The new Modern Slavery Act 2018 (Cth) (the Act) came into force on 1 January 2019, establishing a new national mandatory reporting requirement for instances of modern slavery, which Australian businesses must now comply with.
The Act aims to combat “modern slavery” a term that broadly covers a range of exploitative practices including human trafficking, slavery, forced labour, child labour, removal of organs and slavery-like practices, with an aim of preventing them from occurring in organisations and the supply chains of businesses operating within Australia.
Large Australian entities, including companies, partnerships, trusts, universities and charities, which carry on business in Australia (irrespective of where they are incorporated) and have an annual consolidated revenue of at least $100 million are now required to prepare annual “Modern Slavery Statements” (Statements) for the Minister of the Department of Home Affairs, while any Australian entity or entity carrying on business in Australia with an annual consolidated revenue of less than $100 million can provide a voluntary Statement. The Statements must report on the risks of modern slavery in the global operations and supply chains of that entity (together with those owned or controlled by them), as well as proposing actions to address those risks.
The Statements must detail the following:
- the identity of the entity;
- the entity’s structure, operations and supply chains;
- the risks of modern slavery practices in those operations and supply chains;
- the actions taken by the entity to assess and address those risks;
- how the entity assesses the effectiveness of such actions; and
- the process of consultation with any entities in the group or that is covered by a joint Statement.
The Statements must be approved by the entity’s principal governing body (e.g. the board of directors or board of trustees) and signed off by a responsible member of the entity (such as a company director). Joint Statements can be submitted by an entity on behalf of multiple reporting entities, covering related companies and subsidiaries, provided they are done in consultation with all reporting entities and satisfy the necessary approval requirements.
Following submission of the Statement to the Department of Home Affairs, the Statement will then be published on an online central register and available to the public free of charge.
The Act requires each relevant entity to submit annual reports covering that entity’s financial year to the Department of Home Affairs within six months following the end of the reporting period. The first reporting period will commence shortly on 1 July 2019, with statements due as early as 31 December 2020.
What if my entity already reports under other modern slavery laws?
The new federal legislation follows similar mandatory reporting for modern slavery risks in the United Kingdom and more locally, within New South Wales (NSW). If your business operates in all three jurisdictions, you would be required to meet all three separate reporting requirements under each different Act.
The Modern Slavery Act 2018 (NSW) (the NSW Act) captures smaller commercial organisations with a mandatory reporting requirement for those with an annual turnover of $50 million. So even if your organisation is not captured by the new Commonwealth laws, if you have employees in NSW and your business has an annual turnover of over $50 million, you must comply with existing modern slavery reporting requirements under the NSW Act or you could face penalties of up to $1.1 million.
What if I don’t comply with the Act?
No penalties currently apply for failing to comply with the Act or for producing misleading Statements. However, the Federal Government may require entities that fail to properly report to provide an explanation or undertake certain remedial action. Non-compliant entities may be included on a public list maintained by the Minister, detailing how each entity has failed to comply or undertake any requested remedial action with potentially detrimental reputational damage.
The Department of Home Affairs has released draft guidance for reporting entities and is in the process of finalising its guidance to ensure businesses understand what they are required to do to comply with the Act.
If you believe your business is captured by either the NSW Act or the Act, you should start preparations in order to comply with these new laws by mapping your supply chains, performing risk assessments on your operations and supply chains, managing and seeking to remediate identified risks and training your staff on the modern slavery risks that may affect your business.
Where you consider that your business needs assistance, Clarendons would be happy to speak to you on how to best prepare for, or address, these new requirements.
This article was co-authored by Mark Farquhar, Director and Jordy Finch, Graduate Lawyer.