Some entities will have to identify modern slavery risks in their operations. Identifying those risks in an entity’s own operations and in their supply chain can be complex, expensive and time consuming.
The Australian Government introduced the Modern Slavery Act (the "Act") in 2018. The Act requires the filing of a “modern slavery statement” by any person, company, partnership or trust (an“entity”) whether it is an Australian entity or carries on business in Australia and that has consolidated revenue of at least AUD100 million.
Every entity coming under the Act must now file a modern slavery statement within 6 months of the end of its financial year. For most Australian companies and other entities, this will mean that first statements must be filed by 31 December 2020. Statements are to be filed online with the Australian Border Force, part of the Federal Department of Home Affairs. Statements that are filed will be available to the public on the internet.
In order to prepare and file a statement, entities will have to design and implement a process to identify modern slavery risks in their operations, in the operations of any entities they control and in the operations of any parts of their supply chains. This will be a substantial exercise. We are urging our clients not to take it lightly or leave it to the last minute before statements are due to be filed. Identifying all the elements in an entity’s operations and in its supply chain can be a complex task. The process of then identifying modern slavery risks that may exist also be an involved and complex task.
We expect that at least initially if an entity fails to file a statement when due, the Home Affairs Department will work with the entity to have the statement filed. However, non-compliance can lead to the Department publicly naming and shaming the non-complying entity. The Act does not currently prescribe any other penalties for non-compliance. The operation of the Act is to be reviewed in 3 years and it may be that at that time, penalties may be introduced.
Compliance and Reporting
In general, modern slavery is taken to apply to people trafficking, the worst forms of child labour and situations where a person is either required to provide services or cannot refuse to provide services under threat, coercion or deception. While situations involving harsh working conditions or underpayment may be illegal under other laws, generally the Act will not apply to those situations.
The Federal Government has now published guidance for how reporting entities can comply with the Act. Those guidance notes provide helpful information to assist entities in understanding and complying with their obligations under the Act. The guidance expressly requests entities not to adopt standard template statements. In addition to the complexity and cost of identifying modern slavery risks, the preparation of statements will require careful consideration and expertise. Many entities will have to consider what information should be or has to be disclosed in the potentially conflicting context of commercial confidentiality.
We have experience in the design and implementation of compliance and reporting systems so please contact us if you would like to discuss or need any assistance – Contact Us
The modern legislative approach to foreign corrupt practices/anti-bribery was originally motivated by an understanding of the damage that corrupt practices do in corporate and more generally, community environments. Similarly, the modern slavery legislation reflects an understanding of the damage to people and to communities that result from slavery practices. Companies are increasingly considering their own operations and are being looked at not just as corporate or economic players but as parts of a social fabric. Increasingly, the environments in which companies are operating will expose them to scrutiny in these “social conscience” areas. We presume that the Act will provide impetus to reporting entities to consider modern slavery risks and how they can be removed or at least diminished.
Still to come.....
In our blog next week, we will discuss some key questions directors of reporting companies must consider.
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.