It can be quite common to engage with suppliers overseas while running your business. This can be for many reasons, including price, competition or quality. When engaging with suppliers based overseas, it is important to remember that you may encounter modern slavery risks with their workers. As such, it is imperative that you are not mistreating your suppliers in any way, even where it is unintentional. This article outlines:
- what modern slavery is;
- modern slavery in legislation;
- the risks for your business; and
- what you can do to limit these risks.
What is Modern Slavery?
The term modern slavery is used to describe any situations of forced labour and generally refers to exploitation where coercion, threats or deception are used to undermine or deprive workers of their freedom. Legislation defines modern slavery as including:
- trafficking in persons;
- slavery and servitude;
- forced marriage;
- forced labour;
- debt bondage;
- deceptive recruiting for labour services; and
- the worst forms of child labour.
In short, modern slavery is the exploitation of people for personal or commercial gain. In this instance, modern slavery would be the exploitation of a supplier when it comes to engaging with a business.
For clarity, modern slavery is generally used to refer to serious exploitation and does not include practices such as:
- underpayment of workers; and
- substandard working conditions.
However, if you do not address these practices in your supply chain, they may become modern slavery.
Is Modern Slavery Covered by Legislation?
In Australia, modern slavery is governed under the Modern Slavery Act 2018 (Cth) (the Act).
This Act came into force on 1 January 2019 and established Australia’s national Modern Slavery reporting requirements. The key purpose of the Act is to increase transparency and accountability by requiring businesses to report and publicise the incidence of modern slavery in their supply chains to enable the market to make more informed decisions when purchasing goods and services.
If your business meets certain criteria, you may have an obligation regarding modern slavery reporting. The criteria include that your business:
- is an Australian entity or operates out of Australia; and
- has a minimum consolidated revenue of $100 million.
In this case, you must submit a modern slavery statement for that financial year.
The modern slavery statement must describe the risk of modern slavery and the actions you have taken to prevent it in that reporting year.
Continue reading this article below the formWhat Are the Risks for My Business?
At this point in time, there are no financial penalties for businesses that fail to comply with the reporting requirements under the Act. However, the reputational damage is arguably much more severe than any financial penalty.
Failing to comply with the Act, including not reporting when you are required, can be made very public. If you have any direct links to modern slavery through your businesses’ operations or supply chains, you may suffer damage to your reputation and commercial relationships.
Ensure your employees are paid correctly with our free guide on how to prevent wage underpayment.
How Do I Limit These Risks?
The best way to limit this risk is to:
- have an understanding of what modern slavery is;
- conduct regular audits to ensure it is not evident in your business; and
- comply with any of your reporting requirements in the relevant timeframe.
If you do not have any reporting requirements, you may choose to report voluntarily. This can have many benefits for your business. For example, it may demonstrate that you are a business with integrity and may showcase your leadership when it comes to modern slavery.
Generally, it is best practice to conduct regular modern slavery reviews of your:
- suppliers;
- supply chains;
- policies; and
- practices.
Some benefits of conducting reviews include improving:
- investor and consumer confidence;
- your relationships with workers and local communities; and
- the integrity and quality of your supply chains.
Key Takeaways
As an employer, it is important to understand what modern slavery is and how you can ensure that it does not exist in your business. You may have reporting obligations under the Act and if you do, it’s very important that you comply with these obligations. Even if you do not have reporting obligations, it is a good business decision to conduct regular audits to ensure that you are compliant with modern slavery laws.
If you would like to discuss modern slavery or determine whether your business has reporting obligations, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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