Modern Slavery and Corporate Supply Chain Compliance

Modern slavery is an umbrella term that is used to describe a range of slavery and slavery-like practices, including forced labour, labour bondage, involuntary servitude and human trafficking. Recognition of modern slavery has begun to gather momentum within the past couple of years and globally we have been seeing greater efforts to combat this human rights abuse.

The Walk Free Foundation refers to modern slavery as:

Situations where one person has taken away another person’s freedom – their freedom to control their body, their freedom to choose to refuse certain work or to stop working – so that they can be exploited. Freedom is taken away by threats, violence, coercion, abuse of power and deception. The net result is that a person cannot refuse or leave the situation.’1

With the annual economic value of forced labour exploitation being determined at US$150 billion,2 it is no question why modern slavery continues to thrive. The economic value serves as an encouragement for offenders to continue the abhorrent crimes against humanity. Furthermore, the globalisation of modern slavery in addition to the contracts they secure within business supply chains enables slavery to become more widely practiced.

Human rights abuses do not only occur in developing countries or countries with limited slavery or trafficking laws, but slavery continues to occur in countries such as Australia. As per the Australian Border Force report in relation to Modern slavery in public procurement, there are 24.9 million people in forced labour and at least 15. 4 million women and girls living in a forced marriage Globally. In Australia, there are at least 1,500-1,900 of modern slavery and only 1 in 5 victims is ever detected.3Only recently did Australia secure a conviction of a couple who had held a slave captive in metropolitan Victoria. In July 2021, the Australian justice system secured a prison sentence for a Victorian couple who had held the male perpetrator’s mother, a woman in her 60s, as a slave for eight years.4 The couple were sentenced to 8 years and 6 years imprisonment.5 The victim initially arrived on a 30-day tourist visa from the south of India, upon her arrival her passport was confiscated by the couple and was forced to clean, cook and care for the couple’s children.6 The victim was found unconscious in a puddle of urine and was diagnosed with sepsis and diabetes which had been untreated.7

The Department of Home Affairs (Australian Government Department which provides visas for foreign nationals to visit Australia) was criticised by Justice Champion, noting the Department was ‘missing in action’, as they had not investigated the overstay of her 30-day visa, it was also noted that numerous visas requesting longer stays had been rejected prior to being issued the short stay visa.8 It is clear that immigration authorities, migration and modern slavery are inherently connected and there must be rigorous monitoring of visa compliance to prevent modern slavery cases. Whilst migration is a major contributor to the global economy, the migrants themselves are vulnerable to exploitation due to various factors including language barriers and a necessity to support themselves financially in an unfamiliar location. These factors create an environment whereby migrants are more at risk of coming in contact with unethical employers who are swift take advantage of vulnerable migrants. Statistics demonstrate the vulnerability of migrants as they ‘make up a significant share of the detected victims in most global regions:

  • 65 per cent in Western and Southern Europe,
  • 60 per cent in the Middle East,
  • 55 per cent in East Asia and the Pacific,
  • 50 per cent in Central and South-Eastern Europe, and 25 per cent in North America’.9

Migrants that do not have permission to work are even more vulnerable as ‘the fear of being exposed as an irregular migrant can be a powerful tool for traffickers, who typically threaten to file reports with the authorities and can more easily keep victims under exploitative conditions’.10

Although prosecutions have been successful and are gaining momentum, it appears that victims continue to receive a lack of support even after being liberated. Despite each State and Territory in Australia operating a financial scheme for victims, victims of modern slavery cannot access these schemes as modern slavery is prosecuted under Commonwealth laws.11 Essentially, ‘there is no national compensation scheme available to victims of modern slavery in Australia’. 12

Recently, the Australian Government published the Exposure Draft Migration Amendment (Protecting Migrant Workers) Bill 2021. This Bill proposes to cover gaps within current regulatory frameworks, provides an additional layer of protection for migrants and aims to strengthen ‘existing protocols to address worker exploitation involving non-Australian workers in Australia.’13 It sends a strong message to exploitative employers and labour hirers who serve as intermediaries, that the abuse of migrant workers and the disrespect of their human rights is unacceptable and will not be tolerated.14

Specifically, the Bill proposes to inform potential migrant workers to be wary of unscrupulous employers, equips the Australian Border Force to meet compliance standards and improves transparency by providing increased visibility of employers that use the migrant workforce, in order to deter exploitative practices.15 The following key proposals were highlighted within the exposure draft context paper:

