Modern Slavery Act 2018

Telstra Group Describes Textbook Example of How to Use Leverage to Remediate Modern Slavery Risks

Andrew C Wood Uncategorized Tags: , , Leave a comment
Photo by cottonbro on Pexels.com Hands shuffling bank notes on a table.

If you have the time to do it, browsing through the 2,000 plus modern slavery statements published to date on the Australian Register can yield huge dividends in terms of discovering how others identify and remediate risks of modern slavery in their supply chains.

If you don’t have time to do it, The Recruiters’ Casebook will try to bring you examples that recruitment and staffing firms would do well to note.

Here’s a textbook example of how Telstra Group used its leverage to address risks which it discovered in its supply chain. The Commnwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.51) explains that “Leverage means your ability to influence the other entities to change their behavior.”

Pay special attention to:

  • how the risk was identified
  • what the risk was
  • what justification the supplier put forward
  • why Telstra Group considered the practice was unacceptable
  • what Telstra Group did about it
  • how the supplier responded
  • what the subsequent outcome has been.

Telstra engaged an independent third party to conduct site audits of one of our suppliers’ labour practices. The audit revealed evidence of practices resembling debt bondage in their Hyderabad operations in India. Under the arrangements, employees were bound to repay training costs incurred as part of their recruitment. While the supplier asserted such practices were both common and legal in India, we took the view that it was not acceptable and in breach of our Supplier Code of Conduct.

We wrote to the supplier and asked them to remove this bond immediately for all employees delivering services to Telstra and all new hires. The supplier agreed to this request.

We also asked that the bond be removed for all other employees of the supplier including those who do not perform Telstra work. The supplier agreed not to take any action to enforce the service bond provisions under existing employment contracts and to issue all employees with new contracts that do not contain service bond provisions. A follow-up audit found the changes we requested had been implemented. We were also pleased to see evidence that throughout the COVID-19 pandemic, the supplier has continued to pay all employees 100 per cent of their wages.

Telstra Group Modern Australian Slavery Statement published 13 April 2021 https://modernslaveryregister.gov.au/statements/2899/

“Debt Bondage”

In this example, Telstra Group is only saying that the supplier’s practise resembled debt bondage.

The Commonwealth’s Guidance for Reporting Entities on the Modern Slavery Act 2018 (p.78) explains that “debt bondage” occurs “where the victim’s services are pledged as security for a debt and the debt is manifestly excessive or the victim’s services are not applied to liquidate the debt, or the length and nature of the services are not limited and defined.”

Nevertheless, Telstra was sufficiently concerned about the practice to do something about it – and without getting involved in technical legal arguments about definitions.

The outcome shows what can be achieved when all parties co-operate to remediate practices that may have adverse impacts on workers and which may be questionable under values and principles of good workforce governance and supply chain stewardship.

What would you have done if you had discovered the practice or something similar in your supply chain or service network?

Andrew C. Wood

“Modern Slavery Clauses”: the Good, the Bad and the Downright Dangerous.

Andrew C Wood Uncategorized Tags: , 2 Comments
Photo by Travis Saylor on Pexels.com Metal gate chained up and locked.

Browse through the 2,000 plus modern slavery statements published to date on the Australian register. You might see that there has been considerable interest in the use of “modern slavery clauses”. These clauses aim to remediate risks that are caused or contributed to by reporting entities or to which they are directly linked through their operations or supply chains. 

Although such clauses can help remediate risks and create a solid foundation for cooperation between suppliers and their customers, some caution is still needed.  That’s because the quality of the modern slavery clauses that have been described in the published statements ranges from well-tempered to confused to downright dangerous.

How do you tell the difference? You need to start with a clear understanding of what prohibitions exist and what Australia’s Modern Slavery Act requires.

Distinguishing good from bad

Did you know that the Act doesn’t actually prohibit modern slavery? That’s done by the criminal law.

Did you know that the Act doesn’t actually require you to eliminate modern slavery from your supply chains? It only requires some entities to report on the risks of modern slavery in their operations and supply chains and actions to address those risks.

Now think about some of the modern slavery clauses you might have seen:

  • the ones that reference so-called “duties of care” supposedly set out in the Act;
  • the cut-and paste ones that require you to warrant that your supply chain is free from slavery, servitude, forced or compulsory labour and human trafficking as defined by the Modern Slavery Act 2015; [1]
  • the ones that require you to comply with all your legal obligations, including WHS, but which forget to say anything meaningful about modern slavery and the Criminal Code;
  • the ones that require you to warrant that you will comply with all rules or international treaties signed by any government authority in relation to corporate social responsibility; but which fail to appreciate that, under our law, those rules only become binding in Australia once they are passed into domestic legislation – and they are often passed into domestic legislation subject to reservations or variations;
  • the ones that include indemnities and hold-harmless provisions.

There are plenty of other examples of poorly constructed clauses out there!

Consequences of breach

Have you ever thought about what the consequences of a breach of these clauses might be? Can your customer refuse your claims for payment? Can you customer terminate your supply agreements? Have you even supplied what you agreed to supply (e.g., services free from any connection to forms of modern slavery through your operations or supply chains)? Can your customer sue you for damages?

Poorly designed modern slavery clauses do nothing to address modern slavery risks. They attempt to shift the burden of compliance in one direction. In doing so, they provide false comfort to parties who rely on them. They add unnecessary costs to transactions in which they are deployed.

A better approach

So, learn how to identify them. Explain to your customers why you can’t or won’t sign them, and help your customers to understand the important contribution that you can both make to combatting modern slavery, not only through well designed modern slavery clauses, but more importantly, through well-designed workforce governance controls and practices

Andrew C. Wood

[1] The MSA 2015 is actually and Act of the UK Parliament! The Australian MSA (Modern Slavery Act 2018 (C’th) doesn’t actually define these terms. They’re defined in the Criminal Code. “Modern Slavery” is given an extended meaning in the MSA (C’th).