Australia: Proposed Act Seeks To Require Large Companies Operating In Australia To Report On Modern Slavery

The Australian Government has announced plans to release draft legislation proposing the introduction of a "modern slavery in supply chains" reporting requirement. The proposal is expected to be released in April 2018 and could require all companies operating in Australia and meeting a threshold of $100 million in total annual global revenue to report annually on their efforts to address modern slavery in their operations and "supply chains"1 (the "Proposed Act"). If enacted, the Proposed Act will add to the increasing number of national laws that place direct obligations on certain companies to report upon efforts to identify and mitigate human rights risks such as human trafficking, child labor, and other forms of forced labor from their global operations.

Why is the Australian Government Proposing this Law?

In a Public Consultation Paper and Regulation Impact Statement issued in August 2017 (the "Consultation Paper"),2 the Government acknowledged that human trafficking, forced labor, debt bondage and other severe human rights violations – collectively defined as "modern slavery" in the proposed statutory definition3 – occur in Australia. Authorities have identified victims in a range of industries, including domestic service, hospitality, construction, and sex work. Since 2004, the Government has identified 350 suspected victims of modern slavery and prosecuted 55 individuals under criminal laws.

In the Consultation Paper, the Government asserts that the risk of modern slavery exists even within large companies in high-risk industries "with complex and changeable multi-national supply chains." Drawing on its support for the United Nations Guiding Principles of Business and Human Rights,4 the Government has emphasized that companies should respond to human rights issues that are directly linked to their operations, products or services.5 The Consultation Paper also recognized that while other countries – including the United Kingdom, the United States, France, and the Netherlands, as well as the European Union – have strengthened national laws on modern slavery, the current Australian regulatory framework does not directly encourage companies to take action to combat modern slavery.

Accordingly, the Government's stated purpose for the Proposed Act is to: "equip and enable the business community to respond effectively to modern slavery and develop and maintain responsible and transparent supply chains." Importantly, the Government intends that the reporting requirement in the Proposed Act will improve information available to consumers and investors about company efforts in combatting modern slavery. Thus, as with laws like the UK Modern Slavery Act and the California Transparency in Supply Chains Act,6 the Proposed Act intends to place market pressure on companies to prevent, identify, and eliminate modern slavery practices in companies' operations and amongst business partners.

What Companies are Covered Under the Proposed Act?

The Government's current proposal is to cover a broad range of entities, including corporate bodies, unincorporated associations or bodies of persons, superannuation funds and approved deposit funds – regardless of industry or sector or the level of risk for "modern slavery." Any of these entities that are either headquartered in Australia or have "any part of their operations in Australia" and meet the revenue threshold of $100 million in total annual global revenue, are subject to the Proposed Act. Thus, as an illustration, a U.S.-based multinational meeting the revenue threshold with even minimal operations in Australia may be a covered entity.

Moreover, the Government intends to broaden the scope of the Proposed Act beyond these large companies. Indeed, it plans on issuing guidance to encourage smaller entities to "opt in" to the Proposed Act.7

What do Covered Entities Need to do?

The Proposed Act, if enacted, will require covered entities to publish a "Modern Slavery Statement." This obligation, along with the general content and format of the Proposed Act, borrows largely from the UK Modern Slavery Act, which requires certain large companies operating in the UK to produce a "slavery and human trafficking statement" each financial year, disclosing their efforts (or lack thereof) to ensure that their own operations and business partners are free from slavery and human trafficking.8 The Government also likens this obligation to Australia's Commonwealth Workplace Gender Equality Act 2012, which requires private sector entities with 100 or more employees to submit annual reports to the Government regarding a range of gender equality indicators.

In limiting the obligation to publishing a Modern Slavery Statement, the Consultation Paper makes explicit that the Government intends to diverge from the model presented by recent French legislation, which requires certain companies to actually undertake (as opposed to simply report) due diligence measures to identify and respond to human rights abuses.9 The Government sees the French model as creating a "regulatory impost" that does not fit the Australian context.

What Must be Included in the Modern Slavery Statement?

The Modern Slavery Statement must, at a minimum, include information about:

  • The covered entity's structure, its operations and supply chains;
  • The modern slavery risks present in the covered entity's operations and supply chains;
  • The covered entity's policies and process to address modern slavery in its operations and supply chains (including codes of conduct, supplier contract terms, and trainings for staff) and their effectiveness; and,
  • The covered entity's due diligence processes relating to modern slavery in its operations and supply chains and their effectiveness.

