More information released about Modern Slavery reporting requirement

By Scott Crabb, Lauree Coci and Ebony Creek

24 May 2018

Entities with $100 million annual consolidated revenue will be caught by the reporting requirement from the end of 2018. This also includes foreign entities operating within Australia.

After first signalling its intention to combat modern slavery in August 2017, the Federal Government undertook a comprehensive national consultation process to develop a Modern Slavery Act. A key outcome is the creation of a modern slavery reporting requirement which aims to support and assist Australian businesses to identify instances of modern slavery in their supply chains, while increasing the information available to consumers and investors. We now have more information about the shape of the final form of the reporting requirement, which will be included in the Bill to be introduced in the middle of 2018.

Given that approximately 3,000 large corporations will be captured by the reporting requirement in the Modern Slavery Act, which is planned to commence by the end of the year, it is now time for entities operating in Australia to become familiar with, and start to implement modern slavery policies and procedures to address, the Reporting Requirement.

What is the reporting requirement?

Each reporting entity will be required to publish an annual Modern Slavery Statement which details the steps undertaken by the entity to address modern slavery practices within its supply chains and operations.

The Assistant Minister for Home Affairs, Alex Hawke MP, expects that the implementation of the Modern Slavery Act will reduce modern slavery risks in supply chains by ensuring that Australian businesses are held accountable for their businesses.

Who will be affected by the reporting requirement?

Entities with $100 million annual consolidated revenue will be caught by the reporting requirement. This also includes foreign entities operating within Australia.

The Federal Government announced that the Australian Government will also be required to publish an annual consolidated statement covering Commonwealth procurement. Annual consolidated statements will be published by Commonwealth corporations and Commonwealth companies not covered by the Commonwealth Procurement rules.

Information to be reported

The Federal Government has indicated that the definition of "Modern Slavery" will be broad enough to cover all modern slavery practices criminalised under Division 270 and 271 of the Criminal Code 1995 (Cth), including human trafficking, slavery and slavery-like practices (servitude), forced labour and forced marriage.

In order to capture all relevant information, reporting entities will be required to include information that meets the following four mandatory reporting criteria to be set out in the Modern Slavery Act:

  • the entity's structure, operations and supply chains;
  • potential modern slavery risks affecting the entity;
  • actions taken by the entity in addressing these risks; and
  • how these actions have mitigated the relevant risks.

Reporting entities must publish Annual Modern Slavery Statements within six months from the end of the financial year; these will be easily accessible to the public through a Government-run, public central repository.

Business Engagement Unit

The Department of Home Affairs will establish a dedicated Anti-Slavery Business Engagement Unit to provide expert support and advice to reporting entities on modern slavery risks. The Unit will be responsible for:

  • initiatives aimed at maximising the impact of the Modern Slavery Act, including the promotion of best practice and undertaking awareness raising and training; and
  • the administration of the public central repository of all published Modern Slavery Statements.

The Federal Government will also publish clear and comprehensive guidance on the reporting requirement and obligations of reporting entities, which will be drafted in consultation with the key stakeholders. To ensure the effectiveness of the Modern Slavery Act, the Federal Government has committed to a review of the reporting requirement three years after its commencement.

The Modern Slavery timetable for Australian businesses

We expect the Government to introduce the Bill to enact the Modern Slavery regime into Parliament by the middle of the year, and the Act itself to commence by the end of 2018. Although the fine detail of the new regime will only be available when the Bill is released, there are enough details available for Australian businesses which might be reporting entities to plan for its introduction, including assessing their own risk and reviewing their long-term supply contracts, so that they are ready to report.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.