For the majority of Australian entities required to comply with the Modern Slavery Act 2018 (Cth) (MSA) the time to start implementing changes in their business to comply with the requirements began earlier this year (depending on the financial year adopted by that entity).
Accordingly, entities should be carrying out a number of MSA activities in parallel including:
- developing a MSA action plan
- assessing whether it is a 'reporting entity' and, in respect of an entity comprising a group, which entities need to report and how that report is done and authorised
- undertaking due diligence and a risk analysis in respect of its supply chain
- a review of corporate policies
- changes to supplier on-boarding practices, including development of vendor questionnaires
- internal MSA awareness raising and training
- changes to existing supplier agreements
- amendments to standard template contracts to take account of the new law.
This article provides practical guidance on what changes should be made to contracts, tender documentation and policies to achieve best practice MSA compliance.
Reporting entities should be reviewing their existing and ongoing agreements, as well as template contracts to consider ensuring that the following matters are covered:
- information and disclosure: Obligations on the supplier to provide information to the reporting entity in relation to its labour practices and rights for the reporting entity to request information and conduct audits for the purposes of the MSA
- warranties and representations: Warranties and representations that any information supplied by a supplier is true and accurate and may be relied upon by the reporting entity for the purposes of the MSA
- training: An obligation on the supplier to conduct training with its personnel on the MSA
- termination rights: Specific termination rights that allow the reporting entity to terminate a contract for a breach of the MSA by the supplier (noting that it is not recommended that this termination right be triggered without first engaging in remediation and awareness raising with the relevant supplier)
- indemnities or liabilities: An indemnity from the supplier for any loss or damage caused to the reporting entity due to a breach of Modern Slavery contract clauses (for example, providing false or misleading information in relation to its labour hire practices)
For any contracts currently on foot, reporting entities may consider issuing a notification to all current suppliers and customers regarding the reporting entity's obligations under the MSA. This notification may include a request to vary the current contract to include Modern Slavery clauses, or a set of stand-alone obligations to which the supplier or customer is requested to commit.
Whilst there may be no contractual obligation for a current supplier or customer to accept a variation of a current contract to include Modern Slavery clauses, a commitment from that supplier or customer to assist in the identification and reduction in modern slavery in its supply chains would no doubt be beneficial to future relationship and contracting opportunities with the reporting entity.
Changes to tender documentation is another action that a reporting entity can take to assess and address modern slavery risks in its supply chains, and enhance the visibility it has over new supplier's human rights practices and labour hire policies.
One way to do this is to include a Modern Slavery supplier on-boarding questionnaire, either separately or as a tender schedule, which all prospective suppliers should complete as part of the on-boarding process, or tender submission (as appropriate). Alternatively, the on-boarding questionnaire can be issued to new suppliers as a stand-alone document.
The questionnaire should ask for details on:
- the supplier's company structure, employees and recruitment practices
- whether it is subject to the MSA or an equivalent State / Territory legislation and has submitted a Modern Slavery Statement for the relevant reporting period under that legislation
- whether it has programmes or policies currently in place to ensure that human trafficking and slavery do not exist in its operations and supply chains
- whether it works with third parties to identify the overall risks of slavery and human trafficking in its supply chains
- whether it conducts independent, unannounced audits of its operations and suppliers
- whether it requires certification that all materials incorporated into its products or services were sourced, processed and manufactured in compliance with the human trafficking and slavery laws of the country or countries in which they operate
- whether it provides training to employees, customers or suppliers on slavery and human trafficking in supply chains
- whether it has had any instances of known or suspected modern slavery in its supply chain, claims or adverse media attention in relation to its human rights practices.
It is important that the reporting entity complies will all of its obligations under the Privacy Act 1988 (Cth) in relation to the collection and use of information gathered as part of this supplier onboarding due diligence process.
Another important action that a reporting entity can take to assess and address modern slavery risks in its supply chains is to review and amend its suite of polices.
Amending or improving policies is an integral part of an entity's Modern Slavery action plan as this will:
- demonstrate the entity's commitment to complying with all of its obligations under the MSA
- set out clear rules, standards and expectations within the entity in relation to human rights and modern slavery
- provide workers with the requisite knowledge about the MSA, the entity's obligations in relation to the legislation and what is expected of each individual employee, for example a pro-active obligation to notify management of any suspected instances of modern slavery or unsafe working practices
- provide rules and guidelines for decision-making in routine situations, for example routine procurement or spending decisions, or on-boarding of new suppliers
- provide a confidential, safe and effective whistleblowing mechanism for staff, suppliers and other members of the public to raise concerns, for example an anonymous hotline
- provide a consistent and clear framework for how the entity will respond to any known or suspected instances of modern slavery that are identified within the entity's supply chain, including grievance mechanisms, remediation options and communication strategies
- provide a consistent process for communicating information to current employees and new employees, for example training and induction
- ensure that the entity is better equipped to respond to queries from its suppliers, staff or the general public in relation to its anti-slavery practices, any breach of the MSA, or any adverse media in relation to its human rights practices more generally
The following is a non-exhaustive list of suggested policies that should be reviewed, amended or adopted if not already in place, to ensure the appropriate policies are in place in relation to the MSA:
- human rights or anti-slavery
- supplier or vendor on-boarding
- recruitment and labour hire
- induction of new staff
- anti-discrimination and anti-harassment
- code of conduct
- equal employment opportunities and diversity
- corporate social responsibility
- team member issues resolution
- workplace health and safety
- grievance mechanism or remediation
Once the reporting entity's suite of policy documents are revised in relation to the MSA, they should be made available to the entire workforce, and the entity should ensure that all new and current employees, suppliers and contractor are trained and are familiar with the revised suite of policies and the entity's obligations in relation to the MSA.
For most Australian reporting entities the reporting period in respect of the MSA has commenced.
To ensure those entities can meaningfully report on the actions they have taken to assess and address modern slavery risks in their operations and supply chains, they should be:
- reviewing existing current contracts, and drafting amendments in relation to the MSA
- developing an on-boarding questionnaire, incorporating it as part of its standard procurement procedure, and using it as an assessment tool to assess modern slavery risks in suppliers; and
- reviewing and developing a suite of policies.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.