Tackling Worker Exploitation by ‘Gangmasters’ in the UK and Australia - Part 2: From Labour Hire Licensing to Modern Slavery Laws – By Katharine Booth

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


[1] See Director of Labour Enforcement, ‘United Kingdom labour market enforcement strategy 2018/19’ (May 2018) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/705503/labour-market-enforcement-strategy-2018-2019-full-report.pdf; Department for Business, Energy & Industrial Strategy, ‘United Kingdom labour market enforcement strategy 2018/19: Government response’ (December 2018)

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/765124/dlme-strategy-government-response.pdf.

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