28 August 2019

Press Release: Lack of clarity may hamper Aussie companies tackling modern slavery

Companies tackling the use of forced labour in their international supply chains face major challenges in adopting to new Australian laws designed to stamp out the practice, according to Bartier Perry partner Michael Cossetto.

“Recent media coverage around the use of forced labour in the manufacture of Australian goods has highlighted why the Federal Government enacted new legislation in January to clamp down on modern slavery,” said Mr Cossetto.

“While the intention is right, the Modern Slavery Act, lacks any detail on what companies are expected to do in practical terms to stamp this practice out".

Instead a mandatory reporting system under the legislation puts the onus on large companies to self-report on their supply chain monitoring and risk assessment processes, with details then being available publicly.

“The danger for many companies is that there is now a compliance system in place with few or any compliance guidelines,” said Mr Cossetto.

“Companies acting in good faith in their self-reporting could still face significant reputational damage because of the actions of a third or fourth order supplier with whom they have no direct relationship, control or even knowledge of".

Mr Cossetto said companies should now ensure their direct suppliers were contractually liable for the actions of their own supply chain partners but this in itself could pose challenges.

“Unless you’re a major customer many suppliers won’t always be prepared to do that and others may just engage in a tick a box exercise. Ultimately Australian companies may need to extend on the ground checks beyond a suppliers factory, to seeking to gain inspection access further down the supply chain. That won’t always be easy".

Mr Cossetto said Australian companies understood the importance of doing the right thing by customers who placed increasing importance of the issue.

“We don’t see any lack of will from business but rather a lack of clarity as to what exactly is required of them, which may lead to an inconsistent and uneven reporting regime".