Modern Slavery Legislation: Commonwealth and NSW
On 29 November 2018 the Federal Parliament passed the Modern Slavery Act 2018 (“the Commonwealth Act”), which requires “entities” with annual turnover of over $100 million “to report on the risks of modern slavery in their operations and supply chains and actions” that the entity has taken to address “those risks, and for related purposes”.
The Commonwealth Act follows the similar legislation passed by the New South Wales parliament last year (which we covered in the April 2018 edition), which made NSW the first Australian jurisdiction to enact such legislation.
The Explanatory Memorandum that accompanied the Commonwealth Act characterises “modern slavery practices” as “major violations of human rights and serious crimes. Modern slavery practices include trafficking in persons, slavery, slavery-like practices (including forced labour and forced marriage) and the worst forms of child labour (including using children for prostitution or in hazardous work)”.
In his Second Reading Speech, the Home Affairs Minister Alex Hawke, noted that “4,000 people in Australia [are] estimated to be enduring slavery or slave-like conditions.”
The Commonwealth Act
As set out in the Explanatory Memorandum, the Commonwealth Act has the effect of “establish[ing] a Modern Slavery Requirement” which “will require” entities that carry on business in Australia with a minimum annual consolidated revenue of $100 million “to make annual public reports ([known as] Modern Slavery Statements) on their actions to address modern slavery risks in their operations and supply chains”.
The “primary objective” of the legislation is “to assist the business community in Australia to take proactive and effective actions to address modern slavery”.
Section 16 of the Commonwealth Act mandates that Modern Slavery Statements must address a set criteria, which includes the following:
(b) describe the structure, operations and supply chains of the reporting entity; and
(c) describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls; and
(d) describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes;
The Commonwealth regime differs from the NSW regime in a number of humble ways, including the Commonwealth Act does not provide for either an Anti- Slavery Commissioner or penalties for non, or false, reporting.
Under the Commonwealth Act, most entities will need to submit their first Modern Slavery Statements between January and December 2020. As entities are obliged to submit their Statement no later than 6 months before the end of their financial year, the exact date at which an entity’s first statement is due will depend upon the financial year adopted by the entity.
Entities may report in their own right or where they are part of a larger group, the group will be required to a joint modern slavery statement.
How will this affect you?
As a result of the NSW and Commonwealth Acts, entities may now be asked to enter into contracts which contain a warranty to the effect that their organisation, as well as their employees and agents are not in breach, and will continue to not breach, both Acts.
In addition to searching the public registers when dealing with third party entities, it is prudent to ascertain whether the third party entity is required to report and if so, to include this type of warranty in your contracts.