Modern Slavery Act: What businesses in Australia need to know

Note: At its broadest, the term 'modern slavery' refers to any situations of exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception. The Australian regime defines modern slavery to incorporate conduct that would constitute an offence under existing human trafficking, slavery and slavery-like offence provisions set out in Divisions 270 and 271 of the Commonwealth Criminal Code.  Modern slavery therefore encompasses slavery, servitude, the worst forms of child labour, forced labour, human trafficking, debt bondage, slavery like practices, forced marriage and deceptive recruiting for labour or services.

On 1 January 2019, the Modern Slavery Act 2018 (Cth) (Commonwealth Act) commenced, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia. 

Who needs to report?

Entities need to report under the Commonwealth Act if they are an Australian entity or carry on business in Australia with a minimum annual consolidated revenue of $100 million. 

The Modern Slavery Act 2018 (NSW) (NSW Act) is scheduled to commence on 1 January 2022. On 14 October 2021, the NSW Government introduced the Modern Slavery Amendment Bill (MSA Bill) before Parliament. The MSA Bill repeals the reporting requirements from the NSW Act. This means that NSW entities with a consolidated revenue of between $50-$100 million per annum will no longer be required to prepare a modern slavery statement.

What does reporting entail?

Reporting obligations relate to the risk of modern slavery in the operations and supply chain of a reporting entity (and its owned and controlled entities), as well as the steps it has taken to respond to the risks identified. 

Unlike other jurisdictions, the reporting criteria in Australia are mandatory. That means that UK Modern Slavery Act statements are very seldom compliant. Reporting entities must have a reasonable basis for any opinions expressed in their Modern Slavery statement, so it is important that reporting entities take the time to assess their risk.  The reporting criteria are:

1. the identity of the reporting entity;
2. the structure, operations and supply chains of the reporting entity;
3. 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;
4. the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to asses and address those risks;
5. how the reporting entity assesses the effectiveness of such actions;
6. the process of consultation with any entities the reporting entity owns or controls or is issuing a joint modern slavery statement with; and
7. any other information that the reporting entity, or the entity giving the statement, considers relevant.

Businesses must describe the risk of modern slavery and the actions taken in the reporting year (not in previous years). Joint statements are permitted for corporate groups, but all reporting entities need to be consulted to prepare the statement.

The year 2 statements that we are seeing are focusing a lot more on implementation of policies than year 1 statements. Actions described are increasingly supplier specific, rather than adoption of relevant policies. Simply copying last year’s statement will mean that your statement falls behind those of your peers.

What should entities do?

It is crucial that reporting entities meaningfully review their supply chains and operations to comply with the new reporting obligations. Consider specific actions that can be taken to manage risks identified.

Even if there are no new actions to report in your year 2 statement, you need to check that the description of your operations, supply chains and risks remain accurate.

It is important to be up front if your business has had limited progress in responding to modern slavery risk during the second year. If there are reasons for the slow progress, they should be described. Entities should still address the mandatory reporting criteria and use the opportunity to commit to goals for year 3. Those goals will demonstrate commitment if the last year has proved challenging.

What is the timing? 

Second year statements are due within six months after the end of the reporting entity’s financial year. The one-off three month reporting extensions provided for some entities during 2020 have not been extended.  That will mean that some entities (including those with an Australian financial year ending 30 June) will report twice in 9 months, but in respect of 2 different financial years.

Lodgment and publication

Reporting entities must provide their approved modern slavery act statement to the Australian Border Force for publication on an on-line public register.

Human right due diligence: 2018 report and analysis

In 2018, Norton Rose Fulbright and the British Institute of International and Comparative Law released the results of our human rights due diligence (HRDD) in supply chains project and published a report entitled ‘Making sense of managing human rights issues in supply chains’.

Supply chain HRDD is best understood as an ongoing, dynamic and context-specific process which is depicted in the diagram forming the central point of our report.

The report provides a comprehensive overview of the legal and regulatory framework relevant to the management of human rights issues in supply chains, discusses the components of human rights due diligence in supply chains and sets out observations of current practice and best practice recommendations. Access the report along with a summary of the findings here.