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What charities need to know about the modern slavery laws

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All charities that deliver government funded services should familiarise themselves with the new federal and NSW modern slavery laws.

While only a minority of Australian charities will be required to report directly to government, many more can expect to be affected by the laws particularly if they are funded by government or other large organisations (including hospitals, universities and churches).

How do the laws work?

Both the federal government and the NSW government have passed laws to require large organisations to report on the risks of modern slavery in their organisations and supply chains.

The laws are aimed at encouraging large organisations to confront their own participation in modern slavery practices, particularly through their supply chains. The federal and NSW laws are similar but have some important differences:

  • Federal laws require government agencies and organisations with consolidated annual revenue over $100 million to provide annual modern slavery statements to the Department of Home Affairs. Statements will be made publicly available. It is anticipated that the first reports will be submitted in 2020 (within 6 months of the end of the 2018-19 financial year).
  • The NSW laws apply to organisations with employees in NSW and an annual turnover of between $50 million – $100 million. Unlike the federal laws, the NSW laws carry a maximum penalty of $1.1million for organisations that fail to report. However, while the NSW laws have been passed they have yet to be “proclaimed” meaning that we do not know when they will come into force or when the reporting requirements will kick in.

What are the expected ‘trickle down’ effects?

There are around 160 charities with a turnover of $100m or more that will be required to provide modern slavery statements to the federal government. A majority of are universities and hospitals.[1]

However, as part of the government’s own obligation to address the risks of modern slavery in its supply chains, we are expecting to see modern slavery requirements imported into government funding contracts. This might require charities to provide certain warranties in relation to their compliance with the laws, or to participate in supply chain audits.

One of the government’s aims in introducing these laws is also to encourage a “race to the top” with consumers and investors holding companies accountable for their corporate responsibility. This means that there could ultimately be reputational advantages for charities that demonstrate their voluntary compliance with these laws. Charities should consider the cost of doing this as compared to the potential costs of responding reactively to requests from funders or funders (noting that parliament estimated that it would take one full time employee approximately 25 working days to gather information and produce a draft modern slavery statement).[2]

How are charities affected by modern slavery?

The legislation defines modern slavery in a way that includes not only traditional notions of slavery but also practices such as human trafficking, forced labour, debt bondage, deceptive recruiting and the worst forms of child labour and abuse.

There are an alarming number of common products imported into Australia that are the fruits of forced labour. The top culprits include cotton, rubber, coffee, cocoa, tea, rice, shrimp, salt, bricks and electronic appliances.[3]

Closer to home, there are estimated to be some 15,000 people working in Australia in conditions that fall within the definition of modern slavery. These people are mostly migrants working in industries such as agriculture, meat processing, cleaning and domestic work.

What should charities do?

Boards should start thinking about what their charities should do in anticipation of the trickle down effects of these new laws, and the emerging reputational risks associated with modern slavery.

The Department of Home affairs has indicated that it will publish regulatory guidance on how to comply with the new laws and we will provide a further update when that has been released.  As well as adopting any recommendations from the regulator, charities should also be looking at their contracted labour or service providers to assess compliance with Australian industrial laws, and considering whether they purchase any high risk products that could have been produced by modern slaves.

[1] According to the Australian Charities Report 2016, p18

[2] Explanatory Memorandum to the Modern Slavery Bill 2018, p59

[3] ; ;

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