Australia Starts to Move on Modern Slavery

Human trafficking, slavery, forced labour, child labour, and slavery-like practices are not typically associated with the likes of first world countries such as Australia.  However, modern slavery is rampant in global supply chains, with the International Labour Organisation having estimated that there are over 40 million people trapped in slave-like conditions, with as many as 30 million or so of those being held in slavery and slave-like conditions across the Asia-Pacific region.[1]

In light of this phenomenon, the Parliament of Australia passed the Modern Slavery Act 2018 (Cth) (MS Act) in November last year. The Act, which came into effect 1 January 2019, imposes requirements on entities based, or operating, in Australia, which have an annual consolidated revenue of more than $100 million. Essentially, these entities are required to report annually on the risks of modern slavery in their operations and supply chains, and on actions taken to address those risks. The report will be made to the Minister for Home Affairs and will be listed on the Modern Slavery Statements Register, which will be publicly available. It is envisaged that those who fail to report will be subjected to a ‘name and shame’ regime.

What is modern slavery?

Although there is no universally agreed definition of ‘modern slavery’, under the MS Act, modern slavery means conduct which would constitute an offence under Division 270 or 271 of the Criminal Code (including debt bondage, forced labour, servitude, deceptive recruiting for labour or services, and forced marriage), trafficking in persons,[2] or the worst forms of child labour.[3]

Who has to comply with the requirements in the MS Act?

The following are deemed ‘reporting entities’ under the MS Act:

  • Entities (both based and operating in Australia) with at least an ‘annual consolidated revenue of more than $100 million’ for the 12 month reporting period of each financial year;
  • The Commonwealth (reporting on behalf of non-corporate Commonwealth entities);
  • Commonwealth corporate entities with at least an ‘annual consolidated revenue of more than $100 million’ for the reporting period; and
  • An entity which has volunteered to comply with the requirements of the Act for that period.

What has to be reported?

There are slightly different requirements for single reporting entities, joint statements and Commonwealth statements, but all ‘modern slavery statements’ must:

  • identify the reporting entity;
  • describe the structure, operations and supply chains of the reporting entity;
  • describe 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;
  • describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes;
  • describe how the reporting entity assesses the effectiveness of such actions;
  • describe the process of consultation with any entities that the reporting entity owns or controls; (and in the case of a reporting entity covered by a joint modern slavery statement, the entity jointly giving the statement); and
  • include any other information that the reporting entity, or the entity giving the statement, considers relevant.

What are the consequences of non-compliance?

The MS Act does not impose monetary penalties for non-compliance. However, if a reporting entity fails to lodge a modern slavery statement, the entity may be requested to provide an explanation for the failure to comply; and/or

  • undertake specific remedial action in accordance with the above request;
  • the entity may face ‘public shaming’ by having its name and failure to comply publicised.

These mechanisms rely on ‘reputation risk’ to incentivise compliance and drive self-enforcement.  While the MS Act has faced criticism for being “toothless” in the absence of penalties for non-compliance, such a regime is not dissimilar to the approach taken by the Commonwealth for gender equity reporting in the Workplace Gender Equality Act 2012 (Cth) (and the antecedent Affirmative Action (EEO for Women) Act 1986 (Cth).   

Reporting: who, when, how?

Who do you report to?

Reporting is done through a ‘Modern Slavery Statement,’ basically a document that identifies the reporting entity and gives an overview of their structure, operations and supply chain/s, and most crucially describes the risks of modern slavery within the operations and supply chain/s and actions taken to ‘assess and address’ the risks.

This must be submitted to the Minister for Home Affairs, who keeps these statements in the modern Slavery Statements Register.

When is the report due?

The statements cover a reporting period, defined as a financial year. As this section of the Act only came into force 1 January 2019, the reporting period will cover the financial year of 2019/2020.

The statement must be given to the Minister within 6 months after the reporting period has ended. This means entities have until 31st December of that year to lodge their statements (as the financial year ends 30th June). So, for this year (which is the first reporting period for any entity), the reporting entity will have until 31st December 2020 to submit their statement.

How do you lodge a statement?

Before the statement can be submitted to the Minister, it must be approved by the entity’s principal governing body and signed by ‘responsible member of the entity,’ such as the CEO, a director, a trustee (if the entity is a trust administered by a sole trustee) or the administrator if the company is under administration.

Once executed, the statement must be provided to the Department of Home Affairs for publication in the Statements Register (an online central register). However, the Department of Home Affairs has confirmed that they have not yet created this online register, so stay tuned for more information about how to submit the slavery statement.

Are there any developments in other states?

In June 2018, the NSW Government passed the Modern Slavery Act 2018 (NSW) which has received assent but has not yet commenced. The NSW MS Act seeks to go further than the Commonwealth MS Act by extending its application to ‘businesses with $50 million in turnover (though only if they have employees in NSW)’, imposing penalties for non-compliance and establishing an Anti-slavery Commissioner who will, among other things, provide assistance and support for victims of modern slavery and make recommendations to prevent and prosecute offences of modern slavery.

Since being passed, the NSW MS Act has been sent to the NSW Legislative Council’s standing committee on social issues, “to determine whether the Commonwealth’s comparable legislation renders part or possibly all of the New South Wales Act unnecessary”.

Who can I get assistance from?

The Department of Home Affairs has published guidelines, entitled Modern Slavery Act 2018: Draft Guidance for Reporting Entities. This draft guidance contains detailed explanations of the Act’s requirements and provides useful examples.

For anyone who needs help with drafting a modern slavery statement, is aiming to improve supply chain practices, or suspects their business or a business they deal with is non-compliant with the Act, BAL lawyers offers commercially sound advice,  and can work with you to resolve these concerns.

This article was written by Gabrielle Sullivan with grateful acknowledgement of the preparatory work of Maxine Viertmann and Sarah-Graham Higgs.

[1] https://uploads.guim.co.uk/2017/05/31/Sub_91.pdf

[2] As defined in Article 3 of the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime, done at New York on 15 November 2000 ([2005] ATS 27)

[3] As defined in Article 3 of the ILO Convention (No. 182) concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour,  Geneva on 17 June 1999 ([2007] ATS 38)