News and Insights

MODERN ANTI-SLAVERY LEGISLATION

According to the International Labour Organization, an estimated 24.9 million people were victims of modern slavery in 2016.  These are people throughout the entire world who were being forced to work against their will under threat or coercion as domestic workers, on construction sites, in clandestine factories, on farms and fishing boats.

In 2019 Australia joined a number of countries such as the United Kingdom and France in implementing laws requiring businesses of a certain size to publicly state the steps they were taking to keep their supply chains free from the worst forms of modern-day slavery.

The Modern Slavery Act 2018 (“the Act”) came into force on 1 January 2019.

The Commonwealth Government recently announced it would review the effectiveness of the Act after its first three years of operation[1].  Among the government’s stated intentions were the appointment of an Anti-Slavery Commissioner and the introduction of penalties for non-compliance with the Act.

What is meant by Modern Slavery? 

Generally, it is taken to mean any situation of exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception.  The Act specifically defines Modern Slavery as any conduct which constitutes an offence under Divisions 270 or 271 of the Criminal Code and/or trafficking in persons as defined in specific UN Conventions and Protocols and/or child labour as defined in the relevant International Labour Organization Convention.

What does the Act mandate?  

Of relevance to Australian businesses, the Act established a National Modern Slavery Reporting Requirement.

Under that Reporting Requirement, Australian businesses with annual consolidated revenue of at least $100M are mandated to prepare annual Modern Slavery Statements.  These annual Statements require such businesses (known as “reporting entities”) to outline:

• their structure, operations and supply chains;
• the risks of modern slavery practices in their operations and supply chains and the operations and supply chains of any other entity they own or control;
• the actions taken by the business and any entity that it owns or controls, to assess and address those risks;
• how the business assesses the effectiveness of such actions;
• the process of consultation with any entities it owns or controls or is issuing a joint modern slavery statement with; and
• any other information that the business considers relevant.

The Australian Government publishes Modern Slavery Statements on an online central register.

The biggest (and perhaps, sole) risk many businesses face with regards to Modern Slavery relates to their supply chains.

In fact, the Australian Border Force in its first round of reporting identified supply chain risks as an area which needed improvement.  In this regard what businesses would specifically need to do is:

• Identify all suppliers in their supply chain.
• Identify relevant risk factors.
• Attribute risk factors to each supplier.
• Allocate a risk rating to each supplier.
• Cease using suppliers whose risk rating was considered too high.

What if a business does not meet the revenue threshold of $100M?

Businesses which do not meet the revenue threshold for mandatory reporting may still report voluntarily.

Should a business voluntarily report?

The downside is that, once a business reports, it needs to ensure that it is compliant with the requirements of the Act.

Failure to comply with those requirements currently does not result in any criminal or civil penalties but the Commonwealth Government has at its disposal a reputational deterrent – the “naming and shaming” of the relevant business in its reporting. As noted above, however, the government is now expressly committed to introducing penalties for non-compliance.

In the end, the answer to the above question will depend on business practicalities – balancing cost (including internal administrative resources diverted from core business needs or the engagement of external consultants) with the benefits derived from an enhanced corporate reputation and, more importantly, ethical considerations – being a good corporate citizen.

Can a business not voluntarily report but still have a Modern Slavery policy in place?

There is nothing to stop a business which is not mandated to report to still have in place a Modern Slavery Policy.

That would seem a sensible path for a business intent on enhancing its reputation as a “good corporate citizen” but not wishing to saddle itself with the onerous efforts and costs associated with annual reporting or (in the not too distant future) with the risk of failing to comply with the Act and potentially face penalties.

[1] https://ministers.ag.gov.au/media-centre/review-commonwealth-modern-slavery-act-2018-22-08-2022