Modern slavery reporting and the impact of COVID-19.

While the obligation to report and publish a modern slavery statement under the Modern Slavery Act 2018 (Cth) (Act) remains largely unchanged by COVID-19, reporting entities must be aware of the impacts of the pandemic on vulnerable workers in their supply chains.

The Federal Government has also announced a 3 month extension to the deadline for modern slavery statements for all reporting entities whose first reporting period ends on or before 30 June 2020.

This extension allows those reporting entities to assess the impacts of COVID-19 and to reflect changes to their supply chains, business operations and ability to identify and mitigate risks of modern slavery. Entities whose first reporting period is after 30 June 2020 must also address these impacts in their statements.

What modern slavery risks does COVID-19 present?

Many workers may be more vulnerable due to actions taken by governments and businesses in response to the pandemic. Increased vulnerability may relate to:

• loss or reduction of income or the fear of losing income;
• low awareness of workplace rights;
• a requirement to cover capacity gaps resulting in excessive overtime;
• increased demand due to supply chain shortage;
• inability for workers to return to their home countries;
• uncertainty over visa status and continued rights to work; or
• reduced oversight of downstream supply chains.

Factory shutdowns, order cancellations, workforce reductions and sudden changes to supply chain structures may disproportionately affect some workers and increase their exposure to modern slavery and other forms of exploitation.

These risks are not limited to global supply chains. In Australia, temporary stand-downs and changes to working conditions may jeopardise work visas or diminish economic security, causing previously ‘low risk’ business operations or local supply chains to expose workers to real risks of modern slavery.

Addressing COVID-19 in your modern slavery statement.

Reporting entities must publish a modern slavery statement addressing each of the mandatory criteria under the Act.

Entities must ensure their statement discloses all impacts from the COVID-19 pandemic relating to business operations and supply chains during the relevant reporting period and in terms of planned future actions, which may include:

• risks of modern slavery identified prior to COVID-19;
• current risks of modern slavery, taking into account the impacts of COVID-19 and the wider scope of potential vulnerable workers, during the COVID-19 pandemic;
• steps taken to assess and address the risks of modern slavery which have arisen prior to and in relation to COVID-19, and actions taken to address those risks;
• any limitation on the reporting entity’s ability to prepare their statement due to COVID-19 (eg limited capacity due to staff changes); and
• any delay in actions to address the risks of modern slavery due to COVID-19, including a timeline for when activities will resume and deadline for completion.

Mitigating COVID-19 related modern slavery risks.

Entities may reduce risks of modern slavery in their supply chains during COVID-19 by:

• honouring contracts with suppliers;
• paying suppliers early or on time, particularly if they are SMEs;
• extending orders to ensure ongoing cash-flow for suppliers;
• avoiding making unreasonable variations, pushing for discounts and extending payment terms; and
• continuing supplier due diligence and adjusting processes where necessary to address risks linked to changes in the supply chain and workforce structures.

Get in touch with Bespoke for more information and assistance with preparing your Modern Slavery Statement.

For details of all of our COVID-19 tips and updates, visit the Bespoke COVID-19 Hub.