Australia’s Modern Slavery Act: Update

On 24 August 2018, the Legal and Constitutional Affairs Legislation Committee published its report on the Modern Slavery Bill 2018, recommending the Bill be passed (the Report).  This comes just three days after the Parliamentary Joint Committee on Human Rights published its Human Rights Scrutiny Report of the Bill. 

As usual, the Legal and Constitutional Affairs Legislation Committee held public hearings, with a large number of inquiry participants welcoming the bill as an important first step toward addressing the challenges of modern slavery in Australian supply chains.  Norton Rose Fulbright’s Greg Vickery AO participated as part of the Law Council of Australia’s submissions.

As we have previously reported, the Modern Slavery Bill 2018 creates a 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).  NSW already has a Modern Slavery reporting requirement enshrined in legislation (see our update here).  The NSW legislation is awaiting proclamation and regulation before commencement.

The Legal and Constitutional Affairs Legislation Committee recommended the following:

1. the Government work towards building a list of 'reporting entities', and publish compliance standards publicly, in order to test the proposition that 'reputational risk' is a sufficient motivator for reporting entities to comply with the requirements of the Act;
2. lists of entities that do report, including entities outside the compliance threshold who report voluntarily, should be made public;
3. an independent statutory officer be appointed to support the operation of the Modern Slavery Act and be charged with the duties detailed in recommendation 6 of the Joint Standing Committee on Foreign Affairs Defence and Trade Hidden in Plain Sight report (see paragraph 3.3 of the Report);
4. the statutory three-year review consider all aspects of the Act, with particular attention to compliance thresholds and compliance standards, and that the review be required to consider whether a mandatory penalty regime is required, drawing on the evidence and data gathered through the first three years of the Act's operation.  The committee acknowledges that it may be shown that penalties are not needed; and
5. the Modern Slavery Bill be amended to include, in one location, reference to Australia's existing Modern Slavery offences (as outlined in Divisions 270 and 271 of the Criminal Code Act 1995) and to offences relating to fighting modern slavery, such as offences relating to sexual and labour exploitation under the Migration Act 1958.

The Parliamentary Joint Committee commended the fact that the Bill engaged positively with human rights and welcomed the proposed reporting requirements which promote the right to freedom from slavery and forced labour.  The Committee has, however, sought that the Minister consider whether the reporting requirement could engage and limit the right to privacy, and confirm that the measures are reasonable and proportionate in the circumstances.  

Now that the Parliamentary Committees have reported on the Bill, we can expect to see discussion on some minor points upon which the Minister needs to respond to the Parliamentary Joint Committee.  We do not anticipate there being any amendments to the reporting requirements nor do we expect to see a reduction in the reporting threshold, currently set at $100 million annually.  Subject to any other issues arising in Parliament, we expect the Bill to be passed by the end of the year, and to be shortly followed by NSW Regulations on the exact reporting criteria under the NSW Modern Slavery Act. 

There will likely be two separate reporting regimes in Australia once the Commonwealth Parliament passes the Modern Slavery Bill:

1. Businesses and organisations carrying on business in Australia with consolidated revenue ≥$100 million globally will report only in the Commonwealth; and
2. Businesses and organisations with operations 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 already 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 is yet to be 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 $100million and entirely pass responsibility for managing reporting to the Commonwealth, thereby delivering only one reporting regime. This will likely be welcomed by business.

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).

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.