Modern slavery obligations: a Commonwealth and NSW perspective

Background

On 1 January 2019, the Modern Slavery Act 2018 (Cth) (“Commonwealth Act”) came into effect and established a national modern slavery reporting requirement. However, this Commonwealth Act had two key inconsistencies in the reporting requirements with the Modern Slavery Act 2018 (NSW) (“NSW Act”) as follows:

  • the NSW Act reporting threshold was initially $50 million annual revenue, whereas the Commonwealth Act threshold was $100 million annual revenue; and
  • the NSW Act includes provisions for fines of up to $1,100,000.00 for failing to publish a statement or providing false or misleading information while the Commonwealth Act does not include financial penalties.

The NSW Act was originally passed in June 2018, however, it did not come into force until 1 January 2022 to allow stakeholders an opportunity to interpret the legislation and provide enough time to establish the Anti-Slavery Commissioner in NSW. Once the Commonwealth Act came into effect in January 2019, the Modern Slavery Amendment Act 2021 (NSW) was passed in November 2021 and came into effect on 1 January 2022, which made significant changes to the NSW Act. The changes to the NSW Act were designed to remove the regulatory burden on the NSW private sector under two inconsistent schemes and harmonise the reporting regime under the schemes, by removing the reporting requirement for businesses earning between $50-100 million and removing the financial penalties for failing to comply.

Key Features and Functions of the Commonwealth Act

The key features of the Commonwealth Act include the following:

  • a ‘reporting entity’, meaning an Australian entity which has a consolidated revenue of at least $100 million and carries on business in Australia at any time in that reporting period (s5), is required to provide modern slavery statements annually to the Minister describing the risks of modern slavery in the operations and supply chains of that entity (s11);
  • enabling entities to voluntarily comply with the requirements (s6);
  • there are three (3) different types of ‘modern slavery statements’ under the Act, depending on the nature of the entity. Section 13 outlines the requirements for single reporting entities, s 14 outlines the requirements for joint modern slavery statements and s15 provides for commonwealth modern slavery statements;
  • the modern slavery statements must comply with the mandatory criteria (s16);
  • failure to comply with a requirement under ss 13 or 14 may result in remedial action if no explanation is provided within 28 days (s16A);
  • the Minister is required to keep a Modern Slavery Statements Register that is publicly available for inspection that provides the slavery statements of all the reporting entities (s18); and
  • a report is required to be prepared after 3 years of the commencement date to review the operation and compliance of the Act (s24).

Impact for businesses under the Commonwealth Act

Under sections 13 to 15 of the Commonwealth Act, a reporting entity is required to:

  • provide the Minister with a modern slavery statement for the reporting period to be made publicly accessible on the Modern Slavery Statements Register website; and
  • the Statement must be given within 6 months after the end of the reporting period for the entity, in a manner approved by the Minister.

As this Act came into effect on 1 January 2019, entities should have already started identifying, assessing, and addressing risks of modern slavery to ensure compliance in fulfilling its reporting obligations under the Act.

Key Features and Functions of the NSW Act

The key features of the NSW Act include the following:

  • appointing an Anti-Slavery Commissioner (s6) with a wide range of functions to combat modern slavery (s9) and incidental powers (s17), including the power to refer matters to police and other government agencies (s13);
  • ensuring compliance does not attach personal liability (s16 and s16A);
  • establishing a Modern Slavery Committee to enquire and report on modern slavery matters (s21 and s22);
  • requiring State owned corporations who meet the ‘reporting entity’ definition under the Commonwealth Act to voluntarily comply with the requirements (s25A);
  • State owned corporations are required to publish Commonwealth slavery statements on a publicly accessible website and notify the Commissioner of such publication (s25B); and
  • the Commissioner is required to keep an electronic public register that provides the slavery statements of all the reporting entities (s26).

Some of the functions of the Anti-Slavery Commissioner include:

  • promoting public awareness of modern slavery and its effect on victims (s12(a));
  • providing advice, education and taking preventative measures to modern slavery (s12(b));
  • encouraging reporting of instances of modern slavery (s12(c)), such as through the establishment of a hotline (s12(d));
  • monitoring the reporting concerning risks of modern slavery in the supply chains of government agencies (s9(1)(e)); and
  • monitoring the effectiveness of due diligence and governmental policies and actions in combating modern slavery (s 9(1)(f)).

Impact for businesses under the NSW Act

Under s25B of the NSW Act, any State owned corporation who has a consolidated annual revenue of over $100 million is required to:

  • prepare and publish modern slavery statements on a publicly accessible website kept by the corporation; and
  • give the Commissioner written notice that the statement has been published.

As this Act came into effect on 1 January 2022, State owned corporations should have already started identifying, assessing and addressing risks of modern slavery to ensure compliance in fulfilling its reporting obligations. Whilst non-compliance does not attach any criminal or civil liability (s16 and s16A), the Commissioner is required to keep an electronic form that identifies any State owned corporation that has failed to provide the Minister with a modern slavery statement for a reporting period (s26(1)(c1)).

Consequence for non-compliance under the Commonwealth Act

Whilst non-compliance does not attach any criminal or civil liability (s25(2)), the Minister is required to keep an electronic form that identifies any reporting entity that has failed to provide the Minister with a modern slavery statement. Additionally, the Minister may publish the following information on the register at their discretion:

  • the identity/identities of the entity/entities (s16A(4)(a), (b));
  • the date the request was given and any extension given (s16A(4)(c));
  • the details of the explanation or remedial action requested (s16A(4)(d)); and
  • the reasons why the Minister is satisfied that the entity has failed to comply with the request (s16A(4)(e)).

Although there are no direct financial penalties for non-compliance, failure to comply with the modern slavery statement requirement may result in the above information being published, which could have commercial and reputational consequences for your business.

What this means for your organisation

Many organisations may not have the subject matter expertise or experience to fully audit their practices internally in preparing this statement and the recent investigations demonstrate that many practices have not been effective in mitigating risks in relation to modern slavery. Given the commercial risk of “naming and shaming” through the Minister’s public register (under the Commonwealth regime) and the same risks in the Commissioner’s public register (under the NSW regime), both State owned corporations and national reporting entities should familiarise themselves with the legislative requirements and seek legal advice to help ensure that they comply with these new requirements. Entities who have good reporting practices are likely to enjoy direct and indirect commercial benefits for their compliance with modern slavery practices.

The contents of this publication do not constitute legal advice and are for general information purposes only. You should seek legal advice regarding your particular circumstances.