What is a "Supply Chain"?

The Government has not yet defined the term "supply chains," and intends to publish detailed guidance on this soon. For now, the Consultation Paper simply proposes that the definition of supply chains extend beyond first-tier suppliers.

Though we await further developments, we note that the term "supply chain" is both fraught and outdated, and the ultimate scope and meaning of this term raises a host of practical challenges and concerns.

When and Where Must the Modern Slavery Statement be Published?

The Proposed Act intends that each covered entity must publish its Modern Slavery Statement annually, within five months after the end of the Australian financial year.10 The Statement must be posted on the entity's webpage and the Statements will be available on a free, publicly accessible central repository.

What are the Consequences for Non-Compliance?

Currently, the Government has not proposed any penalties for non-compliance with the proposed obligations. The Government has, however, stated in the Consultation Paper that it will monitor compliance and "entities that do not comply with the reporting requirement may be subject to public criticism."

What Should Companies do in Preparation?

Companies should prepare for the introduction of the Proposed Act by first taking stock of their own operations and those of their suppliers and other business partners, and identifying areas in those operations where there is a high risk of forced labor and other "modern slavery" practices. Where such risks are identified, companies should take appropriate action to address those risks and also implement procedures to ensure that new and existing relationships remain free of such activities. This due diligence process can be complex so we recommend engaging the services of experienced counsel.

Footnotes

1 The term "supply chains" is used throughout the Consultation Paper but, as discussed and utilized in this article, has not yet been defined.

2 Australian Government, Attorney-General's Department, Modern Slavery in Supply Chains Reporting Requirement - Public Consultation Paper and Regulation Impact Statement, available at https://www.ag.gov.au/Consultations/Documents/modern-slavery-in-supply-chains-reporting-requirement/modern-slavery-in-supply-chains-reporting-requirement-public-consultation-paper.pdf.

3 The Government proposes to define "modern slavery" as conduct that would constitute an offense under Divisions 270 and 271 of the Commonwealth Criminal Code, encompassing slavery, servitude, forced labor, debt bondage, deceptive recruiting for labor or services, and human trafficking.

4 These principles do not "creat[e] new international law obligations," but rather define governments' and companies' already-existing obligations to protect human rights and remedy violations. (A copy of the UN Guiding Principles, published by the Office of the United Nations High Commissioner for Human Rights, is available online at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf). The UN Guiding Principles comprise three "pillars": Pillar One - the state duty to protect against human rights abuses by business; Pillar Two - the business responsibility to respect human rights; and, Pillar Three - the responsibility of states and business to provide effective access to remedies.

5 The United Nations Working Group on Business and Human Rights has applauded the Government's efforts to enact the Proposed Act, but has advised that such a law should be part of a broader National Action Plan, which would operationalize the government's role in encouraging responsible business conduct, as envisioned under the "soft law" norms of the United Nations Guiding Principles on Business and Human Rights (the "UN Guiding Principles"). See Surya Deva, Letter to Ambassador John Paton Quinn, December 18, 2017, available at http://www.ohchr.org/Documents/Issues/Business/LetterAustralia_20171218.pdf.

6 See Tahl Tyson, United Kingdom: New Law to Combat Supply Chain Slavery and Human Trafficking, Littler ASAP (July 14, 2015); John C. Kloosterman, California Employers Have Another Notice Posting Obligation - Have You Posted Your Human Trafficking Notice?, Littler Insight (Apr. 3, 2013).

7 For now, the Government does not intend the Proposed Act to create any new obligations for Commonwealth or state and territory procurement. The Government believes that procurement is already appreciably governed by a legislative framework on ethical sourcing.

8 United Kingdom Modern Slavery Act 2015, available at http://www.legislation.gov.uk/ukpga/2015/30/contents/enacted.

9 See Michael Congiu, Stefan Marculewicz, John Kloosterman, Stephan Swinkels, Aaron Saltzman, and Lavanga Wijekoon, Dutch and French Legislatures Introduce New Human Rights Due Diligence Reporting Requirements, Littler Insight (Mar. 3, 2017). On March 23, 2017, the French Constitutional Court declared that the French law is constitutional and will remain on the books, albeit without the corresponding financial sanctions for companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Michael G. Congiu
John Kloosterman
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions