Modern Slavery Clauses and Australian Contracts

Over the last 2 years, I’ve noticed more and more “modern slavery clauses” cropping up in commercial contracts. They tend to be tacked on at the end near the anti-bribery and the Building Code and whatever other issues have cropped up in big court cases recently.

I’ve asked a few clients what they think about it. The general consensus seems to be something like this:

We don’t have slavery in Australia, so I don’t even look at them”.

Most Australians lead a wonderful life of freedom. But modern slavery is about the global supply chain, not just what’s happening in our backyard.

Plus, the Global Slavery Index estimated that in 2021, 41,000 Australians were living in slavery. In Australia! This is a real-life problem, here and overseas.

I want you to understand what modern slavery is and what modern slavery clauses mean for your contract. If you do, you’ll read the clauses the next time you see them. Then you can make an informed decision about whether you need to take action to ensure you comply.

What is modern slavery anyway?

Modern slavery is about serious workplace exploitation. It’s an umbrella term that covers a range of abhorrent practices, including human trafficking, slavery, servitude, forced marriage, forced labour, debt bondage, child labour and deceptive recruiting. At its core, “modern slavery” describes workplace exploitation where individuals can’t refuse or leave work because of threats, violence, coercion, abuse of power or deception. It’s often linked to other crimes like corruption and bribery.

Modern slavery isn’t the same as dangerous or substandard working conditions. Australians expect their workplaces to be safe, and this is dealt with under employment law. Workers in other nations are not so lucky.

Some higher-risk groups in Australia (particularly immigrants) have difficulty exercising their rights under employment law and are vulnerable to exploitative workplace practices.

Is modern slavery really happening in 2023?

Yes. Modern slavery is really still happening. The Global Slavery Index estimates that there are more than 50 million victims of slavery around the world right now. Slavery disproportionately affects the vulnerable, particularly women and children.

Why should we care?

Modern slavery distorts global markets and presents reputational and compliance risks, with the potential to cause serious damage to commercial relationships.

Taking action to prevent it protects businesses and the economy by improving the integrity and quality of supply chains. Better supply chains mean increased profitability, improved investor and consumer confidence and enhanced financing and other commercial opportunities.

You might think that your supply chains are squeaky clean. Maybe all the components of your work are ethically sourced. But modern slavery affects more than just nuts and bolts. You know that great deal you got on your branded PPE – be honest, do you know anything about the factory where that was made?

Australia’s commitment to extinguishing modern slavery from global supply chains

In January 2019, the Federal Government brought the Modern Slavery Act 2018 (Cth) into force. The new legislation established a “Modern Slavery Reporting Requirement” for companies doing business in Australia.

The Act requires certain businesses to publish annual “Modern Slavery Statements” on an online public register managed by the Australian Border Force. The Statements must explain what the reporting entity is doing to assess and address the risk of modern slavery in its global supply chains and operations, including the supply chains of entities it owns or controls.

The Act sets out reporting requirements only; actual incidences of modern slavery will continue to be dealt with under appropriate criminal laws. There are currently no penalties under the Act. However, non-complying entities can be “named and shamed” and suffer reputational damage.

This system encourages the Australian business community to identify and tackle modern slavery risks by maintaining responsible and transparent supply chains.

Who has to report?

At the moment, only big Australian companies with consolidated revenue of at least AUD$100M.

Businesses with an annual consolidated revenue of less than $100M may volunteer to report for ethical or governance reasons.

But my business is WAY smaller than that – why is it in my contract?

You may not be earning $100M (yet), but you are part of a supply chain. That means your clients want to ensure you and your suppliers are doing the right thing. If you are, they can confidently report their commitment to abolishing slavery in their annual Statement.  

What does a Modern Slavery Statement look like?

I could list the requirements set out in the Act. But I think it would have more impact if you saw a real one. Here are a few from the 2022 financial year that are worth a look:

What should I be doing?

Would you like to confirm that all of your supplies and materials come from suppliers doing the right thing? You should consider which parts of your supply chain and business are most at risk and query your suppliers about their specific actions to combat modern slavery. If your suppliers are Australian and meet the threshold, you can check their Statements in the online Register.

Even if your revenue isn’t in the $100M+ bracket, you can complete and upload a voluntary Modern Slavery Statement.

How can SoundLegal help?

Contract Drafting

Like your clients, you can use your contract to support your processes by obliging your commercial partners to commit actively to addressing modern slavery in their own supply chains. We can draft some appropriate, brief, plain English modern slavery clauses to slot into your standard contracts.

Contract Reviews

Concerned about a long and seemingly nasty modern slavery clause? Send to us. We’ll translate it for you and let you know if you should worry about it.

Advice on content of modern slavery statement

Let us create a template for you to populate, and advise on whether it meets legal requirements.

Find out more

Get in touch for a free 15 minute discovery call to discuss how we can help.

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About Gemma

I help construction, engineering and consulting businesses create and negotiate clear contracts so they can achieve great project outcomes. I founded SoundLegal to help SMEs in the engineering, construction, consulting and light industrial sectors manage their risk to support business growth, by finding practical, common sense solutions to contractual and other legal challenges. Subscribe to the SoundLegal newsletter “No Jargon” to hear monthly business insights from me.


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