On 29 November 2018, the Modern Slavery Act 2018 (Cth) (Act) was passed by Parliament. The Act seeks to strengthen Australia's stance against modern slavery by establishing a reporting framework for entities to identify how their operations and supply chains may contribute to modern slavery and how they are addressing those risks.

Who does the Act apply to?

The Act applies to Australian entities who carry on business in Australia with consolidated revenue of at least $100 million. Smaller entities who do not meet these requirements can also voluntarily opt into the reporting regime.

What obligations does the Act impose?

The Act requires affected entities to prepare and lodge an annual 'Modern Slavery Statement' (Statement). The Statement must address:

  • the risks of modern slavery in their operations and supply chains;
  • the action they have taken to assess and address those risks; and
  • the effectiveness of their response.

The Statement must also be approved by the board of directors or equivalent and signed by a director.

What are the penalties for non-compliance?

The Act does not impose a specific penalty for an entity failing to lodge its Statement. The Minister for Home Affairs, however, does have the power to publish the names of any organisations who fail to comply. The need for a penalty regime under the Act will be reviewed three years after the commencement of the Act.

Additionally, regulators are increasingly using a 'stepping stones' approach to actions based upon a breach of directors' duties.

Implications for entities based in NSW

As detailed in our earlier insight, the Modern Slavery Act 2018 (NSW) was passed in June this year which requires commercial organisations with turnovers of $50 million or more who have employees working in NSW to prepare modern slavery statements annually. It also imposes penalties of up to $1.1 million for non-compliance.

Whilst the NSW Act contains an ability to prescribe a "corresponding law", how the two regimes will interact is not yet clear.

Next Steps

No commencement date has been set for the Act at the time of writing. You should review your procedures as soon as possible however to ensure your compliance with the law. Importantly, you should:

  • inform members of your supply chain of your reporting requirements under the Act;
  • modify your contracts with suppliers to permit you to conduct audits and require suppliers to provide you with the information needed to meet reporting obligations; and
  • develop processes to manage and respond in situations wherein modern slavery practices do exist within your supply chain.

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.