Modern slavery

Practice

10 August 2022

Read time: 9 minutes

Modern slavery is an umbrella term for a series of human rights abuses including human trafficking, slavery and forced labour.

The Modern Slavery Act 2018 (Cth) requires certain large Australian organisations (as defined under the Act) to submit annual reports on the modern slavery risks in their operations and supply chains, and the actions they are taking to address those risks.

Since the legislation was introduced, governments, business partners, investors, financiers, consumers and other stakeholders are putting increased pressure on business to take meaningful action to end modern slavery.

This note explains the scope of the Act, highlights modern slavery risks in the construction industry, and provides strategies for architects to comply with the Act and operate responsibly.

Page contents:

What is modern slavery?
Modern slavery in Australia
Slavery offences
Modern Slavery Act 2018 (Cth)
Does my business need to submit a modern slavery statement?
What if I don’t report?
Risk factors in the construction industry
Strategies and resources for architects
Further Reading

What is modern slavery?

Modern slavery is a term used internationally to refer to a group of human rights abuses including slavery, human trafficking, forced labour, forced marriage and bonded labour.

It is estimated that over 40.3 million people are living in conditions of modern slavery globally (WFF, ILO and IOM 2020).

Modern slavery in Australia

Modern slavery is particularly prevalent in the Asia-Pacific where six in every 1,000 people have experienced modern slavery conditions.

The International Labour Office and the Walk Free Foundation estimated that approximately 15,000 people were living in ‘conditions of modern slavery’ in Australia in their most recent surveys (WFF, ILO and IOM 2020).

The Australian Federal Police received 500 referrals for modern slavery and human trafficking offences between 2013 and 2017.

Given the prevalence of modern slavery in the Asia-Pacific region, many Australian businesses will find instances of modern slavery in their supply chains.

Slavery offences

Australian law has traditionally addressed modern slavery through employment law and criminal law. Slavery, human trafficking and engaging in commercial transactions resulting in slavery like conditions are all offences under Australian law (Australian Government 1995).

Modern Slavery Act 2018 (Cth)

The Modern Slavery Act 2018 (Cth) (the Act) came into force in Australia on 1 January 2019 (Australian Government 2018).

The core aspect of the legislation is a requirement that certain large businesses submit an annual ‘modern slavery statement’ by 30 June each year.

These statements must set out, among other things:

the potential modern slavery risks in the entity’s operations and supply chains
the actions the entity has taken to address those risks, including due diligence and remediation processes (in this context, ‘due diligence’ refers to an entity’s ongoing management processes to identify, prevent, mitigate and account for how they address incidences of modern slavery).

A key policy goal was to drive societal change, by holding large businesses accountable for ensuring that risks of modern slavery are addressed within their operations and supply chains.

The process of preparing a modern slavery statement prompts many businesses to update internal procedures to identify and address modern slavery risks and improve procurement procedures.

Does my business need to submit a modern slavery statement?

Submitting an annual modern slavery statement is compulsory for all organisations or corporate groups, which:

operate in Australia
have an annual consolidated revenue of more than $100 million (Australian Government 2018).

Organisations with revenue below the legislative thresholds are not obliged to submit annual statements but are encouraged to do so voluntarily.

In New South Wales, the Modern Slavery Act 2018 (NSW)(MSA NSW) commenced on 1 January 2022 (brought into force by the Modern Slavery Amendment Act 2021 (NSW)). The obligation to prepare and submit modern slavery statements in New South Wales is directed at state-owned corporations. Commercial organisations are not subject to statutory reporting obligations under the MSA NSW. However, the MSA NSW contains some provisions which encourage commercial organisations to comply with, or work towards complying with, modern slavery compliance. For example, the Anti-Slavery Commissioner may work in cooperation with organisations the Commissioner considers appropriate in exercising its functions, developing codes of practice for organisations, and exercising its public awareness and advice functions with respect to remediating or monitoring risks of modern slavery in the supply chains of organisations.

Voluntary reporting is becoming increasingly common. This is partly due to the fact that modern slavery statements can be used, not only to meet legislative requirements, but as a way to show potential investors, community members and other stakeholders that a business is committed to operating ethically and sustainably. Businesses should be aware that once they have volunteered to report and the related reporting period commences, they will be bound as though they were a mandatory reporting entity.

What if I don’t report?

If an entity with annual revenue of more than $100 million fails to submit an annual statement, it will be in breach of the Act.

At the date of this note there are no financial penalties for non-compliance, however businesses will face significant reputational risks.

Border Force have indicated that after the 30 June 2022 deadline, they will be ready to ‘name and shame’ organisations that fail to comply.

As larger organisations and community members become more focused on sourcing goods and services from ethical providers, organisations who do report may have competitive advantages over competitors who do not report.

Organisations who are not actively auditing their supply chains also face a greater risk of being associated with human rights violations that are occurring in their supply chains without their knowledge and suffering any associated reputational damage, legal and financial costs.

Risk factors in the construction industry

Given that Australian businesses rely heavily on global networks, it is imperative that large businesses identify and take action to remediate and monitor risks in global supply chains where regulation may be weak.