    • Introduction of criminal offences for those who coerce or exert undue influence or pressure on a migrant in relation to their work arrangements
    • Inclusion of provisions that prohibit employers listed as ‘prohibited employers’ from continuing to employ migrant workers (excluding permanent residents)
    • Encourage employers and other parties to use departmental systems (currently the Visa Entitlement Verification Online (VEVO) system) to verify a migrant’s immigration status and visa conditions by enforcing positive obligations
    • Increasing penalties for ‘work-related breaches and related offences’
    • Introduction of ‘new compliance tools for the ABF to support behavioural change’

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The proposed Bill is an important step in effectively deterring employers from exploiting migrant workers in addition to demonstrating Australia’s commitment in protecting and supporting migrants.

Modern Slavery and Corporate Supply Chain Compliance

Despite Modern Slavery legislation around the world, corporations are encouraged to comply beyond the prescribed requirements and practice moral responsibility. Currently, countries including the United Kingdom and Australia have modern slavery legislation and prescribe reporting requirements in relation to modern slavery risks and actions that must be taken to combat slavery within their supply chains.

The Australian Government passed the federal Modern Slavery Act 2018 (Cth) in late 2018. This legislation is the key to prevent modern slavery in thriving within business supply chains. The objective of the Act is to reduce the risks of modern slavery within operations and supply chains of Australian businesses, in addition to highlighting the proactive steps to mitigate the risks. The introduction of this Act was and continues to serve as an important mechanism in addressing systems within businesses which facilitate modern slavery.

The key provisions under the Act include:

    • Australian entities with an annual consolidated revenue of A$100 million are required to report under the Commonwealth Act.
    • Reporting entities must prepare an annual Modern Slavery Statement addressing mandatory criteria including the risks of modern slavery practices in the operations and supply chains of the reporting entity, as well as the actions which the entity has taken to assess and address those risks.
    • Power is granted to the Minister of Home Affairs to establish a free and publicly available register of Modern Slavery Statements to promote operations and supply chain transparency and permit consumers and others to make informed decisions. The register, administered by the Australian Border Force, is publicly available and reveals the number of entities that have submitted statements; currently 4705 reporting entities are covered by statements, 2060 mandatory statements have been lodged, 268 voluntary statements have been lodged and reporting entities are headquartered in 38 different countries.

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  • The Minister of Home Affairs may make written requests to an entity who has failed to comply with requirements, to provide an explanation for the reason of the failure, or to undertake specified remedial action to address the non-compliance.
  • The Minister of Home Affairs must prepare a report each year regarding the implementation of the Act, including an overview of compliance by entities and best-practice modern slavery reporting under the Act during the year. On 9 November 2020, the Australian Government provided its own Modern Slavery Statement.

These measures have been criticised and many have argued that the A$100 million revenue threshold for attracting the reporting requirements is set too high to achieve the Act’s stated aims.18 Moreover, the Law Council of Australia supports a lower threshold closer to A$60 million, which is approximately equivalent to the UK Modern Slavery Act 2015 (UK) threshold.19Penalties for non-compliance should also be a key component of the Act, which would overcome the inherent unreliability of leaving compliance incentives to the market and consumers.20 Nevertheless, this federal legislation is to be reviewed every three years; it is a significant starting point to ensure Australia’s continual commitment to human rights.

The Australian Government is committed to eradicating modern slavery and provide an online portal with prescribed guidelines for the reporting entity to submit a statement or statement profile to the Australian Border Force. “Australia is the first country to release detailed guidance to assist organisations with identifying and combating modern slavery in their supply chains… Australia is an international leader in combating modern slavery” stated by The Hon Jason Wood MP, Assistant Minister for Customs, Community Safety and Multicultural Affairs. A National Action Plan to Combat Modern Slavery 2020–25 was published on 9 December 2020. Its mission is to ‘actively prevent and combat modern slavery, wherever it occurs, including by supporting, protecting and empowering victims and survivors’.21 Furthermore, the Modern Slavery Expert Advisory Group, which was created to provide strategic advice on the effective implementation of the Act, had its sixth meeting in May 2021 where they discussed issues such as: compliance patterns within submitted statements and the establishment of an Inter-Governmental Network to promote the awareness of modern slavery, amongst other issues.22

Despite modern slavery reporting requirements, there appears to be a lack of moral responsibility in going beyond the minimum requirements. A review of the modern slavery statements produced under the United Kingdom Modern Slavery Act revealed a lack of transparency and best practice.

