The Modern Slavery Act Falls Short on Holding Corporates Accountable

Over 40 million people around the world live in conditions of modern slavery. Women and girls make up 71 percent of these people, while children account for a quarter of them. Around 25 million people are in situations of forced labour, and half of these enslaved workers are in debt bondage.

The Global Slavery Index estimates there are around 15,000 people living in modern slavery conditions in Australia.

Modern Slavery – or the trafficking in persons, as the United Nations terms it – includes, but is not limited to, forced labour, human trafficking, debt bondage, slavery, slavery-like practices, forced marriage, servitude, the worst forms of child labour and the forced removal of organs.

These practices are so pervasive – especially in the Asia-Pacific region – that there’s no doubt products sold in the Australian market are produced by people whose freedom has been compromised.

As part of a global move to end trafficking in persons, the federal government passed the Modern Slavery Act 2018 (Cth) on 29 November. The legislation establishes a framework which makes large corporations accountable for any modern slavery practices involved in their supply lines and operations.

However, many anti-slavery advocates assert that the accountability mechanism the Act creates will be ineffective and key proposals made by the parliamentary inquiry into modern slavery have been ignored.

Corporate transparency

“It’s a good thing to have corporate responsibility. We have these massive corporates, who live outside of domestic jurisdictions,” said Professor Felicity Gerry QC. “Legislation like the Modern Slavery Act can at least create some corporate responsibility.”

Professor Gerry is an international barrister with global expertise on trafficking in persons, both as a practitioner and academically. She authored the Civil Liberties Australia submission on the modern slavery legislation.

Effective from 1 January, the Act requires businesses with a consolidated revenue of $100 million to annually report on the modern slavery risks in their operations and supply chains and the actions that they’re taking to address these risks.

These annual statements – which have to be signed off at board level – will be publicly available online at a central register maintained by the Home Affairs Department. An estimated 3,000 businesses will be affected, and the federal government and its corporate entities will also report.

But, according to Professor Gerry, the Modern Slavery Act has “no teeth”. “When you actually drill down into it, it has little or no substance in the corporate sphere, and it simply does not deal at all with trafficking in persons within organised crime.”

Relying on reputation alone

“The problem is if they don’t do it, there’s no real sanction,” the professor told Sydney Criminal Lawyers®. Indeed, those entities required to report will face no penalties for failing to lodge a statement or for handing in an incomplete one.

As then assistant home affairs minister Alex Hawke explained in June during the bill’s second reading speech the statement system relies on corporations’ concerns about their own reputations. It’s supposed to “drive a ‘race to the top’ as reporting entities compete” to appear the most compliant.

Last minute amendments to the legalisation created a further impetus for businesses to comply, as the home affairs minister can now require an explanation from an entity that hasn’t satisfied the requirements. And if the business still doesn’t come through, the minister can publicly shame them.

A lack of oversight and reach

The parliamentary inquiry Hidden in Plain Sight report recommended the government introduce penalties and compliance measures, as well as an Independent Anti-Slavery Commissioner to oversee the reporting system and deal with other modern slavery-related issues.

However, the Act doesn’t establish such a position. Instead, the Home Affairs Department’s new Modern Slavery Business Engagement Unit will be charged with monitoring and supporting the Australian business community with their investigations into their own operations.

Professor Gerry also pointed out that the reporting revenue threshold is too high. The International Commission of Jurists Victoria submission recommended that it be dropped from $100 million to $25 million in annual revenue, so that more businesses are included.

The NSW Modern Slavery Act 2018 was passed on 6 June this year. It imposes penalties of up to $1.1 million for companies that don’t go along with its reporting system. It also created an independent commissioner position and the reporting revenue threshold is $50 million annually.

Criminal defences for the victims

Another major shortfall of the Act is that it does nothing to protect people who fall victim to human trafficking and are then forced to commit crime in Australia. Establishing such defences was a key recommendation the Civil Liberties Australia submission made.

“A major way to deal with that is not just have a policy that we won’t prosecute people, but to actually create defences,” Professor Gerry made clear.  “So, people who end up in the system can at some point feel brave enough to put their hand up and say, ‘I did this as a victim.’”

The UK Modern Slavery Act 2015 – which the Australian legislation was meant to better – does provide a victim of modern slavery defence. Section 45 stipulates that a person is not guilty of an offence if the “compulsion is attributable to slavery or to relevant exploitation”.

Professor Gerry has represented human trafficking victims who were being prosecuted for crimes in the past. The barrister listed examples of such crimes as children being forced into begging and stealing, as well as people being coerced to smuggle illicit items across borders.

Corporate criminal liability

But, the government has stated that the new laws are just a first step in dealing with modern slavery. Professor Gerry is hopeful more measures will be forthcoming, as the new Act fails to even consider the trafficking of persons carried out by organised crime.

The professor is also advocating for the establishment of a Global Criminal Law Act. This would involve creating globally agreed corporate offences that would apply in the jurisdictions of all nations.

“What needs to be discussed is some way of having global corporate responsibility with criminal sanctions that are consistent around the world,” Professor Gerry concluded.

All the federal Modern Slavery Act “really does is say to a few corporates, who have a turnover of a very high level of money, ‘Well, have a look and see if you have any problems in your supply chain’”.