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May 21, 2019

Modern Slavery Act

Following a 2017 parliamentary enquiry and mirroring earlier steps taken by other countries, including the UK, Australia has introduced a Modern Slavery Act effective from 1 January 2019.

The 2018 Global Slavery Index has estimated that globally, there are more than 40 million victims of Modern Slavery practices, including forced labour, debt bondage, human trafficking and the exploitation of children. Many Australian business supply chains are linked to the Asia Pacific region where there are estimated to be over 30 million people living under modern slavery conditions. It’s also believed that there are up to 15,000 modern slavery victims in Australia.

 

Commonwealth Legislation

The Modern Slavery Act 2018 (Cth) requires organisations conducting business in Australia with annual consolidated revenue of $100 million or more, to report annually on the risk of modern slavery in their operations and supply chains and what they are doing to address those risks.

Impacted organisation will need to file an annual Modern Slavery Statement with the Minister for Home Affairs; it will be published online on a central register. The Statement will need to:

  • describe their structure, operations and supply chains;
  • describe the risks of modern slavery practices in their operations and supply chains and of any entity it owns or controls;
  • describe the actions taken to assess and mitigate risks and the effectiveness of those actions;
  • describe the consultation process with entities it owns or controls; and
  • include any other information that they consider relevant.

 

Reporting timeframe

Organisations with a December year end
The first reporting period is 1 January 2019 to 31 December 2019
The first Modern Slavery Statement is due for lodgement by 30 June 2020.

Organisations with a June year end
The first reporting period is 1 July 2019 to 30 June 2020
The first Modern Slavery Statement is due for lodgement by 31 December 2020.

The Minister can request an explanation for any perceived non-compliance and may ultimately publish details of non-compliance, which could damage an organisation’s reputation. It is expected that over time additional compliance measures and civil penalties may apply for failure to comply.

 

NSW Legislation

The NSW Government has introduced its own modern slavery legislation requiring similar reporting for organisations that have a total annual turnover of $50 million and at least 1 employee in NSW. The Modern Slavery Act 2018 (NSW)) was passed on 21 June 2018, however the commencement of the NSW Act has not yet been confirmed.

For larger organisations, the reporting obligations under the NSW Act will not apply to organisations already subject to the Commonwealth Act (i.e. with revenue over $100m), provided that the Commonwealth Act is officially prescribed as a corresponding law under the NSW Act. For smaller organisations, the NSW Government has indicated that businesses with less than 20 employees will be exempt from the reporting requirement for 18 months following commencement.

The NSW Act incorporates penalties for non-compliance. A maximum penalty of $1.1m can be imposed for offences including:

  • failing to prepare a modern slavery statement;
  • failing to publish the modern slavery statement in accordance with the regulations; and
  • providing false or misleading information within the Modern Slavery Statement.

 

What organisations need to do next

We recommend that impacted organisations:

  • Map their operations and supply chains. It is not expected that organisations would not identify any modern slavery risk in their supply chains. If an entity does not identify any modern slavery risks, it must still respond to the reporting criteria and explain actions taken.
  • Review their risk management framework and their approach to identifying and managing any potential areas of risks in their supply chains. For example based on geographical location and/or the goods or services being produced. This may include: a review of supplier and contractor management and procurement processes and increased due diligence of prospective suppliers and appropriate drafting of supplier contracts to ensure there is an expectation of support of human rights and workplace conditions.
  • Update their Code of Conduct to explicitly state the support of human rights.
  • Training of applicable staff in operations and procurement, to drive awareness.
  • Discuss the drafting of a Modern Slavery Statement with their Merton’s representative.