New criminal offence for failure to prevent modern slavery on the way

Modern slavery, which includes slavery, forced labour and debt bondage, is already a crime under the Criminal Code Act 1995 (Cth).

The Federal Government will introduce a new criminal offence targeting companies with an annual consolidated revenue exceeding $100 million that fail to prevent modern slavery in their supply chains.

This represents a significant shift in Australia's modern slavery framework. Currently, the Modern Slavery Act 2018 (Cth) has imposed only reporting obligations on entities meeting the revenue threshold – requiring them to publish annual modern slavery statements addressing seven mandatory criteria. The proposed reforms move beyond disclosure and introduce a substantive due diligence-style obligation with potential criminal consequences for non-compliance.

What does the proposed modern slavery offence involve?

The key features of the proposed offence, as announced, are as follows:

• the offence will apply to companies with an annual consolidated revenue over $100 million;

• it will be a criminal offence where such a company fails to prevent modern slavery in its supply chains; and

• a defence will be available where the company can demonstrate it took "reasonable steps" to prevent modern slavery.

Upcoming consultations will inform the details of the offence and enforcement options, including consideration of a deferred prosecution agreement scheme and remedies for victims.

The Government also intends to introduce civil penalties and associated enforcement powers to address non-compliance with existing reporting obligations under the Act.

Why is this new modern slavery offence significant?

This announcement represents a material expansion of Australia's modern slavery regime. Until now, the primary obligation on reporting entities is the requirement to submit a modern slavery statement to the Modern Slavery Statements Register within six months of the end of each reporting period addressing seven mandatory criteria. Specifically, these criteria require every statement to:

• 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

• provide any other relevant information.

While the Australian Anti-Slavery Commissioner had flagged concerns about non-compliance with reporting obligations and foreshadowed developments in the compliance landscape, the framework has lacked substantive penalties to date, and has relied on a "naming and shaming" deterrent where entities do not comply.

The proposed criminal offence introduces, for the first time, a positive obligation on companies to take steps to prevent modern slavery - not merely to report on the risks of modern slavery in their operations and supply chains, how those risks are assessed and addressed and the effectiveness of actions taken. The "reasonable steps" defence signals that the Government's approach is modelled on due diligence frameworks, requiring companies to demonstrate adequate processes and systems to identify, mitigate and address modern slavery risks in their supply chains.