Since we reported on the introduction of Australian modern slavery legislation in August 2018, there have been a number of developments.
The Modern Slavery Act 2018 (Cth) (Cth Act) came into force on 1 January 2019 and requires eligible entities to submit their first modern slavery statement within 6 months of the end of the first financial year starting after 1 January 2019.
Meanwhile, the commencement of the Modern Slavery Act 2018 (NSW) (NSW Act), which was expected to come into force on 1 July 2019, has been delayed.
The Cth Act applies to businesses and organisations carrying on business in Australia with an annual turnover of at least AU$100 million (Cth Reporting Entities). It requires Cth Reporting Entities to publish an annual modern slavery statement identifying the risks of modern slavery in their supply chains and operations as well as the steps taken to address those risks.
Cth Reporting Entities must submit modern slavery statements to the Department of Home Affairs within six months of the end of their financial years.
In order to assist reporting entities comply with their obligations under the Cth Act, the Department of Home Affairs has released draft guidance for reporting. Stakeholders were invited to provide submissions on the draft guidance by 19 May 2019. At the time of writing, the Department of Home Affairs has not released an expected release date for the final guidance.
Although there is no prescribed form for reporting, there are seven mandatory matters which must be addressed in Cth modern slavery statements. They are:
- The identity of the reporting entity.
- A description of the reporting entity's structure, operations and supply chains.
- A description of the risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities it owns or controls.
- A description of 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.
- A description of how the reporting entity assesses the effectiveness of these actions.
- A description of 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).
- Any other relevant information.
The NSW Act applies to businesses and organisations with employees in NSW that supplies goods and services for profit or gain and has a total turnover of not less than AU$50 million in a financial year.
The NSW Act was debated in Parliament in June and has been referred to the Standing Committee on Social Issues for an inquiry and report. The date of the report is yet to be fixed. As a result, the NSW Act is unlikely to commence any time soon and when it does, it may be in a different form.
This development comes in the wake of Special Minister of State, Don Harwin, telling Parliament he had received advice from the Department of Premier and Cabinet that "...the legislation in its current form contains a number of defects requiring urgent attention," adding that "...the consequence of those defects are such that if left unattended they would render some provisions of the Act inoperable."
The details of the 'defects' were not disclosed but it is understood they relate to State and Federal inconsistencies, leaving the NSW Act open to constitutional challenge.
How should reporting entities respond?
Cth Reporting Entities must be aware that the delay in the NSW Act's commencement does not affect their obligations under the Cth Act. As such, Cth Reporting Entities should already have in place a framework to comply with the Cth Act that is consistent with the draft guidance.
While awaiting the outcome of the Standing Committee on Social Issues report, organisations captured by the NSW Act should take initial steps to identify and respond to modern slavery risks in their supply chain.
Dentons can assist organisations comply with their obligations in a number of ways, including:
- Conducting audits of supply chains.
- Creating internal policies and corporate governance guidelines regarding modern slavery.
- Reviewing and updating procurement contracts.
- Reviewing draft modern slavery statements to ensure they are compliant.
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