On 1 January 2019, the Modern Slavery Act 2018 (the Act) commenced, which means that this year is the first year that reporting requirements apply. The Act is one of the first attempts in the world to create national legislation that defines “modern slavery” and, unlike similar legislation from other countries, the reporting criteria under the Act are mandatory.
The Act defines modern slavery as including eight types of serious exploitations: trafficking in persons, slavery, servitude, forced marriage, forced labour, debt bondage, the worst forms of child labour, and deceptive recruiting for labour or services.
The Act established Australia’s national Modern Slavery Reporting Requirement (the Reporting Requirement) and certain large entities are now required to publish annual Modern Slavery Statements (the Statements). The Reporting Requirement aims to support Australian businesses in identifying and addressing modern slavery risks and maintaining responsible and transparent supply chains.
Do I need to prepare a Statement?
Entities need to report under the Act if they meet the following criteria:
- Has a consolidated revenue of at least AU$100 million over its twelve month reporting period; and
- Is an Australian entity or a foreign entity carrying on business in Australia at any time in that twelve month reporting period.
Entities that do not meet the above criteria can report on a voluntary basis. However, you should also bear in mind that even if you do not have to report, you may have customers or suppliers who do have to report (and who will want to know as part of that reporting, what you are doing about Modern Slavery). That is, after all, the key thing about supply chains – they have links, and it is not just the biggest links which need to be transparent.
When is my Statement due?
The Act requires entities to prepare annual Statements covering its twelve months’ reporting period. The reporting period means the Australian financial year or other annual accounting period used by the entity. The Statement is due six months after the end of the entity’s reporting period.
The first reporting period for an entity operating on an Australian financial year will be 1 July 2019 to 30 June 2020 while the first reporting period for an entity operating on a calendar year will be 1 January 2020 to 31 December 2020.
How do I prepare a Statement?
The Act sets out the seven mandatory criteria required under every Statement:
- Identify the reporting entity;
- Describe the reporting entity’s structure, operations and supply chains;
- Describe the risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities it owns or controls;
- Describe the actions taken by the reporting entity and any entities it owns or controls to assess and address these risks, including due diligence and remediation processes;
- Describe how the reporting entity assesses the effectiveness of these actions;
- Describe the process of consultation with any entities the reporting entity owns or controls (a joint statement must also describe consultation with the entity giving the statement); and
- Any other relevant information.
The Statement will be a public document and it must meet specific requirements for approval and publication. Subject to additional requirements, related entities can also prepare a joint statement.
The Act does not impose penalties on reporting entities for failing to lodge a Statement or for lodging an incomplete Statement but the Minister for Home Affairs has the ability to identify non-compliant entities. Being identified as non-complaint could, in turn, cause reputational damage to a non-compliant company.
We recommend that you consider whether your entity is required to prepare a Modern Slavery Statement or wishes to report voluntarily under the Act. We also recommend that you consider providing appropriate training to deal with the new legislation, particularly for managers and supervisors who may be exposed to modern slavery in your supply chain.
Like most compliance tasks, we expect that reporting will be easier to do if it is integrated with existing compliance activities. For example, you should already be carrying out regular audits of the way that work is performed in your organisation (both by your organisation’s workers, and by workers whose work is affected by the organisation’s business) so that the officers of the organisation can comply with the due diligence obligations under work health and safety legislation. Although Modern Slavery reporting extends to supply chains, which will in many cases be outside the reach of Australian work health and safety obligations, the same assessment and audit tools for work health and safety purposes are likely to be useful in relation to Modern Slavery reporting.
We can assist you to understand your obligations under the new Modern Slavery Act and draft Modern Slavery Statements. Equally, if you said “huh?” when we mentioned work health and safety duty and its obligations, we need to talk.