On 29 November 2018, in a major milestone for Australia, the Australian Modern Slavery Act passed all stages of the Australian Parliament, and is now waiting Royal Assent. The legislation is likely to be in force in early 2019.

Large Australian entities (including companies, partnerships, trusts, universities and charities), those entities carrying on business in Australia (irrespective of where they are incorporated), and Commonwealth corporations and companies, with annual consolidated revenue exceeding $100 million are now required to disclose how their operations and supply chain may contribute to modern slavery and explain what they are doing to address those risks.

Key features of the Modern Slavery regime

Modern Slavery Statement: Reporting entities will need to prepare an annual Modern Slavery Statement addressing mandatory criteria, including:

  • the entity’s structure, operations and supply chains;
  • the potential modern slavery risks in the entity’s operations and supply chains;
  • actions the entity has taken to assess and address those risks, including due diligence and remediation processes; and
  • how the entity assesses the effectiveness of those actions.

Senior management accountability: The legislation makes senior management accountable for the organisation's modern slavery risks by requiring Modern Slavery Statements to be approved at Board level (or equivalent) and signed by a director of the entity (or equivalent).

Public register of Modern Slavery Statements: As a world-first leading initiative, the Government will make all Modern Slavery Statements available online through a central, transparent, Government-run register, to ensure the community can easily access the statements.

Modern Slavery Business Engagement Unit: The Government has committed $3.6 million through the 2018 budget to establish a dedicated Modern Slavery Business Engagement Unit within the Department of Home Affairs to advise and support business.

Failure to comply: Organisations that fail to take action will be penalised by the market and consumers and stand to severely damage their reputations. In addition, if the Minister is reasonably satisfied that an entity has failed to comply with the requirement to provide a Modern Slavery Statement, the Minister may give a written request to the organisation to provide an explanation for its failure to comply (within 28 days) and/ or undertake action to remedy it. If the organisation fails to comply with the request, then the Minister may publish information about the failure to comply on the register or elsewhere, including the identity of the organisation.

Minister’s annual report highlighting compliance and best practice: The Minister must prepare an annual report about the implementation of the Act, including an overview of compliance by reporting entities and identifying best practice modern slavery reporting during the year.

Three year review: The legislation will be reviewed by the Minister after three years from when it commences.

Government Modern Slavery Guide: the Department of Home Affairs is part-way through consultations with business and civil society to assist in preparing a detailed guide for the complying with the reporting requirements imposed by the legislation. The guide is designed to be practical and assist government and business to navigate through the legislation and will be finalised before the reporting requirement comes into force.

What you need to do know to comply with your Modern Slavery reporting requirements

The precise date for first reporting will depend upon the proclamation date. However, the first relevant period for reporting will relate to FY19. Reporting entities will therefore be obliged to release their first Modern Slavery Statements between January to December 2020 (depending on each company’s annual reporting period).

The first key action for reporting entities is to ensure that you actually know now what your supply chains contain; this includes mapping supply chains, risk assessments and gap analysis. Given the complexity of modern supply chains, in our experience this is often a complicated and time-consuming task which must be done in advance of the reporting period. We're advising clients to do this now so that when the reporting period begins they will have a clear picture of what they're reporting on.

Along with that, you should also be looking at ways you can generally reduce the risk of modern slavery in your business and supply chains. This can include conducting comprehensive due diligence in any business acquisitions, but also policies, compliance manuals and procedures, compliance programs and training, proper drafting of supplier contracts, and supply chain and contractor management.