After a hotly debated parliamentary process, the Modern Slavery Bill 2018 (Cth) has passed both houses of parliament and now awaits royal assent as the final step to its enactment.
As previously reported here, similar to the NSW legislation, the Modern Slavery Act 2018 (Cth) (the Act) will require entities in Australia which have an annual consolidated revenue of more than $100 million to report annually on the risks of modern slavery in their operations and supply chains, and describe their actions to address those risks.
The Act now brings Australia into line with the UK (where modern slavery legislation came into force in 2015) and reflects growing awareness for the need to address modern slavery both domestically and internationally.
The Act introduces a new reporting system with the aim of preventing modern slavery and increasing transparency in supply chains. The central provisions under the Act include:
- the obligation on the following entities to submit an annual Modern Slavery Statement including their current modern slavery risks and plans to address them:
- large Australian entities (those worth more than $100 million in annual consolidated revenue who carried on business in Australia at any time in the reporting period), noting that joint modern slavery statements covering more than one entity within a corporate group is permissible
- Commonwealth corporate entities (those worth more than $100 million in annual consolidated revenue), and the Commonwealth on behalf of non‑corporate Commonwealth entities
- any other entity that has voluntarily opted in to the Act.
- the establishment of a publicly available Modern Slavery Statements Register to be kept by the Minister of Home Affairs to promote transparency and allow consumers and other businesses to make informed decisions about products in particular supply chains
- the power granted to the Minister of Home Affairs to make written requests to an entity who has failed to give a modern slavery statement to provide an explanation as to why, or to undertake specific remedial action to address the non-compliance
- the publication of an annual report by the Minister of Home Affairs each year regarding the implementation of the Act including an overview of compliance by entities and the best practice modern slavery reporting under the Act.
Specific requirements for modern slavery statements
Section 16 of the Act contains the mandatory criteria for modern slavery statements. Notably, reporting entities must cover in their statement:
- the identity of the reporting entity
- their structure, operations and supply chains
- the risks of modern slavery practices in their operations and supply chains and any entities that the reporting entity owns or controls
- the actions taken by them (and any entities that the reporting entity owns or controls) to assess and address those risks of modern slavery (for example, the development of policies and processes to address modern slavery and providing training to staff about modern slavery)
- the method of assessing effectiveness of such actions
- the consultation process with entities that the reporting entity owns or controls; and
- any other relevant information.
Key difference with NSW Act
The Act, while it is a significant step in addressing modern slavery risks in Australia, contains some key differences to the NSW legislation, including:
- lack of financial penalties, leading to it being described by some as a ‘toothless tiger’, in comparison to the significant penalties of up to a maximum of $1.1 million under the NSW legislation. A recent amendment to the Act which goes some way to address this was the introduction of the power for the Minister to issue a written request of non-compliance which may require the non-conforming entity to undertake ‘specified remedial action’ which may include submitting a modern slavery statement to the Minister within a further specified period. If the entity fails to comply with that written direction, the Minister may ‘name and shame’ that entity and publish details regarding its non-conformance on the Register.
- significant revenue threshold of $100 million annual turnover, compared to the $50 million turnover threshold under the NSW legislation, which targets only the largest entities in Australia
- lack of an independent Modern Slavery Commission as is the case under the NSW legislation, compared with powers granted to the Minister for Home Affairs under the Act
- lack of additional ‘modern slavery offences’ and the power of Courts to issue penalties and make orders in relation to those.
How to prepare?
To prepare for the first round of Modern Slavery Statements which will likely be due in 2020, organisations need to:
- determine if the Act (and the NSW legislation) applies to them, and where it does not apply, whether the organisation is willing and able to ‘opt in’ to the regime
- develop modern slavery policies, or review existing policies to identify any gaps or shortcomings with current internal practices and update or prepare fresh policies where required
- begin conducting due diligence on their supply chain starting from identified high risk organisations and industries
- consider processes that will be able to be implemented to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains
- develop training for staff on modern slavery risks and impacts
- review procurement documents and contracts and make ‘modern slavery’ amendments where required
- begin to prepare a modern slavery statement (perhaps by using 2019 as a ‘dry run’).
Authors: Scott Alden & Victoria Young
Scott Alden, Partner & National Head of Procurement
T: +61 2 8083 0419
Christine Jones, Partner
T: +61 2 8083 0477
Helena Golovanoff, Partner
T: +61 2 8083 0443
Troy Lewis, Partner & National Head of Construction and Infrastructure
T: +61 7 3135 0614
Stephen Burton, Partner
T: +61 7 3135 0604
Suzy Cairney, Partner
T: +61 7 3135 0684
Stephen Natoli, Partner
T: +61 3 9321 9796
Kyle Siebel, Partner
T: +61 3 9321 9877
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