Editor’s
note: Katharine Booth holds a LLM, Advanced Programme in European and
International Human Rights Law from Leiden University, Netherlands and a LLB
and BA from the University of New South Wales, Australia. She is currently
working at the Asser Institute in The Hague. She previously worked as a lawyer and
for a Supreme Court Justice in Australia.
Both the UK
and Australia have enacted legislation regulating the activities of
‘gangmasters’ or labour hire providers. Part 1 of this series of blog posts examines
the circumstances that led to the enactment of labour hire licensing schemes in
both the UK and Australia, and some key limitations of these laws. Part 2 explores two issues closely connected
to the business and human rights context. (1) Reform (in the UK) and potential
reform (in Australia) of these laws in light of the increasing national and international
recognition of modern slavery, human trafficking, labour exploitation and other
human rights violations in corporate supply chains. Both the UK and Australia
have enacted ‘modern slavery laws’ requiring certain companies to publish
annual statements addressing human rights violations in their operations and
supply chains. At the same time as the introduction of the UK Modern Slavery
Act, the relevant gangmasters licensing authority (the Gangmasters Licensing
Authority (GLA)) was empowered with broad ‘police-like’ powers to investigate
offences under that Act. These powers have shifted the authority’s focus from
the passive regulation of the gangmasters licensing scheme to the active
enforcement of compliance with the Modern Slavery Act. (2) However, as
currently enacted, modern slavery laws are not perfect. A key criticism of
these laws is that they do not impose strong enforcement mechanisms
(particularly financial penalties) on companies that fail to comply with their
provisions. The imposition of penalties is central to ensuring that companies
take note of the importance of eliminating slavery from their supply chains.
Licensing Schemes in Relation to Legislation
Addressing Modern Slavery in Corporate Supply Chains
In recent years, there has been increasing
national and international recognition of modern slavery, human trafficking,
labour exploitation and other human rights violations in corporate supply
chains. In response, some countries, including the UK and Australia, have enacted
legislation to tackle these issues.
In March 2015, the UK Government passed the
Modern Slavery
Act 2015, which requires companies with a global annual turnover of £36
million or more to prepare and publish a modern slavery statement. Read this
blog’s review of the Act here.
Due to the increased focus on human rights violations in corporate supply
chains, the role of the GLA was reviewed and the Gangmasters
(Licensing) Act was amended through several provisions of the Immigration
Act 2016. The GLA was renamed the Gangmasters and Labour Abuse Authority (GLAA) to reflect its new, broader
role with respect to tackling labour market exploitation. The GLAA retained the
GLA’s licensing and regulatory functions but was given police-style powers with
respect to “labour market offences” alleged in any sector. This means that
while the licensing of gangmasters is still limited to the sectors listed in
the Gangmasters (Licensing) Act, the GLAA’s
investigations are not similarly restricted and extend to, for example, other
sectors where there has been concerns about exploitative activity, including car
washes and nail salons.[1] The GLAA is able to investigate,
search and arrest persons allegedly connected to worker exploitation and
illegal activity under the Modern Slavery Act (including slavery, human
trafficking, forced labour and illegal labour provision), and to search for and
seize evidence and to investigate offences under the National Minimum Wage and
Employment Agencies Acts. The focus of the GLAA and the UK Government more
generally has shifted from the passive licensing of gangmasters to the active
disruption and dismantling of slavery and human trafficking in the UK more
broadly.
The GLAA
has actively exercised its new investigative and enforcement powers. In May
2019, GLAA officers arrested three men on suspicion of modern slavery and human trafficking offences
following an operation in Birmingham. It was alleged that the suspects
organised for several people to work at a logistics company through a
recruitment agency before controlling their finances. In September 2019, in an
operation connected to the May arrests, the GLAA detained and questioned a Romanian national upon her
arrival in the UK. Three months later, as a result of a joint GLAA and National
Crime Agency investigation, two gangmasters who exploited 41 Romanian workers
by, among other things, controlling their wages, forcing them to live in
sub-standard housing, and giving them false identities, were gaoled. A GLAA Senior Investigating
Officer stated in relation to the investigation: “While protecting vulnerable
workers from abuse will always remain our number one priority, disrupting the
criminal behaviour which causes this exploitation is also a fundamental part of
our work which we take extremely seriously.” This demonstrates both the GLAA’s
focus on protecting vulnerable (often migrant) workers and the increased scope
of the GLAA’s new policing powers.
