modern slaves? Or, dare I say, make things worse? The answer seems to be a little more complicated than you would expect.

The new Australian laws (discussed in our previous article, which are modelled off the pioneering modern slavery laws passed in the UK in 2015 and were sponsored by Theresa May before Brexit became all she lived and breathed), seem on their face to be an excellent first step towards tackling modern slavery issues that are infused into the supply chains and operations of Aussie businesses. Broadly, these new laws have been well received by those concerned about modern slavery. Good on you Straya.

Of course, not everyone is back slapping the federal parliament and the main criticism being levelled by some stakeholders such as the Law Council of Australia is that these laws don’t go far enough, generally because they rely on the risk of business’s reputational damage associated with being ‘named and shamed’ to provide all of the deterrence. Specifically, the laws are toothless (no penalties) and without independent oversight in the form of an independent anti-slavery commissioner with the authority and resources to oversee compliance. It is probably relevant to note here that the NSW modern slavery laws, which we had previously flagged were to be implemented on 1 July 2019 and did contemplate financial penalties and the appointment of a government Anti-Slavery Commissioner, are now in limbo and the subject of review by the NSW Legislative Council Standing Committee on Social Issues (much to the disappointment of the architect of those laws).

However, of even greater concern, we have recently read reports on the effectiveness of the UK modern slavery laws (which our laws are modelled on) which describe how actions taken by compliance-driven UK businesses, whose suppliers are at the coal-face of modern slavery, can lead to (and potentially have had) a detrimental effect on those suffering already challenging or cruel conditions, such as factory workers in developing countries. This journalist observed intense pressure on factory managers in Sri Lanka to keep their assembly lines ‘clean’ so that their western customers could not be accused of modern slavery, which may cause them to lose their contracts with those and other customers. This pressure increases surveillance of their work force (eg additional compliance officers), and decreases liberties. For example, rumours about women engaging in casual sex with various boyfriends or knowledge of women participating in part-time sex work to supplement their insufficient incomes, were alleged to lead to those women being fired or demands made that they cease those activities to avoid the risk of the manufacturer being seen to be involved in sexual trafficking or exploitation. It is hard to see how this is a good outcome for those workers.

So, what then? Do we lobby the Australian government to scrap their new laws and go back to the old out-of-sight-out-of-mind mentality? No, that is not where this is heading.

It comes down to how Australian companies (you) choose to implement the requirements and intent of the new laws. A compliance driven approach to managing the risks of modern slavery in your supply chain, such as demanding warranties from all suppliers that no modern slavery exists in their supply chains and operations and ditching contracts if suspicions of modern slavery issues come to light, may damage the lives of those that need help.

An alternative approach that more closely emulates the intent and ethics of the new laws might involve asking suppliers to describe what level of due diligence they go to in order to identify modern slavery issues and, importantly, working with them to implement strategies that will help solve issues or suspicions that might be identified.

First things first, the first round of modern slavery statements for businesses with an annual consolidated revenue of $100 million or more are due by 31 December next year. How well do you know your supply chain?

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