On 29 November 2018, the Modern Slavery Bill 2018 (Cth) (Bill) was passed in the House of Representatives, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia. The passing of the Bill marks the conclusion of the Parliamentary process and paves the way for assent to the Bill by the Governor-General.
The manner in which the Bill has been debated to date with great passion in both chambers of Parliament demonstrates the bipartisan acceptance of the need for such legislation in Australia and sends a powerful message to the business community that modern day slavery must be addressed as a matter of priority.
First introduced into Parliament on 28 June 2018, the Bill was debated in the House of Representatives before being passed on 17 September 2018, spearheaded by the former Assistant Minister for Home Affairs, the Hon. Alex Hawke MP, and in more recent months, by the new Assistant Minister for Home Affairs, Senator the Hon. Linda Reynolds CSC.
As we have previously reported, the Bill creates an annual reporting requirement for large businesses and other entities in Australia to report publicly on the actions they have taken to address modern slavery risks in their operations and supply chains (see our dedicated Hub for more information). Within 6 months of the end of their financial year, reporting entities must submit a ‘modern slavery statement’ to the Minister for Home Affairs which details the following:
- the identity of the reporting entity;
- the structure, operations and supply chains of the reporting entity;
- the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;
- the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to asses and address those risks;
- how the reporting entity assesses the effectiveness of such actions;
- the process of consultation with any entities the reporting entity owns or controls or is issuing a joint modern slavery statement with; and
- any other information that the reporting entity, or the entity giving the statement, considers relevant.
Amendments in the Senate introduced a mechanism by which the Minister for Home Affairs can require an explanation or remedial action if the Minister is reasonably satisfied that an entity has failed to comply with the reporting requirement. Following that, the Minister may publish the details of the non-compliance.
Once the Bill receives assent from the Governor-General and comes into force, we expect reporting entities with an Australian financial year will be required to provide their ‘modern slavery statements’ to the Minister for Home Affairs within 6 months of the end of the 2019-2020 Australian financial year. Entities with an international financial year will need to report within 6 months of their year-end.
Parallel reporting regimes – NSW and Commonwealth
NSW already has a statutory Modern Slavery reporting requirement (see our update here). The NSW legislation is awaiting proclamation and regulation before commencement.
Once the Commonwealth Bill becomes law, there will be two separate reporting regimes in Australia:
- Businesses and organisations carrying on business in Australia with consolidated revenue ≥$100 million globally will report only in the Commonwealth; and
- Businesses and organisations with employees in NSW and an annual turnover of between $50 million and $100 million will report only in NSW.
This assumes that NSW will accept that the Commonwealth reporting regime is comparable to its own (the NSW Act provides that commercial organisations reporting under a “corresponding law” will be exempt). The exact reporting criteria under the NSW law is to be prescribed by regulation, but as mentioned above, regulations have not been made publicly available. In the Second Reading Speech of the NSW Modern Slavery Act, the Hon Premier Gladys Berejiklian stated that the NSW Government will ensure the NSW reporting obligations will not overlap with any Commonwealth regulations.1 It remains possible that NSW will decide to increase its threshold by regulation to $100 million and pass all responsibility for managing modern slavery reporting to the Commonwealth, thereby delivering only one reporting regime.
Preparing for the new reporting regimes
At minimum, reporting entities that have not already done so should consider taking the following steps:
- Map the organisation’s structure, businesses and supply chains.
- Formulate policies and procedures in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed.
- Carry out a risk assessment – identify those parts of the business operations and supply chains where there is a risk of modern slavery taking place.
- Assess and manage identified risks – this may include carrying out further due diligence in the entity’s operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers.
- Consider and establish processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains
- Carry out remedial steps where modern slavery is identified.
- Develop training for staff on modern slavery risks and impacts.
To find out how businesses are managing risks of modern slavery in the broader human rights context, read our report ‘Making sense of managing human rights issues in supply chains’, published jointly with the British Institute of International and Comparative Law (BIICL).
To assist organisations in preparation for the new regime we have developed the NRF Transform | Risk Sonar, a secure and cost-effective technological solution that helps organisations identify risk in their supply chains, with an initial focus on human rights, and comply with statutory reporting requirements. Follow the link to find out more.
For more information contact Abigail McGregor, JP Wood, Greg Vickery or Gavin Scott to discuss how modern slavery legislation may impact on your business and ways to manage your supply chain risks.