The Walk Free report highlighted:

  • ‘53% failed to meet all minimum requirements of the Act
  • 54% did not disclose due diligence to address modern slavery risks in their supply chains.
  • 28% failed to disclose policies to address modern slavery in direct operations or supply chains.
  • 27% disclosed conducting some form of due diligence on human rights or modern slavery in their portfolio.
  • 51% conducted some type of risk assessment on their supply chains, but only 30% of these then identified specific risks.
  • 15% disclosed engaging directly with investee companies to address modern slavery through social audits, self-assessment reviews, filing shareholder resolutions, or training’.23

From this research it appears that the companies are not following best practice reporting to make a difference in eradicating modern slavery from their supply chain. The Report aims to support the financial sector and asset managers to ‘improve transparency and drive better practice’ by encouraging modern slavery prevention and respect for human rights to enable the development of a sustainable and resilient economy.24

Companies can be proactive and commit to best practice to eradicate modern slavery from their supply chains. The Slave- Free Alliance (SFA) is a social enterprise committed to prevent slavery within business supply chains and operations, and was launched by the Hope for Justice Charity. The enterprise has been operating successfully within the UK boasting 100 members, including large supermarket chains and Financial Times Stock Exchange Group 100 (FTSE 100) companies.25 They launched their Australian branch (Slavery Free Alliance Australia – SFAA) in 2020 and have confirmed their first member, supermarket chain Aldi. SFAA is said to work closely with member organisations and their suppliers ‘ to identify and address the human rights risks in their supply chain in Australia’.26 Aldi Australia and the SFAA have already rolled out a plan to conduct a Human Rights Risk Assessment and have begun training ‘all employees with sourcing responsibilities, as well as merchandise suppliers’ to ‘understand risks, identify the signs of modern slavery, and take action to address them’ via the Modern Slavery Awareness Training Program.27

Training programs for employees are an effective practice which enables and encourages front-line workers to identify and report red flags. An anti-modern slavery attitude must be adopted on all levels of an organisation, employees should be encouraged to speak up about risks and red flags. Organisations must promote the respect of human rights within their operations.

COVID-19 and modern slavery

As the Delta strain of the COVID-19 virus continues to spread at an inevitable rate, modern slavery has not been affected and continues to prosper within the horrendous conditions. After the mass closure of workplaces, the International Labour Organisation estimated 93% of the ‘world’s workers’ resided ‘in countries with some form of workplace closure measures in place in early January 2021’ and in 2020 global job losses were calculated at 114 million.28 Research reveals ‘the hardest hit are those in low income regions (i.e. Asia, Africa and Latin America) where informal work constitutes more than 90% of their workforce’.29 Subsequently, millions of workers have become desperate to accept any form of work available to support their families and themselves, workers are particularly vulnerable in countries that have not provided financial support during the pandemic.

New research states travel restrictions, lockdowns and remote working has increased the risk of modern slavery.30 Demand for labour in certain sectors has given rise to the exploitation of workers, the Minority Rights Group provides the current example of a sudden increase in demand for personal protective equipment by health care sectors in light of the pandemic. Reports of abuse and exploitation within these sectors, ‘including worsening living and working conditions, have been reported among factories producing PPE [personal protective equipment] and in the agricultural sector’.31 Although the world is in a vulnerable position and the health care sector, along with other sectors are under pressure to deliver and help us get through the pandemic, it is of utmost importance that we do not neglect supply-chain enquiries and compliance checks. Traffickers and perpetrators of modern slavery must not be encouraged and must be stopped from securing contracts for the supply of their services. At vulnerable times we must continue to prevent modern slavery and human exploitation.

Furthermore, the global closure of schools has increased the opportunity for children to be forced into exploitation in sectors such as agriculture, mining and domestic work.32 Additionally, as a result of travel limitations and lockdowns online sexual exploitation of children is said to have increased during the pandemic.33

Conclusion

Modern slavery requires an orchestrated effort, it cannot be eradicated by lone bodies; governments and business entities must work together to eliminate modern slavery risks within supply chains. Although companies may be abiding by reporting requirements, they should be encouraged to practice moral responsibility and go beyond the minimum requirements. This may be done through employee training programs which may serve as an important identification method of modern slavery risks within supply chains. Furthermore, the visible connection between modern slavery and migration should become a focal point in combatting modern slavery and human rights abuses. Migrants carry an extra layer of vulnerability considering most may not have working rights and are unfamiliar with authorities. Finally, the lack of support for modern slavery victims must also be amended in order to encourage victims to speak up.

