Australia: What you need to know

While the problem of modern slavery is a persistent and hidden crime, those working to end it are crippled by three significant challenges: prevailing gaps in collecting and sharing data, limited resources to address slavery, and a challenging policy environment.

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On 1 January 2019, the Modern Slavery Act 2018 (Cth) commenced, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia. Reporting obligations relate to the steps taken to respond to the risk of modern slavery in the operations and supply chains of the reporting entity and its controlled entities.  Unlike other jurisdictions, the reporting criteria are mandatory.

It is crucial that reporting entities begin reviewing their supply chains and collecting data to comply with the new reporting obligations. For Australian corporations, the first reporting year will be 1 July 2019-30 June 2020 with the reports due by 31 December 2020. Entities with an international financial year may have to report earlier, depending upon the timing of their end of financial year. For example, entities with a 31 March 2020 end of financial year will need to report by 30 September 2020. The reports will be published on a public register.

At its broadest, the term ‘modern slavery’ refers to any situations of exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception. The Australian regime defines modern slavery to incorporate conduct that would constitute an offence under existing human trafficking, slavery and slavery-like offence provisions set out in Divisions 270 and 271 of the Commonwealth Criminal Code.

Modern slavery therefore encompasses slavery, servitude, the worst forms of child labour, forced labour, human trafficking, debt bondage, slavery like practices, forced marriage and deceptive recruiting for labour or services.

Entities will need to report under the Commonwealth Act if they carry on business in Australia with a minimum annual consolidated revenue of $100 million. Corporate groups should obtain specific advice in relation to which entities are required to report and how joint reporting can work.

The NSW Act is not yet in force and is currently subject to Parliamentary review. On 6 August 2019, the Legislative Council Standing Committee on Social Issues announced an inquiry into the NSW Act. The Committee’s recommendations are due on 14 February 2020. The NSW Government will await these recommendations before progressing its response to modern slavery.

For more detailed information on the new regime, read our article: Commonwealth Modern Slavery Bill passes through both houses of Parliament.

On 29 November 2018, the Modern Slavery Bill 2018 (Cth) (Bill) was passed in the House of Representatives, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia.  The passing of the Bill marks the conclusion of the Parliamentary process and paves the way for assent to the Bill by the Governor-General.

The manner in which the Bill has been debated to date with great passion in both chambers of Parliament demonstrates the bipartisan acceptance of the need for such legislation in Australia and sends a powerful message to the business community that modern day slavery must be addressed as a matter of priority.

First introduced into Parliament on 28 June 2018, the Bill was debated in the House of Representatives before being passed on 17 September 2018, spearheaded by the former Assistant Minister for Home Affairs, the Hon. Alex Hawke MP, and in more recent months, by the new Assistant Minister for Home Affairs, Senator the Hon. Linda Reynolds CSC.

As we have previously reported, the Bill creates an annual 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). Within 6 months of the end of their financial year, reporting entities must submit a ‘modern slavery statement’ to the Minister for Home Affairs which details the following:

  1. the identity of the reporting entity;
  2. the structure, operations and supply chains of the reporting entity;
  3. 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;
  4. the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to asses and address those risks;
  5. how the reporting entity assesses the effectiveness of such actions;
  6. the process of consultation with any entities the reporting entity owns or controls or is issuing a joint modern slavery statement with; and
  7. any other information that the reporting entity, or the entity giving the statement, considers relevant.

Amendments in the Senate introduced a mechanism by which the Minister for Home Affairs can require an explanation or remedial action if the Minister is reasonably satisfied that an entity has failed to comply with the reporting requirement. Following that, the Minister may publish the details of the non-compliance.

Once the Bill receives assent from the Governor-General and comes into force, we expect reporting entities with an Australian financial year will be required to provide their ‘modern slavery statements’ to the Minister for Home Affairs within 6 months of the end of the 2019-2020 Australian financial year. Entities with an international financial year will need to report within 6 months of their year-end.

Parallel reporting regimes – NSW and Commonwealth

NSW already has a statutory Modern Slavery reporting requirement (see our update here). The NSW legislation is awaiting proclamation and regulation before commencement.

Once the Commonwealth Bill becomes law, there will be two separate reporting regimes in Australia:

  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 employees 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 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 as mentioned above, regulations have not been 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 $100 million and pass all responsibility for managing modern slavery reporting to the Commonwealth, thereby delivering only one reporting regime.

Preparing for the new reporting regimes

At minimum, reporting entities that have not already done so should consider taking the following steps:

  • Map the organisation’s structure, businesses and supply chains.
  • Formulate policies and procedures in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed.
  • Carry out a risk assessment – identify those parts of the business operations and supply chains where there is a risk of modern slavery taking place.
  • Assess and manage identified risks – this may include carrying out further due diligence in the entity’s operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers.
  • Consider and establish processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains
  • Carry out remedial steps where modern slavery is identified.
  • Develop training for staff on modern slavery risks and impacts.

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).

To assist organisations in preparation for the new regime we have developed the NRF Transform | Risk Sonar, a secure and cost-effective technological solution that helps organisations identify risk in their supply chains, with an initial focus on human rights, and comply with statutory reporting requirements.  Follow the link to find out more.

Who needs to report?

Entities will need to report under the Commonwealth Act if they are an Australian entity or carry on business in Australia with a minimum annual consolidated revenue of $100 million. 

The Modern Slavery Act 2018 (NSW) (NSW Act) is not yet in force and is currently subject to Parliamentary review. On 6 August 2019, the Legislative Council Standing Committee on Social Issues announced an inquiry into the NSW Act. The Committee’s recommendations are due on 14 February 2020. The New South Wales Government will await these recommendations before progressing its response to modern slavery.

What does reporting entail?

Reporting obligations relate to the risk of modern slavery in the operations and supply chain of a reporting entity (and its owned and controlled entities), as well as the steps it has taken to respond to the risks identified. 

Unlike other jurisdictions, the reporting criteria in Australia are mandatory.  Reporting entities must have a reasonable basis for any opinions expressed in their Modern Slavery statement, so it is important that reporting entities take the time to assess their risk.  The reporting criteria can be found here.

What should entities do?

It is crucial that reporting entities begin reviewing their supply chains and operations to comply with the new reporting obligations.

What is the timing? 

A modern slavery statement must be submitted within six months after the end of the reporting entity’s financial year.  The reporting period is the entity’s first full financial year that commences after 1 January 2019. 

Entity’s annual financial reporting period

First reporting period under the Commonwealth Act

Due date for statement

1 July to 30 June

1 July 2019 to 30 June 2020

31 December 2020

1 January to 31 December

1 January 2020 to 31 December 2020

30 June 2021

1 April to 31 March

1 April 2019 to 31 March 2020

30 September 2020

Lodgment and publication

Reporting entities must provide their approved modern slavery act statement to the Australian Border Force for publication on an on-line public register.