Businesses can educate themselves on known geographic and industry-based risk factors, as well as looking for red flags in their operations and supply chains.

Industry risk factors

The construction industry is generally considered a high-risk industry due to the fact that:

there is a high demand for low-skilled labour
workers undertake physically demanding work in potentially unsafe conditions
construction contracts often put acute pressure on deadlines for completion
end-users of raw materials often have poor visibility over long and complex supply chains
complex supply and labour chains leave project partners with limited visibility or control over the recruitment and employment practices of suppliers and subcontractors.

It is common for materials used in the construction industry to be sourced through long and complex supply chains. Non-governmental organisation research shows that:

building materials sourced from India, Pakistan, Cambodia, Myanmar, Bangladesh and the Philippines present some of the highest modern slavery risks in our region
the production of bricks, tiles, cement, granite, rubber and timber commonly involve forced labour and child labour.

Red flags

Indicators of modern slavery which may be visible to architects operating in Australia on work sites or in their business dealings include the:

withholding of wages and significant underpayment of workers
withholding identity documents such as passports
reports of excessive work hours, restrictions of movement, isolation or confinement, close surveillance or misinformation about workers’ rights
physical abuse or threats of abuse or threats that workers will be reported to authorities
inflated loans to be paid back to the employer
overrepresentation of vulnerable groups including migrants, exchange students, temporary visa holders and low-skilled labour (KPMG 2020, 23).

Strategies and resources for architects

Australian architects should familiarise themselves with the most common modern slavery risks that are present in their own operations and supply chains. This section sets out tools and resources that can assist with this process.

Understanding the supply chain

Architecture practices should consider the organisations, people and activities that are involved in delivering their services from inception to delivery. This may well involve documentation and consideration of the following:

business relationships of the practice, including relationships with organisations that provide services or materials for delivery of projects of the practice
business activities of the practice, such as how services are procured, subcontracted or outsourced and in which countries
whether there are any particular risks or issues with suppliers, trade unions or other bodies representing workers that may be relevant to the overall assessment.

A practice may issue a questionnaire to its suppliers (addressed further under Supplier screening below) to undertake its initial due diligence and assessment of the risk of modern slavery in its supply chain, then implement a regular reporting and auditing process for key suppliers.

Modern slavery policies

The development of a modern slavery policy can assist architecture practices to put in place strategies to identify modern slavery risks and address risks once they have been identified.

The policies may include commitments to staff training, system improvements, regular audits of key suppliers and clear pathways for staff to report actual or suspected incidents of human rights abuses and modern slavery practices. Such a policy should also identify the person/s within the practice’s management team responsible for ensuring compliance with the policy and how breaches will be dealt with.

An architecture practice may also consider implementing a procurement policy or supplier code of conduct which aligns with and complements a modern slavery policy, as well as a whistleblowing policy.

Supplier screening

It is becoming common practice for reporting entities to issue questionnaires to their suppliers, seeking information on how entities manage and mitigate modern slavery risks in their supply chains and operations. These types of questionnaires are often integrated into tender processes and can be a deciding factor in the awarding of contracts.

It is best practice to both develop a standard form questionnaire to issue to your own suppliers, and to have data available about your own operations, to allow you to promptly respond to questionnaires received from contract partners.

A supplier questionnaire may cover the following areas:

Structure of the supplier’s business.
Supplier’s policies and procedures on modern slavery, including whether the supplier has agreed to a practice’s modern slavery policy.
Direct and indirect suppliers and subcontractors that the supplier engages with in providing goods and services to the architectural practice.
Sourcing of goods and services, including identifying countries where those are sourced.
Use of contract workers or seasonal workers.
Monitoring and reporting on modern slavery.
Training on modern slavery by the supplier to their staff or subcontractors, including details of the frequency and attendance.

Training

An architecture practice may undertake training with staff to raise awareness about modern slavery and, where relevant, their modern slavery policy and procedures.

Such training should be included within the practice’s general training register or a separate record retained of when this training has been conducted and who participated. The practice should also consider training on its modern slavery policy, and complementary policies, within the induction process for new employees.

Contracts

Another strategy that may be used by an architecture practice seeking to increase visibility over their supply chains, is to update their standard contract suites, to include clauses which require counterparties to, for example:

develop and maintain a modern slavery policy
train their staff in modern slavery matters
share data about their workforce and supply chains
cooperate with an annual audit to assess compliance with contract obligations regarding modern slavery and the supplier’s modern slavery policies and procedures
report modern slavery risks or incidents that may arise during the relevant project.

Modern slavery statements

All modern slavery statements submitted in accordance with the Act are publicly available on the Border Force website. Statements can be sorted by the industry type, annual revenue and geographical location of the reporting entity. Over time, this will become a useful library of practical strategies and best practice in the design, architecture and construction industries.

Additional tools

Since the Act was introduced, new software platforms and professional services have become available which allow businesses to assign risk ratings to suppliers and products, based on real time data. Popular options include:

Informed365’s software platform
MSA360 by CENTRL
Procurement software with modern slavery capabilities
Audits provided by professional services firms.

As the department responsible for administering the Act, Australian Border Force also provide training and guidance materials on their website.