1Walk Free Foundation, The Case for an Australian Modern Slavery Act, The Minderoo Foundation (2017) Australia.
2International Labour Organisation, Profits and Poverty: the economics of Forced Labour (2014).
3Australian Border Force, Modern slavery in public procurement, https://modernslaveryregister.gov.au/static/elearning/modern_slavery_in_public_procurement/index.d477c4664192.html#/lessons/tGk2jar_LYa7gSAdCTqR13Bs362elfMC
4Caroline Schelle, Kumuthini and Kandasamy Kannan hid slave in Melbourne home for eight years, https://www.news.com.au/national/breaking-news/kumuthini-and-kandasamy-kannan-hid-slave-in-melbourne-home-for-eight-years/news-story/1d28f73a3df9dabad501fbb733627a16 (2 July 2021).
5Rebecca Dominguez, Australia urgently needs a compensation scheme for victims of slavery – without it there can be no justice, https://www.theguardian.com/commentisfree/2021/aug/06/australia-urgently-needs-a-compensation-scheme-for-victims-of-slavery-without-it-there-can-be-no-justice (6 Aug 2021).
6Caroline Schelle (above n 3).
7Ibid.
8Australian Associated Press, ‘Absence of humanity’: Melbourne couple jailed for keeping Indian woman as a slave for eight years, https://www.theguardian.com/australia-news/2021/jul/21/absence-of-humanity-melbourne-couple-jailed-for-keeping-indian-woman-as-a-slave-for-eight-years (21 July 2021)
9United Nations Office on Drugs and Crime, ‘Global Report on Trafficking in Persons 2020’, https://www.unodc.org/documents/data-and-analysis/tip/2021/GLOTiP_2020_15jan_web.pdf (January 2021).
10Ibid.
11Rebecca Dominguez, (above n 4).
12Ibid.
13Australia Government, Department of Home Affairs, Exposure Draft Migration Amendment (Protecting Migrant Workers) Bill 2021, https://www.homeaffairs.gov.au/reports-and-publications/submissions-and-discussion-papers/exposure-draft-migration-amendment-bill-2021
14Ibid.
15Migration Amendment (Protecting Migrant Workers) Bill 2021 , Exposure Draft – Context Paper, https://www.homeaffairs.gov.au/reports-and-pubs/files/exposure-draft-bill/migration-amendment-context-paper.pdf
16Ibid.
17Australian Government, Australian Border Force, https://modernslaveryregister.gov.au/
18Law Council of Australia, Public Consultation Paper on the National Action Plan to Combat Modern Slavery 2020–2024.
19Ibid.
20Law Council of Australia, Modern Slavery Bill 2018, Submission to the Senate Legal and Constitutional Affairs Legislation Committee (24 July 2018).
21Commonwealth of Australia, National Action Plan to Combat Modern Slavery 2020–25 (2020).
22Australian Government, The Department of Home Affairs, Criminal Justice,’ Modern Slavery’, https://www.homeaffairs.gov.au/criminal-justice/Pages/modern-slavery.aspx.
23The Minderoo Foundation, Beyond Compliance in the Finance Sector: A Review of Statements Produced by Asset Managers Under The UK Modern Slavery Act, https://cdn.walkfree.org/content/uploads/2021/03/18184928/WalkFree_BeyondComplianceInTheFinanceSector_210318.pdf (2021).
24Ibid
25Niki Stefanoff , How Australia’s Slave-Free Alliance hopes to change the face of Aussie retail, https://probonoaustralia.com.au/news/2021/07/how-australias-slave-free-alliance-hopes-to-change-the-face-of-aussie-retail/ (19 July 2021)
26Ibid.
27Aldi News, ALDI becomes the first Australian member of Slave-Free Alliance and publishes Modern Slavery Statement https://www.aldiunpacked.com.au/aldi-becomes-the-first-australian-member-of-slave-free-alliance-and-publishes-modern-slavery-statement/ (28 June 2021).
28International Labour Organisation Monitor: COVID-19 and the world of work. Seventh edition Updated estimates and analysis, (https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/briefingnote/wcms_767028.pdf (25 January 2021).
29 Minority Rights Group, Good practice in protecting people from modern slavery during the COVID-19 pandemic, https://minorityrights.org/publications/cfs-report/
30Ibid.
31Ibid.
32Ibid.
32Ibid.