Australia: Proposed Modern Slavery Act taking shape based on (and going beyond) the UK Modern Slavery Act model

Last Updated: 22 December 2017
Article by Scott Crabb and Lauree Coci

We have a better idea of the shape of the proposed Modern Slavery Act, which would cover entities with a total revenue of $50 million.

Australia has moved one step closer to combating slavery with the Foreign Affairs and Aid Sub-Committee of the Parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade tabling in Parliament on 7 December 2017 its final report, Hidden in Plain Sight, for the Committee's inquiry into establishing a Modern Slavery Act in Australia. The Report makes 49 recommendations to combat modern slavery here in Australia and around the world.

The Committee recommended that the Australian Government introduce a Modern Slavery Act in Australia similar to, but improving on, the UK Modern Slavery Act 2015.

Recommendations based on the UK model

Modern Slavery Statement: Transparency in supply chain reporting requirements in the form of producing a Modern Slavery Statement, similar to, but improving on, the requirements of section 54 of the UK Act. Consistent with the UK requirement, Modern Slavery Statements would be approved at the equivalent of board level and signed by the equivalent of a director and be published on an entity's website. Additionally, the Committee has recommended that such statements could be published online, in their annual reports or in another public document if they do not have a website.

Revenue threshold: The total revenue threshold for the entities caught by the reporting requirements should be $50 million, consistent with the UK's equivalent threshold of £36 million.

Independent Anti-Slavery Commissioner: There should be an Independent Anti-Slavery Commissioner, like the UK Independent Anti-Slavery Commissioner, with powers including, but not limited to, providing education, guidance and awareness training for entities on the reporting requirements, collecting and analysing data on modern slavery in Australia, working with agencies, law enforcement bodies and prosecutors to increase identification and reporting of modern slavery.

Victim support: Statutory defences for victims of modern slavery who are compelled to commit a crime due to exploitation, similar to, but improving on, section 45 of the UK Act by drawing from international best practice jurisdictions, such as Scotland.

Recommendations which deviate from the UK model

Content: The UK Act currently provides flexibility as to the content of Modern Slavery Statements and sets out six optional criteria of reporting which entities may choose to include in their Statement. However, the Modern Slavery (Transparency in Supply Chains) Bill 2017, if passed, will make the six categories of reporting compulsory.

Like the UK Bill, the Committee has suggested that the criteria for the Australian legislation be fully prescribed, or there be stepped due diligence reporting. It's proposing seven criteria, the first six of which are consistent with the UK's reporting criteria:

  1. the organisation's structure, its business and its supply chains;
  2. its policies in relation to modern slavery;
  3. its due diligence and remediation processes for modern slavery in its business and supply chains;
  4. the parts of its business and supply chains where there is a risk of modern slavery taking place, and the steps that it has taken to assess and manage that risk;
  5. its effectiveness in ensuring that modern slavery is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  6. the training about modern slavery available to its management and staff; and
  7. any other actions taken.

Reporting entities: The Committee suggested that the subject of the mandatory reporting requirements should cover "entities" defined to include:

"companies, businesses, organisations (including religious bodies), bodies corporate, unincorporated associations or bodies of persons, sole traders, partnerships, trusts, superannuation funds and approved deposit funds."

The Committee has recommended that Commonwealth Government agencies, public bodies and the Australian Government should also be included in that definition. While the UK Act does not currently require public authorities to publish a Modern Slavery Statement, the UK Bill, if passed, will amend the definition of "commercial organisations" to include "public authority".

Central repository: The Committee recommends that a central repository of Modern Slavery Statements should be maintained and administered by an independent civil society NGO or NGOs. The repository should also be combined with other international modern slavery repositories for consistency and to avoid duplication for those entities reporting in multiple jurisdictions.

List of entities: Alongside the central repository, the Committee recommends that the Government publishes a list of entities required to undertake reporting, and another of those entities that have complied with the reporting requirement, including those entities which have voluntarily reported. Although the UK Act currently does not require this, the UK Bill, if passed, would mandate that the Secretary of State must publish a list of all commercial organisations that come within the scope of reporting.

Penalties for non-compliance: In the UK, if an entity fails to publish a Modern Slavery Statement, the Secretary of State may bring civil proceedings in the High Court for an injunction compelling the organisation to do so. If the organisation fails to comply with the injunction, it will be in contempt of a court order, which is punishable by an unlimited fine. The Committee has not suggested that there be injunctive relief, but does support penalties and compliance measures for entities that fail to report; from the second year of reporting onwards, the proceeds of these penalties and measures should be used to support victims of modern slavery as part of a national compensation scheme. The Committee suggests that ASIC may have an enforcement role with non-reporting entities.

Coverage

Definition: "Modern slavery" should be defined as a non-legal umbrella term to include those modern slavery crimes in Divisions 270 and 271 of the Criminal Code 1995 (Cth), child labour, child exploitation and other slavery-like practices.

Smaller entities: Smaller entities below the threshold that wish to voluntarily submit a Modern Slavery Statement should be able to opt in. If they do, they should only be required to provide a Modern Slavery Statement to requesting entities and should not be required to provide different sets of information to multiple requesting entities.

Government procurement: The Australian Government and local governments should only procure from entities that complete a Modern Slavery Statement.

Operation and enforcement

Reporting period: Entities required to publish a Modern Slavery Statement should do so within five months after the end of the Australian financial year, with the option of making a supplementary statement at any time.

Government support: In consultation with the Anti-Slavery Commissioner, the Government should provide detailed, clear guidance on the operation and expectations of the supply chain reporting requirements to entities required to report.

Modern slavery hotline: There should be a national online and telephone modern slavery hotline to incentivise the reporting of modern slavery and exploitation. For example, the provision of information on the indicators of labour exploitation and modern slavery and providing advice on visa conditions.

Police officer training: The number of Australian Federal Police officers with specialised modern slavery training should be increased in all states and territories, including raising awareness for new migrants, before and on arrival in Australia, that the withholding of a passport is an offence under Australian law.

Employment

Vulnerable worker protections: The Report recommends protections for vulnerable workers, including reviewing Australia's visa framework for migrants, employer sponsorship, sign-off requirements, visa requirements for 'tied' visas and the introduction of a national labour hire licensing scheme. Labour hire contractors should be licensed to tackle the problem of coerced or debt bonded workers living in slave-like conditions. These licensing schemes should include random audits and unannounced inspections of labour hire firms to ensure compliance.

Fair Work Ombudsman information: The Fair Work Ombudsman should provide further resources to investigate allegations of modern slavery, and give all migrant workers information on their employment rights and responsibilities.

Review and research

Legislative review: The Independent Anti-Slavery Commissioner should undertake a legislative review of the proposed Modern Slavery Act three years after its commencement, and every three years thereafter.

Research: The Government should support the Australian Institute of Criminology to develop a research and monitoring program to better understand the prevalence of modern slavery.

Next steps on implementing a Modern Slavery Act in Australia

The Federal Government has said it will introduce a Modern Slavery Act as soon as possible. There is bipartisan support for the legislation, although some parties have differing views as to the precise terms of the Modern Slavery Act. For example, the Greens recommend lowering the revenue threshold for entities caught by the legislation to be $25 million, or more.

Timeframes for compliance

If a Modern Slavery Bill is passed before the first half of 2018, then the first round of reporting is likely to be due in November 2019.

If you have any further questions about how your business can prepare for the reporting requirements, or if you require assistance in preparing for this important development, Clayton Utz can help you.

RELATED KNOWLEDGE

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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