The Australian Government's commitment to introduce regulation to tackle modern slavery is now beyond doubt.
On 16 August 2017, the Minister for Justice Michael Keenan announced that the Federal Government proposes to introduce legislation to require large businesses to report annually on their actions to address modern slavery. This announcement reinforces Australia's commitment to having one of the strongest responses to modern slavery in the world.
Following a period of consultation, the Government proposes a targeted regulatory regime under which large businesses will report annually in relation to their actions to address modern slavery against a set of minimum criteria. It also proposes a central repository of the annual statements.
Here, we outline what the reporting requirement is likely to involve and how Australian businesses can prepare for it.
What is modern slavery?
At its broadest, the term 'modern slavery' specifically refers to any situations of exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception.
The Australian Government proposes that for the purpose of the reporting requirement, modern slavery will be defined to incorporate conduct that would constitute a relevant offence under existing human trafficking, slavery and slavery-like offence provisions set out in Divisions 270 and 271 of the Commonwealth Criminal Code.
This will mean modern slavery will encompass slavery, servitude, forced labour, debt bondage, and deceptive recruiting for labour or services.
The Government proposes to exclude practices, such as forced marriage, that they regard as unlikely to be present in business operations and supply chains.
What are the statistics?
As at June 2017, the Walk Free Foundation's Global Slavery Index estimates:
- 45.8 million people globally are subject to some form of modern slavery and collectively approximately US$150 billion per year is generated in the global private economy from forced labour alone;
- 30,435,300 people in Asia-Pacific Region are 'enslaved' (66.4 per cent of all people enslaved); and
- 4,300 people in Australia are enslaved.
Many Australian businesses may be unaware of the risk that they have slavery in their business or supply chains. Statistically, the incidence of modern slavery within Australia appears to be relatively low, but the concern is that the statistics reflect a low level of awareness of the issues, and the actual incidence may be much higher, both domestically and overseas.
Path to an Australian Modern Slavery Act
The Australian Government's proposals have clearly been influenced by international developments, particularly the introduction of the UK's Modern Slavery Act 2015.
The UK Act requires commercial organisations carrying on business in the UK with an annual turnover of GBP36 million or more to publish an annual statement that sets out the steps if any it has taken in the previous financial year to prevent slavery from occurring within in its operations and supply chains.
Any statement needs to be adopted by the board and signed by a director. As a result, this is an issue that requires board level attention. A number Australian businesses that operate in the UK have published statements under their Act.
Following the UK's implementation of this legislation, on 15 February 2017, the Attorney-General, Senator the Hon George Brandis QC, asked The Foreign Affairs and Aid Subcommittee to inquire into and report on establishing a Modern Slavery Act in Australia.
Today's announcement follows the Inquiry's initial hearings and, interestingly, pre-empts the Subcommittee's report.
Key Australian Government proposals
Like the UK Act, the Australian Modern Slavery Act will define the types of entities that will be subject to the reporting requirement. These entities may not be limited to corporations, but may include unincorporated associations and other bodies of persons, partnerships, superannuation funds and approved deposit funds.
The Act will likely apply to all businesses that are headquartered in Australia or have part of their operations in Australia and that meet the applicable revenue threshold. The Australian Government has suggested a revenue threshold that will be no lower than $100 million total annual revenue.
It is proposed that entities report annually within five months after the end of the Australian financial year. Statements will be posted on business websites and a publicly accessible, searchable, central repository will be formed, run by the Australian Government or a third party.
Entities will need to report against a minimum set of criteria in relation to their operations and their supply chains (more on this later). In this way it differs from the UK legislation, which does not prescribe the content of statements (although it does list matters that may be included).
Statements will need to be approved at board level and signed by a director (or equivalent).
The Australian Government has said it will issue detailed guidance and awareness raising materials for businesses to assist in complying with the reporting requirement.
The Australian Government does not propose to apply the reporting requirement to Commonwealth or State and Territory procurement.
No penalty regime will be put in place, but the Australian Government will monitor compliance with the new provisions and will subject the legislation to review three years after its introduction.
What are the key dates?
The Australian Government has announced a consultation period with industry in relation to its proposals.
The Public Consultation paper is available here. Submissions are open until 20 October 2017.
As the broad proposal to establish a Modern Slavery Act in Australia appears to have cross-party support, we anticipate Australian businesses could well see a Modern Slavery Bill tabled in Parliament by early 2018 and legislation enacted shortly afterwards.
What will a Modern Slavery Act mean for Australian businesses?
All the current indications are that Australia is likely to have a reporting requirement relating to modern slavery that is similar to what is already in operation in the UK. That regime could be in place as early as 2018.
While the Australian Government does not intend to include penalties for non-compliance, Australian businesses ought to expect that there will be significant public criticism of those businesses that do not comply with the legislation and that statements, once published, will be subject to intense public scrutiny, as has been the case in the UK.
The existence of a central repository of statements will facilitate the monitoring and review of statements. It is also likely to assist businesses, consumers and other stakeholders to understand the steps being taken by businesses to eradicate modern slavery in their operations and supply chains and take more effective steps to address the underlying issues.
In his announcement, the Justice Minister Michael Keenan said:
What can Australian businesses do to prepare and respond?
To date, the UK experience is that there have been varying responses from commercial organisations to the UK reporting requirement. Although some organisations have been able to demonstrate that they have taken concrete steps towards tackling the risk of modern slavery in their operations and supply chains, others have only just begun to develop their awareness of the issues and are on a steep learning curve.
Given the Australian Government's announcement and cross-party political support for an Australian Modern Slavery Act, it makes sense for larger Australian businesses to assume an Australian Modern Slavery Act will likely be enacted in the near future and consider how they will prepare for the introduction of a reporting requirement that is likely to be similar in many respects to the UK requirement.
Bearing in mind the current proposed minimum reporting criteria, this approach ought to include consideration of at least the following steps:
- Mapping the organisation's structure, businesses and supply chains.
- Formulating policies in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed.
- Carrying out a risk assessment – identifying those parts of the business operations and supply chains where there is a risk of modern slavery taking place.
- Assessing and managing identified risks – this may include carrying out further due diligence in the entity's operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers.
- Considering and establishing processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains.
- Carrying out remedial steps where modern slavery is identified.
- Developing training for staff on modern slavery risks and impacts.
Businesses should bear in mind that apart from the introduction of new government regulation, there are many other good reasons for taking these steps, particularly at a time when businesses are facing renewed public pressure to operate sustainably and ethically.
By undertaking these steps, businesses will be well placed to respond effectively to new regulations and show that they are committed to eradicating modern slavery, in Australia and overseas, and taking concrete steps to achieve that objective.
Norton Rose Fulbright made a submission to the Inquiry (No. 72) and participated in the public hearing held in Sydney on 23 June 2017.