The GLAA is
also collaborating with supranational institutions to strengthen its response
to abusive recruitment practices that trick workers into modern slavery and
forced labour. In January 2017, the GLAA and International Labour Organization
(ILO) signed a Letter of Intent to strengthen their cooperation in
relation to the prevention and elimination of forced labour. According to a
GLAA press release, cooperation between the GLAA and
ILO would contribute to raising awareness on the Modern Slavery Act’s
transparency provisions, which align with the ILO Protocol to the Forced Labour
Convention, which provides that the measures to be taken for
the prevention of forced or compulsory labour include supporting due diligence
by both the public and private sectors to prevent and respond to risks of
forced or compulsory labour. The Modern
Slavery Act’s provisions, however, have been criticised on the basis that they
do not require companies to take steps to eliminate modern slavery in their
supply chains, but rather require only that companies publish a modern slavery
statement. As LeBaron and Rühmkorf state, “The Act therefore leaves
companies discretion not to deal with forced labour or slavery in their supply
chains at all, since companies can be compliant with the law without taking any
steps to prevent or address forced labour, so long as they publish a statement.”
Other weaknesses of these laws will be discussed below. Despite these
weaknesses, however, collaboration between the GLAA and the ILO indicates the
growing importance of eradicating modern slavery and human trafficking in corporate
supply chains.
Unlike in
the UK, the scope of the Australia labour hire
licensing laws has not been similarly expanded. There are two main reasons for
this. First, compared to the Gangmasters (Licensing) Act, the Australian laws
are relatively recent. Second, in the past couple of years there has also been
a shift away from State-based labour hire licensing schemes to Federal
legislation focused on tackling modern slavery and other human rights abuses in
corporate supply chains. In 2018, the Federal Government passed the Modern Slavery Act
2018, which applies to all Australian States and Territories and generally requires
businesses with over AU$100 million per annum global consolidated revenue to publish
an annual statement on the risks of modern slavery in their operations and
supply chains. For this blog’s review of the Act, click here.
The Federal Act was implemented following a
parliamentary inquiry into the nature and extent of modern slavery in the
supply chains of businesses operating in Australia and whether legislation equivalent
to the UK’s Modern Slavery Act should be implemented. The inquiry’s final
report recommended for such legislation to be implemented, and also for the
Federal Government to establish a uniform national labour hire licensing scheme
to address worker exploitation. Such legislation is not supported by the
current majority government but may be introduced following the next
parliamentary election in 2022, as the current Opposition party has committed
to establishing a national labour hire licensing scheme. If or when this
occurs, rather than establishing a separate body to investigate allegations of
modern slavery and labour exploitation, as is the case in the UK, the Fair Work
Ombudsman (FWO) (an existing statutory office) was recommended by the inquiry’s
final report to be empowered to do so. Indeed, a single labour inspectorate to
protect the labour rights of all workers in the UK was recommended
by Oxfam in its report on protecting workers employed by gangmasters. Therefore,
the FWO, which already has some police-like powers to investigate alleged
violations of Commonwealth workplace laws, appears best placed to regulate such
a scheme, if or when national legislation is implemented.
Ensuring Corporate Compliance Through Strong
Enforcement Mechanisms
In the UK and three Australian States,
gangmasters or labour hire providers have been subject to increasing regulation
in recent years. As discussed in Part 1 of this series of blog posts, in both
countries, the enactment of gangmasters licensing legislation was due to
flashpoints of public awareness of the exploitation of migrant workers – the
Morcombe Bay cockling disaster in the UK and the exploitation of migrant labour in fresh produce
stocked by major supermarkets in Australia. The laws, as originally enacted,
are generally similar. The Gangmasters (Licensing) Act originally empowered the
GLA with the licensing and oversight of a national licensing scheme. The
Australian laws similarly empowered statutory bodies to oversee State-based
licensing schemes. The laws have been amended (in the UK) or enacted (in
Australia) in the context of an increasing national and international focus on
modern slavery and other human rights violations in corporate supply chains. In
the UK, the GLA was renamed the GLAA and conferred considerably more policing powers
to enforce the newly enacted Modern Slavery Act. Around a year after the
enactment of the Queensland, Victorian and South Australian licensing laws, the
Federal Government introduced their own modern slavery laws.
