'Modern slavery' is a term usually used to cover a range of exploitative practices including slavery, human trafficking, forced labour, child labour, removal of organs and other slavery-like concepts.

What you need to know …

Modern slavery incorporates conduct that would constitute an offence under existing human trafficking, slavery and slavery-like offence provisions such as in the Criminal Code Act 1995 (Cth) or the Crimes Act 1900 (NSW).

Although New South Wales (NSW) was the first Australian state to pass modern slavery-specific legislation with the Modern Slavery Act 2018 (NSW) on 27 June 2018; the NSW Act has not yet commenced.

The Commonwealth Modern Slavery Act 2018 (Cth) however commenced (in full) from 1 January 2019.

Both Acts impose reporting requirements on larger entities operating in Australia in the form of a 'Modern Slavery Statement'.

Key aspects of the legislation are as follows.

  Commonwealth Act New South Wales Act (once effective)
What is the turnover/revenue threshold? Consolidated revenue over $100 million per financial year. Turnover of $50 million per financial year.
Which entities need to comply?
  • Australian resident companies within the meaning of the Income Tax Assessment Act 1936 (Cth) (ITAA);
  • trusts, where the trust entity is a resident trust estate within the meaning of the ITAA;
  • Australian resident corporate limited partnerships within the meaning of the ITAA; or
  • other partnerships or entities that are either:
    • formed or incorporated within Australia; or
    • the central management or control of the entity is in Australia; and
  • entities that carry on business in Australia within the meaning of the section 21 of the Corporations Act 2001 (Cth) at any time in the reporting period;
  • the Commonwealth; and
  • corporate Commonwealth entities or a Commonwealth company with a consolidated revenue of at least $100 million for the year.
'Commercial organisation' including companies, partnerships and associations (other than a NSW government agency) that supply goods and services for profit or gain and has employees in NSW.
What information is required in the Modern Slavery Statement? The Modern Slavery Statement must identify the reporting entity and describe:
  • its structure, operations and supply chains;
  • the risks of modern slavery practices in its operations and supply chains;
  • actions taken to assess and address those risks, including due diligence and remediation processes;
  • how it assesses the effectiveness of such actions;
  • the process of consultation with any entities it owns or controls; and
  • any other information that it considers relevant.
To be prescribed, but the regulations may require the statement to include:
  • the organisation's structure, its business and its supply chains;
  • its due diligence processes in relation to modern slavery in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of modern slavery taking place, and the steps it has taken to assess and manage that risk; and/or
  • the training about modern slavery available to its employees.
How often do Modern Slavery Statements need to be prepared?

Each financial year (due within 6 months after the end of each financial year).

This may be either the Australian financial year or another annual accounting period applicable to the entity which started after 1 January 2019.

Each financial year (due such period after the end of the financial year as is to be prescribed by regulations).
Who is authorised to sign Modern Slavery Statements?

The statement must be approved by the 'principal governing body' (eg, a board of directors for a company) and signed by a 'responsible member' (eg, an authorised member of the board of directors for a company).

Joint Modern Slavery Statements may be given on behalf of one or more reporting entities provided they are prepared in consultation with, approved and signed by each reporting entity in accordance with the above.

To be prescribed by regulations.
What is the method of publication? The Modern Slavery Statement is to be provided to the Minister for Home Affairs who will maintain an online public register of the statements.

The commercial organisation must make the Modern Slavy Statement public in accordance with the regulations.

The Commissioner is to keep a public register.

Are any penalties imposed for non-compliance? No.

Penalties are imposed, including for not preparing, no publishing or providing false or misleading information in connection with a Modern Slavery Statement.

The maximum penalty is 10,000 penalty units (which currently equates to $1.1 million).

 

Notably, the Commonwealth Act does not impose penalties unlike the NSW Act. However, the NSW Act does not apply to organisations subject to obligations under another corresponding regime (eg, the Commonwealth Act).

Interestingly, this will create a situation where entities covered by the NSW Act, but not the Commonwealth Act (ie, those with a presence in NSW and annual turnover between $50m and $100m) will be subject to penalties. However, larger entities with annual consolidated revenue of $100 million or more, will not. Although, maintenance of a public register means entities subject to the Commonwealth Act that do not report properly can still be 'named and shamed'.

Voluntary compliance is also provided for under both Acts for other entities who are not required to but may wish to comply with the reporting requirements.

What you need to do

Entities operating on the Australian financial year that are required to comply under the Commonwealth Act will have their first Modern Slavery Statement due on 31 December 2020. Entities operating on another annual accounting period may have their first Modern Slavery Statement due as early 1 June 2020.

If you think your business may be subject to either Act or you wish to voluntarily comply, we suggest you begin collecting data and reviewing your business' supply chains and supply contractors as soon as possible. This may include reviewing company policies, conducting audits or due diligence on suppliers and supply contractors, taking steps to address any modern slavery risks identified and assessing the effectiveness of those steps.

Entities that are subject to modern slavery regimes in other jurisdictions (eg, the UK) and may be subject to the new Australian regimes will need to review any existing statement and consider whether it will meet the requirements of the new Australian legislation.

How can we help

Please do not hesitate to contact us if you believe your business may be subject to the new modern slavery legislation or you wish to voluntarily comply with the regime and need assistance with ensuring your business meets the prescribed reporting requirements. We would be happy to assist with specific advice and/or review of your Modern Slavery Statement to ensure compliance.

For more information, please contact Julie Briscoe or Madeleine Urmoneit on 02 9234 1500.

Share