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Modern Slavery Act 2018 (Cth)

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Paper | The Modern Slavery Act Requirements for Business

Download Full Document October 2019

1. ​Are you ready to respond to your obligations under the Modern Slavery Act 2018 (Cth)?

The actions that you take in the next few months will form the foundation of your first Modern Slavery Statement (“Statement”). The more complex your operations and supply chains, the more important it is for you to get started as soon as practicable. We are able to assist you with developing a practical, commercial and rights-based approach to managing your modern slavery risk.

The Department of Home Affairs has released the Guidance for Reporting Entities (“Guidelines”) to assist businesses and organisations in complying with the requirements of the Modern Slavery Act 2018 (Cth) (“Act”).

2. What is Modern Slavery?

There is no globally agreed definition on “modern slavery”. The term is typically used to describe situations where coercion, threats or deception are used to exploit victims and undermine or deprive them of their freedom.

The Act is the first national legislation in the world to define modern slavery as including eight types of serious exploration: trafficking in persons, slavery, servitude, forced marriage, forced labour, debt bondage, the worst forms of child labour and deceptive recruiting for labour or services.

3. What are the requirements of the Act?

The Act establishes a national modern slavery reporting requirement for “reporting entities”. Reporting entities are entities based, or operating, in Australia, that meet the determined financial threshold ($100 million consolidated annual revenue). They must publish an annual Statement describing their actions to assess and address modern slavery risks in their (as well as entities that they own and control) operations and supply chains.

Whilst the Act does not define “operations” of a reporting entity, the Explanatory Memorandum notes that operations is intended to cover any activity undertaken by the entity to pursue its business objectives and strategy. The Guidelines further clarifies that operations includes any activity undertaken by the entity to pursue its business objectives and strategy in Australia or overseas.

“Supply chain” is also not defined in the Act. The Explanatory Memorandum makes it clear that the term supply chain is not restricted to tier one or direct suppliers. The Guidelines describe supply chain as the products and services (including labour) that contribute to the entity’s own products and services. This includes products and services sourced in Australia or overseas and extend beyond direct suppliers.

The Statement must be approved by the entity’s board and signed by a director, and will be recorded on a register with the Department of Home Affairs, accessible by the public. The Statement is intended to act as a transparency mechanism which obliges reporting entities to critically assess their modern slavery risks and improve their response over time as the issues matures. By improving transparency, businesses will increase their awareness of modern slavery risks, reduce modern slavery risks in Australian goods and services and drive a business “race to the top” to improve workplace practices.

4. When do you need to publish your Statement?

Reporting entities must report in respect of the first full reporting period following commencement of the Act and must make a report within six months of that period ending. This means - first reporting period for reporting entities with a 30 June financial year end will be 1 July 2019 to 30 June 2020 with a Statement due no later than 31 December 2020.

The Statement can be submitted by a single reporting entity or by a corporate group of entities in the form of a joint statement. There are certain governance requirements that apply in relation to joint statements.

5. What information must be included in the Statement?

Under the Act, the following mandatory criteria must be included in the Statement:

  • the reporting entity’s structure, operations and supply chains.
  • modern slavery risks in the reporting entity’s operations and supply chains (including those of the entities that the reporting entity owns and controls).
  • action taken by the reporting entity (including by the entities that the reporting entity owns and controls) to assess and address modern slavery risks including due diligence and remediation processes.
  • how the reporting entity assesses the effectiveness of those actions implemented.
  • the process of consultation with any entities that the reporting entity owns and controls in preparing the Statement.

6. What are the penalties for non-compliance with the Modern Slavery Act?

There are no penalties prescribed in the Act in respect of non-compliance. However, non-compliance is likely to have reputational repercussions for the reporting entity. The Act grants the Minister power to require the entity to explain reasons for its non-compliance and to undertake specified remedial action. The Minister may also publish information about entities that fall to comply with such a request including by naming the entity (or the group of entities), the date and details of the requests made and the reasons why the Minister is satisfied that the entity has failed to comply.

7. How we can assist you

Our approach to compliance with the Act starts with advising you on your legal obligations under the Act and then providing you with assistance in implementing policies and procedures and reporting structures to ensure compliance.

Our services include:

Governance

  • ​Provide legal advice on the application of the Act across your group.
  • Develop new policies or enhance existing policies to comply with the Act.
  • Assist with the risk assessment methodology.

Risk Assessment

  • Review the integration of your modern slavery assessment approach into broader existing risk frameworks.

Due Diligence

  • Conduct assessment of whether your supplier/procurement contracts are compliant with the Act.
  • Conduct due diligence on your supplier/procurement contracts.
  • Assist with the development of audit and compliance reporting requirements on your supplier/procurement contracts.

Reme​diation

  • Advice on the implementation of modern slavery practice considerations in whistleblowing avenues and corporate culture.
  • Advice on dispute resolution – if required under legal privilege.

Training

  • Provide on-site training on modern slavery to your staff and where appropriate to your supply chains.

Monitoring & R​eporting

  • Advice on the development of key performance indicators and reporting frameworks to monitor ongoing performance.
  • Draft the Statement including conducting a comparative review of your intentions versus that of your peers within the industry.
  • Assist with the engagement of your stakeholders to develop an understanding of their expectations of the Statement.

Disclaimer

The content of this newsletter is for general information purposes only and should in no way be treated as formal legal advice.