As we have
seen, however, in both countries the focus has shifted from licensing schemes
towards modern slavery laws. This shift is perhaps due
to the recognition that the effectiveness of the licensing schemes is limited,
in that they do not impose obligations on companies higher up in supply chains
to ensure that workers employed by gangmasters are not subject to exploitation.
These companies potentially have considerable leverage to encourage labour
users further down their supply chains to take steps to ensure that they
contract with gangmasters that do not exploit their workers.
Indeed, the UK and Australian Modern
Slavery Acts target these companies, requiring them to produce annual
statements detailing the steps that they have taken to eliminate labour and
human rights abuses from their operations and supply chains. However, while
these laws target these companies, neither provide penalties for corporate
non-compliance with their provisions. (It should be noted, however, that the UK
Act sets down criminal penalties and/or fines for persons convicted of slavery,
servitude, forced or compulsory labour and human trafficking.) As LeBaron and Rühmkorf note:
“In legal terms, the [UK] Modern Slavery Act amounts
to little more than an endorsement of existing voluntary CSR reporting without
any legally binding standards, and there are no government sanctions for
failure to combat modern slavery or failure to report about the company’s
policies.”
Similarly, Justine Nolan and Fiona McGaughey argue that the Australian Act’s
absence of penalties “means enforcement is effectively left to NGOs which could
use the public repository to ‘name and shame’ companies, and to shareholders or
investors who could put pressure on the companies to comply with their
reporting obligations.” Under the Australian Act, if a business required to issue
a modern slavery statement fails to do so, the relevant Minister may only
publish information about that failure to comply. No other penalties, criminal,
civil or administrative (i.e. fines), are enshrined in either law to ensure companies
comply with their provisions. Accordingly, neither the UK nor Australian Modern
Slavery Acts include strong enforcement mechanisms imposing penalties on
companies that do not comply with reporting requirements.
By comparison, the labour hire licensing
laws in the UK and Australia do. The Gangmasters (Licensing) Act provides
criminal and civil penalties for both operating as an unlicensed gangmaster (10
years in prison and/or a fine) and labour users entering into an agreement with
an unlicensed gangmaster (6 months in prison and/or a fine). In Queensland,
for instance, providing labour hire services without a licence and entering
into a business arrangement with an unlicensed provider has a maximum penalty
of 3 years imprisonment or a fine.
To ensure the effectiveness of the UK and
Australian Modern Slavery Acts, significant financial penalties should be
introduced into their provisions for companies that refuse to take part in
their reporting and compliance regime, or otherwise that do not comply with
their provisions. Furthermore, as recommended
by the Human Rights Law Centre in its submission on the Australian Modern
Slavery Act:
“… it would be
preferable for any legislation to include a range of civil and criminal
penalties applicable to both the corporate entities and to senior executives,
with the possibility of escalating consequences for repeat offenders or
companies that deliberately turn a blind eye to forced labour in their supply
chains.”
Money talks. Strong enforcement mechanisms –
particularly significant financial penalties – must be incorporated into the UK
and Australian Modern Slavery Acts to work towards the eradication of slavery
and other labour and human rights violations from corporate supply chains. Of
course, simply penalising companies that do not comply with their current reporting
requirements will not eliminate slavery in supply chains. Notably, there is an international
trend towards governments requiring companies to undertake mandatory
human rights due diligence to identify actual or potential human rights
impacts that the business may cause or contribute to, or which may be directly
linked to its operations, products or services, and to eliminate those impacts
from their supply chains. Modern slavery statements are a first step in the
direction of increasing corporate transparency. However, the imposition of
significant financial penalties on companies that fail to comply with the law
and, further, requiring companies to undertake mandatory human rights due
diligence, are significant leaps towards the eradication of modern slavery from
corporate supply chains