Australia: Modern slavery law in Australia
The following is an extract from the updated Doing Business in Australia publication by Maddocks. You can download the publication at https://www.maddocks.com.au/insights/doing-business-in-australia.
Unfortunately, modern slavery occurs in every sector and industry. There are an estimated 40 million victims of modern slavery around the world.
The Modern Slavery Act 2018 (Cth) (Modern Slavery Act) requires large organisations (those with a consolidated revenue of at least $100 million, including a foreign entity that is 'carrying on a business in Australia') and the Commonwealth to submit a modern slavery statement. The modern slavery statement must be approved by the principal governing body of the reporting entity and signed by a responsible member of the reporting entity. For companies this generally means the statement must be approved by the board and signed by a director of the board.
For nearly a decade, other jurisdictions, such as the United Kingdom, have been adopting legislation to address the modern slavery challenge. This legislation often has required businesses to report on the steps that they are taking to identify and mitigate modern slavery and human trafficking risks in their own operations and in their supply chains. This has been part of a broader trend in the field of business and human rights over the past decade — namely, the proliferation of new human rights standards for businesses, and a shift away from voluntary “best practice” guidelines towards mandatory legal obligations
The modern slavery statement must cover the following 7 criteria:
- Identity of reporting entity
- Reporting entity’s structure, operations and supply chains
- Risks of modern slavery practices in the operations and supply chains of the reporting entity and any controlled entities.
- A description of the actions taken by the reporting entity to assess and address these risks including due diligence and remediation processes.
- A description of how the reporting entity will assess the effectiveness of its actions.
- A description of the process of consultation with any entities that the reporting entity owns or controls.
- Any other relevant information.
The Department of Home Affairs has released detailed, non-binding guidelines (Commonwealth Guidelines) on how to address each mandatory criterion. We know from advising clients in this space there is a significant body of work to address the 7 mandatory criteria in a manner consistent with the Commonwealth Guidelines.
At its core, the Modern Slavery Act is a reporting regime. It does not make acts of modern slavery themselves a criminal offence (this is covered under different legislative regimes).
Instead of having financial penalties under the Modern Slavery Act for non-compliance, the Australian Government has opted for a public register to create a reputational ‘race to the top’ (or as some might say a ‘name and shame’ approach) to drive compliance by reporting entities.
It is clear this objective remains front and centre for the Australian Government: “This is the world’s first, government-run website of its kind, and will provide Australian consumers, investors and civil society with an unprecedented window into the global supply chains that produce the goods and services we use every day,” Assistant Minister for Customs, Community Safety and Multicultural Affairs, the Hon Jason Wood MP said on the release of the Modern Slavery Register.
While the laws are only new, it seems that the Modern Slavery Register is having the desired effect, with a number of reporting entities publishing impressive, detailed statements setting the bar high for the “best practice” in Australia.
The Government has made clear that the Modern Slavery Laws are a continuous improvement regime. Reporting entities are only able to report on the steps they have taken in the relevant reporting year. This means reporting entities generally need a clear compliance roadmap of steps to be taking in order to be able to address the mandatory criteria under the Modern Slavery Act.
The Modern Slavery Laws do not carry a financial penalty. Instead, the primary drivers for compliance are investor pressure, reputational costs and benefits.
Under the Modern Slavery Act, reporting entities are required to submit their first Modern Slavery Statements within six months after the first financial year that commenced after 1 January 2019, and for each subsequent year, within six months after the relevant financial year.
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