Do modern slavery reporting obligations apply to you? Now's the time to act!

The Australian Anti-Slavery Commissioner has issued a letter to law firms, advisory firms and industry bodies seeking support in ensuring that clients and members of associations are meeting their reporting obligations under the Modern Slavery Act 2018 (Cth). This is in accordance with the Commissioner's function to promote compliance with the Act, and in light of foreshadowed developments in the compliance landscape.

Modern slavery is an umbrella term covering various forms of serious exploitation, including forced labour, debt bondage, forced marriage, human trafficking and the worst forms of child labour. The Modern Slavery Act reporting requirement came into force on 1 January 2019, with the aim of supporting Australian businesses to identify and address their modern slavery risks and maintain responsible and transparent supply chains.

"Reporting entities" in relation to a reporting period (ie. the entity's financial year) are required to submit a modern slavery statement for publication to the Attorney General's Department's Modern Slavery Statements Register within six months of the end of that reporting period. The modern slavery statement must:

• address seven mandatory criteria;

• be approved by the entity's principal governing body (such as a corporation's board); and

• be signed by a responsible member of that body (such as a director of the board).

While more than 12,500 modern slavery statements have been provided to the Attorney-General's Department since the reporting requirements came into force, the Commissioner expressed concerns that a number of entities are not providing modern slavery statements where required. The Commissioner noted that estimates of the number of entities that must report annually under the Modern Slavery Act but are not vary from a few hundred to more than a thousand.

Consequences of failure to report on modern slavery where required

There are currently no financial penalties for failure to comply with the reporting requirements in the Modern Slavery Act, with the Act designed to promote compliance through public scrutiny instead. However, this looks likely to change in the near future.

Currently, if the Attorney-General's Department is reasonably satisfied that an entity has failed to lodge a modern slavery statement where required, it may give a written request for the entity to provide an explanation for the failure to comply and/or undertake specified remedial action within a specified period of at least 28 days (which may be extended). If the entity fails to comply with that written request, details of the entity's non-compliance may be published on the Modern Slavery Statements Register or elsewhere, although this power has not been exercised to date. Aside from this, human rights groups and other civil society organisations have been known to scrutinise compliance with the Modern Slavery Act, including by publishing reports that name and shame organisations with modern slavery statements that are missing from the Register.

In recent developments, the Commissioner has flagged that Attorney-General's Department is now progressing work to enhance its data matching capabilities to detect entities that have failed to comply with the reporting requirements. The Commissioner foreshadowed that this will inform targeted actions to address non-compliance with modern slavery statement lodgement obligations.

Further, a statutory review of the Modern Slavery Act has recommended that penalties be introduced for a reporting entity failing, without reasonable excuse, to provide a modern slavery statement for that entity for a reporting period. In its response to the review, the Government agreed in principle with this recommendation, and the Attorney-General's Department has recently collected public consultation submissions on the review recommendations, including the introduction of penalties for specific non-compliance.

Who is required to report under the Modern Slavery Act?

An entity is a "reporting entity" in relation to a reporting period if it has a consolidated revenue of at least $100 million for that reporting period, and:

• is an Australian entity at any time in that reporting period; or

• carries on business in Australia (within the meaning of the Corporations Act) at any time in that reporting period.

Reporting entities also include:

• the Commonwealth;

• a corporate Commonwealth entity, or Commonwealth company, within the meaning of the Public Governance, Performance and Accountability Act 2013 (Cth), which has a consolidated revenue of at least $100 million for the reporting period; and

• an entity which has volunteered to comply with the requirements of the Modern Slavery Act for a reporting period.

Notably, an entity's status as a reporting entity is assessed in relation to a reporting period. This means that an entity that has not been required to report in one reporting period may nonetheless find itself subject to the reporting requirements in another reporting period, particularly if its consolidated revenue rises beyond the $100 million threshold, or if it begins to carry on business in Australia.