In an effort to reduce modern slavery in the supply chain practices of Australian businesses, organisations must now take steps to comply with the Modern Slavery Act 2018 (NSW), which was passed on 21 June 2018. Organisations will also need to consider what additional actions they need to take should the Modern Slavery Bill 2018 pass Federal parliament.With an estimated two thirds of global modern slavery taking place in the Asia Pacific region, the supply chain practices of Australian businesses are coming under increasing scrutiny.
On 21 June 2018, New South Wales became the first Australian jurisdiction to pass modern slavery specific legislation, in the form of the Modern Slavery Act 2018 (NSW) ('NSW Act'). In addition, the Modern Slavery Bill 2018 ('Cth Bill') was introduced to Federal Parliament on 28 June 2018.
Both regimes impose new reporting obligations on businesses to identify and detail their actions to address risks of modern slavery in their supply chains. Both pieces of legislation mandate supply chain reporting dealing with the organisation's consideration of and response to modern slavery in its supply chains.
This means it is crucial that Australian businesses understand their obligations and take steps now to ensure they are compliant before the legislation comes into effect.
What is 'modern slavery'?
The NSW Act provides a broad definition of 'modern slavery', which includes:
'any conduct involving the use of any form of slavery, servitude or forced labour to exploit children or other persons taking place in the supply chains of government agencies or non-government agencies'.
This definition covers a number of offences under the Crimes Act 1900 (Cth), Human Tissue Act 1983 (NSW) and Criminal Code Act 1995 (Cth).
Under the NSW Act, certain commercial organisations in New South Wales will need to publish a publicly available "modern slavery statement". This applies to companies, partnerships and associations that:
- have employees in NSW;
- supply goods and services for profit or gain;
- have a total turnover of not less than $50 million in a financial year; and
- are not a NSW government agency.
Every organisation that meets these criteria must prepare and publish a modern slavery statement containing the following information:
- the structure and nature of the business, including information regarding supply chains;
- due diligence and remedial processes undertaken in respect of modern slavery;
- risk areas within the business and supply chain for potential incidences of modern slavery and the steps taken to mitigate those risks; and
- training practices available in regards to modern slavery.
The NSW Act contains a range of penalties of up to AU$1.1 million for companies who:
- fail to prepare a modern slavery statement;
- fail to publish a modern slavey statement publicly in accordance with the NSW Act Regulations; or
- knowingly provide false and misleading information in a modern slavery statement.
However, the requirement to publish a modern slavery statement will not apply to an organisation that is subject to another comparable regime – likely to include the Cth Bill if an when it is passed and comes into effect.
The NSW Act also creates an independent Anti-Slavery Commissioner, tasked with promoting awareness, education, advocacy and advice. The Anti-Slavery Commissioner is also responsible for maintaining a public register that identifies the incidence of modern slavery in organisations' supply chains.
The Cth Bill was introduced and had its first reading in June 2018. In its current form the mandated reporting obligations are similar to those under the NSW Act and proposes to obligate eligible entities to report annually on the risks of modern slavery in their supply chains by publishing a modern slavery statement, which will be available online through a government run register.
If passed, the Cth Bill will apply to the following entities:
- all Australian entities, and foreign entities carrying on business in Australia, with an annual turnover of at least AU$100 million;
- the Commonwealth; and
- a corporate Commonwealth entity or a Commonwealth companies with annual revenue of at least AU$100 million.
However, unlike the NSW Act, the Cth Bill will also apply to not-for-profit entities and foreign entities carrying out business in Australia. Furthermore, the Cth Bill does not impose penalties for non-compliance.
These developments in Australia follow the United Kingdom's Modern Slavery Act 2015 (UK Act) (discussed in our previous alert), which some foreign entities doing business in Australia may already be required to comply with.
Although comparable to the UK Act, the Australian regimes impose further requirements. It is important that businesses that operate in both jurisdictions understand their obligations under both regimes and ensure compliance.
Unlike the UK Act, the Australian regime dictates the content of the statements rather than providing a list of optional matters. In addition, the Australian modern slavery statements must also be freely accessible online.
How to comply
Organisations that do business in Australia must consider whether they will be subject to either the NSW Act or Cth Bill. If so, those organisations should consider take steps to ensure such as:
- notifying suppliers of the new legislation;
- undertaking audits or due diligence in relation to slavery within supply chains;
- training employees and members of supply chains on modern slavery regulatory requirements;
- reviewing/ introducing company policies on anti-slavery;
- incorporating obligations under the modern slavery legislation into supplier contracts;
- introducing measures to address any risks identified in supply chains; and
- implementing processes to evaluate effectiveness of such measures.
Foreign entities doing business in Australia who currently comply with similar requirements overseas (such as the UK Act) should review their existing anti-slavery frameworks to ensure consistency with Australian requirements.
How can Dentons assist?
Dentons has international experience assisting organisations in complying with modern slavery reporting obligations. In addition to assisting Australian organisations with meeting the requirements under the Australian regimes, Dentons can help ensure UK entities doing business in Australia comply with their obligations under both the UK Act and Cth Bill.
Some of the ways Dentons can assist include:
- conducting audits of supply chains;
- creating internal policies and corporate governance guidelines regarding modern slavery;
- reviewing supply and procurement contracts; and
- reviewing draft modern slavery statements to ensure compliance.
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