UK Modern Slavery Act 2015
Section 54 of the UK Act requires commercial organisations with a turnover of £36 million or more, which carry on part of their business in the UK to prepare a statement, outlining the steps they are taking to combat slavery and human trafficking in their own operations and their supply chains. The UK Act is supplemented by government guidance, which also encourages businesses not caught by the provision to report voluntarily. Although the government has been careful not to prescribe what an appropriate response to modern slavery looks like, it has stipulated that the modern slavery statement must set out the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in its business or supply chains, or that it is taking no such steps. It has also specified that organisations “should aim” to include information on the following in their statements:
- the organisation’s structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
- the training and capacity building about slavery and human trafficking available to its staff.
The UK government has not clarified how enforcement of this provision would work, save that the Secretary of State can apply for an injunction to compel a company to publish a statement. According to the guidance, the principal enforcement mechanism will be the pressure applied by consumers, investors and NGOs where an organisation is perceived to have taken insufficient steps. The guidance states that the provision aims to create “a race to the top by encouraging businesses to be transparent about what they are doing, thus increasing competition to drive up standards”. This has catalysed a flurry of activity from corporates (implementing measures to tackle modern slavery and human trafficking to include in their statements) and NGOs (scrutinising corporates’ efforts). For example, various reports have been published commenting on the standard of modern slavery statements.
Australian Reporting Model 2018
At this stage, there is some uncertainty surrounding the Australian Reporting Model due to the divergence between the recommendations in the Parliamentary Inquiry Report, the NSW Bill and the model proposed by the Attorney-General’s Department’s public consultation paper in August 2017 (the Government’s Consultation Model).
Despite the uncertainty, it is anticipated that the Australian Reporting Model will be broadly similar to that required by the UK Act, but with some important differences. The Australian Reporting Model will likely impose a reporting requirement on organisations with an annual turnover of at least AUD50 up to 100 million (approx. £28 to 56 million). The exact turnover is yet to be announced. As with the UK Act, there will be provisions for corporates that do not meet the annual turnover requirement to opt into reporting.
The current Australian Model differs from the UK Act in three crucial ways.
- Mandatory Criteria: First, the Australian Model is likely to make it mandatory for organisations to publish modern slavery statements that, as a minimum, include a set of criteria in relation to their operations and supply chains. The exact criteria are yet to be announced, but are expected to be similar, in substance, to the non-mandatory criteria in the UK.
- Public Repository: Secondly, the Australian Model will likely include a free, publicly accessible central repository that will contain all the modern slavery statements published in compliance with the Australian Reporting Model. This will make it easier for the public and NGOs to compare how different corporates are meeting their reporting requirements (if at all). In comparison, the UK Act does not provide for such a repository. Under the UK Act, organisations are required to publish their modern slavery statement on their website or to provide a copy of the modern slavery statement to anyone who requests it, if the organisation does not have a website. The Business and Human Rights Resources Centre has voluntarily set up a central repository for modern slavery statements in the UK but this is not formally monitored by the government.
- Punitive Measures: Thirdly, there is a risk that there will be penalties for corporates that do not comply with the reporting requirements. The introduction of penalties from the second reporting year onwards was recommended in the Parliamentary Inquiry Report.6 The NSW Bill goes even further by setting out penalties for failure to report as well as for publishing information that is false or misleading in a modern slavery report.7 The Government’s Consultation Model steered clear from penalties, expressing the view that corporates that do not comply with the reporting requirement “may be subject to public criticism.”
Hong Kong Bill 2017
The Hong Kong Bill also contains a corporate reporting obligation under section 189, which is nearly identical to section 54 of the UK Act. However, the Hong Kong Bill goes much further than the UK Act (or the Australian Bill) in that section 169 provides claimants with a civil cause of action in tort against any person (individual or company) who has: (a) committed one of the offences under the Hong Kong Bill against them; or (b) knowingly benefited, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of the Hong Kong Bill. This section is derived from §1595 of 18 U.S. Code Chapter 77 (Peonage, Slavery, and Trafficking in Persons).
Interestingly, although section 169(a) is designed for claimants who have themselves suffered at the hands of human traffickers, section 169(b), as drafted, does not currently specify what sort of claimant will be given standing, begging the question of whether, for example, an NGO can bring an action under section 169(b) unilaterally. Moreover, it remains open whether section 169(b) could extend liability to defendants who, for example, benefit financially from their subsidiaries’ operations, but would not otherwise owe a duty of care to victims. This is particularly an issue for larger companies, which may be deemed to have the requisite “knowledge” under section 169(b) by virtue of carrying out due diligence in preparation for meeting their reporting obligations under section 189.
Although section 169 does not expressly stipulate the types of damages which victims of slavery and human trafficking can seek, in light of the application of the equivalent provision in the United States, it is expected that civil damages under section 169 could cover both pecuniary and non-pecuniary loss such as emotional harm, pain and suffering, inconvenience, and mental anguish. Punitive damages may also be awarded to punish the defendants and deter future illegal conduct.
Singapore Prevention of Human Trafficking Act 2014
As stated above, the PHTA does not contain any reporting requirements for corporates. However, Singapore-incorporated companies are not completely immune from providing modern slavery statements as the UK Act also imposes a reporting requirement on foreign corporates that operate in the UK. Many Singapore-incorporated companies have therefore published modern slavery statements in accordance with the requirements of the UK Act even though Singapore law does not require them to do so.
In the future, it is likely that a greater number of Singapore corporates will have to publish modern slavery statements as a result of having operations in Hong Kong or Australia. The legislation in the UK and the proposed scheme in Australia and Hong Kong place an emphasis on a corporate’s global supply chain. This will certainly include many Singapore-incorporated organisations. In addition, Singapore is located in the Asia Pacific region which accounts for more than half of the total number of victims of forced labour worldwide. Corporates, who are subject to the reporting requirements in other jurisdictions may therefore put pressure on the Singapore-incorporated organisations within their supply chain to issue modern slavery statements.
Although the Singapore PHTA criminalises the use of forced labour and the participation in human trafficking, no Singapore-incorporated company has been convicted under the PHTA. This begs the question of whether, in light of the developments in Australia and Hong Kong and pressure from stakeholders, Singapore will be next to adopt modern slavery legislation aimed at corporates.