How new legislation is bringing Modern Slavery front of mind for Australian entities
What is Modern Slavery?
There is no simple legal definition of ‘Modern Slavery’, rather the legislation refers to “conduct which would constitute an offence under…” the Criminal Code and a variety of different protocols, codes and conventions. However, Modern Slavery is based on a similar concept to traditional slavery: the taking away of a person’s rights, freedom and choice for the purposes of exploitation. This may take the form of forced labor, trafficking in persons or child exploitation.
The insidious nature of Modern Slavery means that it is generally unreported and difficult to detect. This was the basis of the recommendations for new legislation in ‘Hidden in Plain Sight’, the report of the 2017 Joint Standing Committee on Foreign Affairs, Defence and Trade.
The new Australian legislation does not require affirmative action to rid supply chains of slavery and human trafficking, but rather requires engagement in due diligence, disclosure of any potential risks and also description of steps taken to address these risks. Mandating this assessment by business aims to increase the understanding of the risks associated with each business sector and its supply chain.
New legislation and potential penalties
There are two new pieces of legislation to be aware of – the Commonwealth and the NSW legislation.
The Modern Slavery Act 2018 (Cth) came into effect on 1 January 2019 with a mandate to increase reporting. While breaches of the Act will not incur any monetary penalties, if an entity fails to comply with the reporting requirements, or recommendations following unsatisfactory reporting, the relevant Minister may publish a public statement of non-compliance, effectively naming and shaming the entity. All reporting will be publically available, and as such the legislation will rely on the reputational incentive to drive compliant reporting.
Interestingly, the Modern Slavery Act 2018 (NSW) has taken a different approach. This came into effect on 1 July 2019 and whilst similar reporting requirements apply, significant penalties may be imposed and lower thresholds for reporting have been established. Under the NSW legislation, non-compliant commercial organisations may be liable for:
- Fines up to $1.1 million for failure to provide a statement or making a false or misleading statement; and
- Injunctive modern slavery risk orders which if breached can result in a $55,000 fine and/or 2 years in prison.
Are you caught by the new legislation?
The new legislation captures two different types of entities; Reporting Entities within the Commonwealth and Commercial Organisations within NSW.
Importantly, the NSW legislation only applies to entities that do not report under the Commonwealth Act.
For entities that are not caught by the above, it is worth considering if you are part of a larger supply chain with entities that are required to report under the new regime. There may be increasing pressure from these entities to gain relevant information from you to evidence their compliance with the new legislation. Hence it may be beneficial to report voluntarily in the interests of transparency, corporate governance and avoiding any reputational risks which may be associated with involvement with those who do not comply.
If you are caught by the legislation, what does this mean for you?
Both pieces of legislation target the assessment of whether an entity is causing, contributing to or directly linked to modern slavery in their supply chains. While ‘supply chains’ are also not defined, the term generally encompasses the goods and services an entity purchases to provide its final product or service. Mandatory annual reporting with a Modern Slavery Statement seeks to address these risks.
What to include in a Modern Slavery Statement
Under the Commonwealth Act, a Modern Slavery Statement (MSS) must be submitted each year. The MSS must show that the entity has considered their structure, operations, supply chains and where there are apparent risks for Modern Slavery practices. Additionally, the entity must show that actions have been taken to assess and address those risks including due diligence, remediation processes and consultation with any entities that it owns or controls.
The NSW legislation adds the additional requirement to describe the training about Modern Slavery available to its employees in a MSS.
Reports will be due within the first 6 months of the end of the full financial year, one year after January 2019:
- For entities with a 30 June reporting year the reports will be due on 31 December 2020 or
- For entities with a calendar reporting year the reports will be due on 30 June 2021.
Joint statements may be given on behalf of one or more related reporting entities.
How can you start preparing?
Whether or not you need to prepare a MSS, it would be beneficial to develop a Modern Slavery compliance policy or plan, to arrange relevant training sessions and to ensure that clauses are added to existing contracts to ensure compliance throughout your supply chain.
Cowell Clarke will be happy to assist clients with preparing Modern Anti-Slavery policies, updating current policies to comply with the new regime, and preparing new clauses for template contracts.
Please contact our Corporate Team if you would like to discuss.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.