How Will Modern Slavery Legislation Affect My Business?

The New South Wales Parliament has passed legislation which places obligations on organisations to take steps to prevent modern forms of slavery occurring in their supply chains. This is an important update for larger employers. Similarly, a national Modern Slavery Bill has been introduced and read in the lower house of the Federal Parliament to place similar obligations on organisations nationally. This article will explain this legislation and what it means for larger businesses. 

Why is the Government Introducing This Legislation? 

In a media release, the Assistant Minister for Home Affairs noted that the United Nations estimates that there are 25 million victims of forced labour exploited in global supply chains, including in the agriculture, manufacturing and construction industries.

Furthermore, modern slavery practices encompass more than forced labour, but also other practices such as wage exploitation and human trafficking. Accordingly, federal and state governments are taking steps to ensure companies help prevent modern slavery occurring in their supply chains.

The Commonwealth Modern Slavery Bill  

On 15 February 2017, the Attorney-General asked the Joint Standing Committee on Foreign Affairs, Defence and Trade to inquire into establishing a Modern Slavery Act. Ultimately, the Committee recommended the Australian Government consider supporting and implementing a Commonwealth Modern Slavery Act.

Background

Prior to the commissioning of this enquiry, the United Kingdom had introduced the Modern Slavery Act 2015. This legislation promoted an Australian enquiry and a report entitled: ‘Trading Lives: Modern Day Human Trafficking’. Consequently, the Trading Lives report produced sufficient concern around these human rights issues to warrant the further enquiry into a possible Modern Slavery Act.

This subsequent inquiry on the establishment of a Modern Slavery Act considered, among other things:

• the nature and extent of modern slavery both in Australian and globally. This includes:
  • slavery;
  • forced labour;
  • wage exploitation;
  • involuntary servitude;
  • debt bondage;
  • human trafficking;
  • forced marriage; and
  • other slavery-like exploitation;
• the prevalence of modern forms of slavery in the domestic and global supply chains of companies operating in Australia; and
• best practice to prevent modern slavery in domestic and global supply chains, with a view to strengthening Australian legislation.

Final Report

The final report of the inquiry, entitled ‘Hidden in Plain Sight’ and published in December 2017, ultimately found that Australian organisations and supply chains were vulnerable to modern slavery practices. It concluded that a Modern Slavery Act should be enacted to establish:

• an independent Anti-Slavery Commissioner;
• mandatory supply chain reporting requirements; and
• various measures to support victims of modern slavery and improve the criminal justice responses to such practices.

Following these recommendations, the Modern Slavery Bill 2018 was drafted and first read in Federal Parliament on 28 June 2018. The Bill states that all Australian organisations with an annual turnover of $100 million or more will need to prepare and submit a ‘modern slavery statement’ to the Minister for Home Affairs public register every financial year. Notably, the Bill’s requirements are almost identical to those contained in the NSW legislation discussed below.

However, it is anticipated that changes may be made to the Commonwealth Bill, in part because companies who breach the Act do not face any penalties.

The NSW Legislation

Likewise, at the State level, the Governor of New South Wales assented the Modern Slavery Act 2018 (NSW) on 27 June 2018. The Act is not yet in force and will commence at a future time.

The NSW legislation will apply to organisations which:

• have employees in NSW;
• supply goods or services for profit; and
• have an annual turnover of $50 million or more.

Once in force, the NSW legislation will require organisations to prepare a modern slavery statement each financial year. The statement must detail the steps taken  to ensure that the company’s supply chains are not using modern slavery. Although the requirements can be changed from time to time, the statements will generally need to identify:

1. the organisation’s structure, its business and its supply chains;
2. its due diligence processes in relation to modern slavery practices in its business and supply chains;
3. the parts of its business and supply chains where there is a risk of modern slavery taking place. In addition, the steps it has taken to assess and manage that risk; and
4. the training about modern slavery available to its employees.

Penalties

Overall, a failure to prepare the statement complying with the regulations carries a maximum penalty of $1.1 million. In addition, the same penalty applies to a person who provides false or misleading information.

Furthermore, NSW legislation will not apply to organisations caught by corresponding State, Territory or Commonwealth legislation. As discussed above, the Commonwealth Modern Slavery Bill currently applies to companies with a turnover of more than $100 million. Therefore, if a company has $100 million or more annual turnover, the Commonwealth Bill will apply to them rather than the NSW legislation.

This means organisations with at least $100 million annual turnover won’t face any consequences due to the lack of penalties under the Commonwealth Bill. However, companies with employees in NSW and an annual turnover between $50 million and $100 million will face consequences as the NSW legislation contains penalties for companies who breach the Act.

Key Takeaways

Overall, organisations with annual turnover of $50 million or more (or on the verge of this threshold) should start taking steps to ensure they will be compliant with the State and Federal modern slavery legislation when it comes into force.

These key steps should involve:

• a review of the organisation’s supply chains;
• identifying where there is potential for modern forms of slavery practices to occur; and
• staying up to date with the status of the legislation.

If you have any questions, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.