On 1 January 2019, the Modern Slavery Act 2018 (Cth) ('Modern Slavery Act') commenced, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia.

Do you comply? Do you need to?

The Modern Slavery Act requires that entities either based or operating in Australia, which have an annual consolidated revenue of more than $100 million, to report annually on the risks of modern slavery in their operations and supply chains, as well as actions being taken to address those risks.  

Other entities based, or operating, in Australia may report voluntarily.

What is modern slavery?

At its broadest, the term 'modern slavery' refers to instances 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 Criminal Code Act 1995 (Cth) ('Criminal Code').

Division 270 of the Criminal Code criminalises slavery, the condition of a person over whom any or all of the powers attaching to the right of ownership are exercised. These slavery offences have universal jurisdiction, which means they apply whether or not the conduct occurred within Australia, and whether or not the victim or the offender are Australian citizens or residents.  

Division 270 also criminalises slavery-like practices, including servitude, forced labour, and deceptive recruiting for labour or services. These offences can apply to the exploitation of a person's labour or services in any industry, or to exploitation within intimate relationships.

Division 271 of the Criminal Code contains specific offences for trafficking in persons, thus fulfilling Australia's obligations under the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations Convention Against Transnational Organized Crime

Division 271 includes provisions for trafficking people into, out of, and within Australia, and specific provisions for domestic trafficking, organ trafficking and trafficking in children. Division 271 also includes separate offences for debt bondage and harbouring a victim.

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.

Who is required to report?

A reporting entity is defined in the Modern Slavery Act and includes an entity with consolidated revenue of at least $100 million for the reporting period, and the entity:

  1. is an Australian entity at any time in that reporting period; or
  2. carries on business in Australia at any time in that reporting period.

'Entity' covers all types of legal persons including individuals, bodies corporate, other unincorporated entities, trusts and superannuation funds.

What is required?

Entities required to report under the Modern Slavery Act must ensure modern slavery statements are prepared annually, describing the risks of modern slavery in the operations and supply chains of both the reporting entities, and entities owned or controlled by the reporting entities.

The seven mandatory criteria require every statement to:

  1. identify the reporting entity;
  2. describe the reporting entity's structure, operations and supply chains;
  3. describe the risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities it owns or controls;
  4. describe the actions taken by the reporting entity and any entities it owns or controls to assess and address these risks, including due diligence and remediation processes;
  5. describe how the reporting entity assesses the effectiveness of these actions;
  6. describe the process of consultation with any entities the reporting entity owns or controls (a joint statement must also describe consultation with the entity giving the statement); and
  7.  provide any other relevant information.

There is no set template for modern slavery statements - meaning each entity is able to decide how to structure its own statement.  However, reporting entities need to be aware that the statement will be a public document and can be read by a wide range of audiences.  With this in mind, it is important to ensure that the document explains any key terms, concepts or industry-specific language that might be unfamiliar to certain audiences.

What is the timing for reporting?

If an entity is required to comply with the Modern Slavery Act, it must prepare an annual statement covering the entity's reporting period (an entity's reporting period is the financial year or other annual accounting period used by that entity). Statements are due within six months after the end of each reporting period.

A reporting entity must begin its reporting for the first full reporting period after 1 January 2019. For example, if an entity operates on an Australian Financial Year, the first reporting period will be 1 July 2019 to 30 June 2020, with the statement due by 31 December 2020.

Penalties (Commonwealth)

The Minister for Home Affairs may request an explanation from an entity with regard to the entity's failure to comply with a requirement in relation to modern slavery statements, and may also request that the entity undertake remedial action in relation to that requirement. If the entity fails to comply with the request, the Minister may publish information about the failure to comply on the register or elsewhere, including the identity of the entity.

The NSW regime

Whilst the Modern Slavery Act 2018 (NSW) was passed by NSW Parliament in June 2018, it has not commenced, so its directions are not yet in force.

In 2019, the NSW Legislative Council Standing Committee on Social Issues undertook an inquiry into the Act - subsequently handing down its report on 25 March 2020.  In response to the report, the NSW Government indicated that it will seek greater harmonisation with the Modern Slavery Act, and that it would work with the Commonwealth Government to seek harmonisation of the supply chain reporting threshold, ideally at $50 million consolidated revenue, as a key report for a standard national approach to modern slavery.

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.