Legislative update: Modern slavery in supply chains

By Alex Millman and Lindsay Carroll, NRA Legal

On 28 June 2018, the Commonwealth introduced the Modern Slavery Bill, which, if passed, will target the supply chains of large businesses in a bid to quash modern slavery in Australia. A week prior, on 21 June 2018, the New South Wales Government passed the Modern Slavery Act, requiring medium to large NSW businesses to report on incidences of modern slavery in their supply chains.

Modern slavery in supply chains

4300 individuals in Australia are currently estimated to be victims of modern slavery, including slavery, servitude, forced labour, human trafficking, and debt bondage. Of these, forced labour is considered the most prevalent form of modern slavery in Australia, and impacts mainly migrant workers.

Both the NSW and Commonwealth legislation aim to force companies to examine and report on their supply chains, and make reports publicly available, allowing consumers to make informed decisions when making purchases.

Commonwealth legislation

The Commonwealth Modern Slavery BillCommonwealth introduced the Modern Slavery Bill, which, if passed, will target the supply chains of large businesses in a bid to quash modern slavery. Get it!, if passed, will apply to organisations with an annual revenue of over $100 million, and require these organisations to prepare and publish an annual Modern Slavery Statement which reports on the incidence of modern slavery in their supply chain.

The Modern Slavery Statement will be expected to include descriptions of the business structure, operations and supply chain, the risks of modern slavery occurring in their supply chains, the actions taken to address those risks and the effectiveness of those actions.

Although lofty in its ambition, the Bill does not currently include any consequences for organisations which ignore these requirements.

NSW legislation

The NSW Modern Slavery Act requires commercial organisations with an annual turnover of $50 million or more to publish an annual Modern Slavery Statement. Regulations (which are yet to be drafted) will prescribe the content to be included in the statement, and how the statement should be published.

At a minimum, the Act requires that the Statement should be very similar to that stipulated under the Commonwealth proposal.

The Modern Slavery Act imposes penalties of up to $1.1 million will apply for failing to prepare or publish a statement, or for providing false or misleading information in a statement.

What’s the difference?

The most obvious difference between the two pieces of legislation is that the Commonwealth Bill does not contain any penalty provisions, and provides that regulations must not enforce any penalty. In contrast, the NSW Act includes penalties for non-compliance.

Further, the Commonwealth Bill targets companies with an annual revenue over $100 million, whereas the NSW Act targets companies with an annual turnover of $50 million.

As a result of these differences, a situation may arise wherein a company covered by the NSW Act, but not the Commonwealth Bill, will be subject to penalties, whereas a company with a turnover of $100 million or more will not.

The Opposition has flagged that it intends to seek amendments to rectify this, which we anticipate will either be added by Parliament or insisted upon in the Senate. This may become something of a political hot potato, and we will endeavour to keep our members appraised of the situation.

Is my business affected?

At this point in time, the Commonwealth Bill has yet to pass Parliament – it is currently referred to a Senate Committee for consideration and is not due to return to the floor of Parliament until late August. Given that we expect substantial amendments to be made to the coverage of the Act, it is too early to say if any business is affected yet.

You will be required to comply with the NSW Act if:

you operate a business in NSW supplying goods and/services for profit, other than a sole trader; and
you have a total annual turnover of $50 million or more.

What do I need to do if I am affected?

While the NSW Act has not yet commenced and the Commonwealth Bill is yet to pass, there are a number of steps you can take to ensure you comply with its requirements.

These include mapping your supply chains, allocating reporting responsibilities within your organisation, informing suppliers about the new reporting requirements, training employees about modern slavery, and updating your policies and supplier contracts to include modern slavery obligations.

Companies should also be prepared to implement a due diligence process that audits suppliers to evaluate their compliance with the Act.

Once the Act commences, you will be required to prepare a Modern Slavery Statement in line with the Regulations.