Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands and a contributor to the Doing Business Right project of the Asser Institute. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.

The introduction of the UK, Australian and NSW Modern Slavery Acts are part of the international trend towards greater regulation and transparency of modern slavery in corporate supply chains and operations. For example, Canada has recently introduced a modern slavery bill and Brazil introduced a ‘dirty list’ to name and shame companies that engage in slave labour back in 2004. This last blog of a series of articles dedicated to the global modern slavery developments focuses on the modern slavery developments in jurisdictions other than the UK and Australia.  

California

In 2012, prior to the introduction of the UK Modern Slavery Act, the California Transparency in Supply Chains Act 2010 (CTSCA) (the Californian Act) came into force. The Californian Act requires retail sellers or manufacturers that are doing business in California[1] with annual worldwide gross receipts in excess of $100,000,000 to make certain disclosures. In particular, they must disclose information relating to five areas: verification, audits, certification, internal accountability, and training. They must disclose to what extent (if any) they:

1. Engage in verification of product supply chains to evaluate and address risks of human trafficking and slavery.
2. Conduct audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains.
3. Require direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.
4. Maintain internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
5. Provide company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.

Disclosures must be made on the company’s website with a ‘conspicuous and easily understood link’ to the requisite information. There is no public repository of disclosures made by businesses; however, to date 1227 statements have been made by 1292 companies. Examples of disclosures made by businesses can be found here and here. In the event of non-compliance with the Californian Act the Attorney General can file a civil action for injunctive relief. However, to date the Attorney General has not taken such action calling into question the efficacy of the Californian Act.

Hong Kong

Earlier this year, members of the Hong Kong Legislative Council introduced a draft Modern Slavery Bill 2017 (HK) (the HK Bill) that is based on the UK Modern Slavery Act. If passed into law, the HK Bill will require companies exceeding a specific threshold amount to prepare and submit an annual Modern Slavery Statement. It also provides claimants will a civil cause of action against companies that have committed an offence under the HK Bill or knowingly benefited, financially or by receiving anything of value from participation in a venture which that company knew or should have known has engaged in an act in violation of the HK Bill. Accordingly, it is the first modern slavery bill to give claimants a cause of action to sue companies. However, there is no timeline for the HK Bill to come into force and it is yet to be seen as to whether it will receive support from the government.

Brazil 

In 2004 Brazil introduced a ‘name-and-shame strategy’ in order to combat slavery by employers (both businesses and people). In order for a business to be placed on the list, the following process must be adhered to:

1. A complaint must be submitted to the government or a civil society organisation.
2. A labour investigation group investigates the complaint.
3. If the labour inspectors find that the relevant business has subjected its workers to ‘slave-like conditions’, charges will be laid against the business and sent to the Ministry of Labour and Employment.
4. The business may be required to pay a fine.
5. If the business is found guilty of exploiting its workers, its name will be put on the ‘dirty list’.
6. The business will then be monitored for the subsequent two years after which its name will be removed from the list if all fines are paid and it does not subject its workers to slavery.

Since 2004 more than 300 businesses have been placed on the list, which has affected those businesses’ ability to obtain financing and has resulted in boycotting by the business community and consumers.

Canada

On 13 December 2018 a bill was introduced into the House of Commons of Canada titled ‘C-423 – An Act respecting the fight against certain forms of modern slavery through the imposition of certain measures and amending the Customs Tariff’ (the Canadian Bill). The stated purpose of the Canadian Bill is to:

implement Canada’s international commitment to contribute to the fight against modern slavery through the imposition of reporting obligations on entities involved in the manufacture, production, growing, extraction or processing of goods in Canada or elsewhere or in the importation of goods manu­factured, produced, grown, extracted or processed outside Canada (emphasis added).

An ‘entity’ is defined as a corporation or a trust, partnership or other unincorporated organisation that:

• is listed on a stock exchange in Canada;
• has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
• it has at least $20 million in assets,
• it has generated at least $40 million in revenue,
• it employs an average of at least 250 employees.

If the Bill passes the Canadian Parliament, such entities will be required to provide the Minister with an annual modern slavery report that demonstrates:

• the steps the entity has taken during the previous year to prevent and reduce the risk that forced labour[2] or child labour[3] is used at any step of the manufacture, production, growing, extraction or processing of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity.

Other information that must be included in the report includes:

• the entity’s structure and the goods that it manufactures, produces, grows, extracts or processes in Canada or elsewhere or that it imports into Canada;
• the entity’s policies in relation to forced labour and child labour;
• the entity’s activities that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk;
• any measures taken to remediate any forced labour or child labour; and
• the training provided to employees on forced labour and child labour.

In this respect the reporting criteria bear resemblance to the mandatory reporting criteria contained in the Australian Modern Slavery Act (read more here). The report must include an attestation made by a director (or officer) of the entity that the information in the report is ‘true, accurate and complete’ and must be available to the public, including by posting it in a ‘prominent place’ of the entity’s website.

If the Minister is of the opinion that an entity has not complied with the requirements set out above, it may order that the entity ‘take measures that he or she considers to be necessary to ensure compliance’ and the entity may be liable of an offence punishable on summary conviction and liable to a fine of up to $250,000. Accordingly, the Canadian Bill in its current form has more bite that both the UK and Australian Modern Slavery Acts.

Conclusion 

The modern slavery developments discussed above show evidence of the global movement towards combatting modern slavery in global supply chains and increasing transparency by businesses in that respect. It demonstrates that governments worldwide are taking the implementation of the UN Guiding Principles on Business and Human Rights seriously and taking steps to ensure that corporates (including the entities which they control) respect human rights in their operations and activities. It is extremely likely that we will continue to see more countries joining in the fight against modern slavery by implementing legislation to regulate corporate supply chains and operations.

[1] Doing business in California is defined as “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.”

[2] ‘Forced labour’ means ‘labour or service provided, or offered to be provided, by a person under circumstances that could reasonably be expected to cause the person to believe that their safety or the safety of a person known to them would be threatened if they failed to provide, or offer to provide, the labour or service’: see section 2(1) of the Canadian Bill.

[3] ‘Child labour’ means ‘labour or service provided, or offered to be provided, in Canada by children under circumstances that are contrary to the laws applicable in Canada or provided or offered outside Canada under circumstances that, if provided or offered in Canada, would be contrary to the laws applicable in Canada’: see section 2(1) of the Canadian Bill.