Out-Law Analysis | 19 Jul 2018 | 10:53 am | 6 min. read
The legislation is still developing. However, the laws now in place in New South Wales go further than equivalent UK corporate transparency law by introducing financial penalties in respect of modern slavery statements, including for persons, which includes companies and individuals, involved in reporting.
Companies with links to Australia should consider the reporting obligations, and those tasked with drafting the reports should consider the information to be published carefully.
New South Wales passed the Modern Slavery Act 2018 (NSW) in late June 2018, at the same time as the Modern Slavery Bill ('Cth Bill') was introduced before the Parliament of Australia. Similar to equivalent UK legislation, the NSW Act introduces a requirement for certain commercial organisations to prepare annual modern slavery statements. The NSW Act goes further however in introducing financial penalties for organisations that fail to publish a statement when required to, or for companies and/or individuals who knowingly provide materially false or misleading information in connection with statements.
Neither piece of legislation fully addresses the recommendations contained in the Joint Standing Committee on Foreign Affairs, Defence and Trade's December 2017 report into establishing a Modern Slavery Act in Australia. As a result, the regulatory landscape is likely to develop further.
Businesses that will be required to report under the NSW Act or that may be caught in the future by the Cth Bill should now be reviewing their internal policies and supply chain contracts in preparation for the new regimes. Companies that will not technically be required to report under either law should also reflect on their internal procedures as corporate customers are likely to impose contractual obligations on supply chains to take anti-slavery steps. Companies may also elect to produce a transparency statement voluntarily to be a good corporate citizen.
Given the new legislation, businesses should consider:
Regardless of legislative requirements, identifying and addressing areas of concern in a company's supply chain will help to develop an ethical and sustainable business. Companies which act now will be in a better position to eradicate risks prior to potentially have to provide mandatory public statements at a later date. In addition, putting policies and procedures to ensure statements can be readily produced may assist with 'future proofing' the business against further legislative reform.
What is in the new legislation?
The NSW Act
The NSW Act received assent on 27 June 2018 but does not yet have a commencement date. Once in force, the NSW Act will introduce:
The Cth Bill
The Cth Bill was introduced into parliament on 28 June 2018 and, if enacted, will apply across Australia and to the external Australian territories. Similar to the NSW Act, the Cth Bill requires reporting entities to publish annual public reports on actions taken by them to "address modern slavery risks in their operations and supply chains".
'Reporting entity' is defined broadly, and includes:
The Cth Bill also sets out mandatory content for the modern slavery statements. These must include:
Statements must be approved by a 'principal governing body' or the reporting entity, such as the board of directors; signed by a responsible member of the entity, such as someone authorised to sign the statement on behalf of the company; and given to the minister within six months after the reporting entity's end of financial year. Statements must also contain details of approval by the reporting body's principal governing body.
Similar to the NSW Act, the Cth Bill requires that a publicly available and free of charge register be kept of the modern slavery statements. The Cth Bill specifically states that this register must be made available on the internet, but the NSW Act is silent on this.
How far has the legislation gone?
The 2017 report made 49 recommendations under eight larger topics: introducing a Modern Slavery Act for Australia; defining and measuring modern slavery; an independent Anti-Slavery Commissioner; transparency in supply chains; support for victims; criminal justice responses; orphanage trafficking; and labour exploitation and Australia's visa framework.
Both the NSW Act and the Cth Bill address some of these recommendations.
The biggest concern raised by both the NSW Act and the Cth Bill is their failure to adequately address the need for criminal sanctions for acts of slavery or human trafficking. The NSW Act does impose some sanctions in respect of corporate transparency, however both the NSW Act and the Cth Bill do not contain sanctions for acts of slavery in the manner of the equivalent UK legislation, the 2015 Modern Slavery Act ('UK Act'). The approach to punishing companies taken by both the NSW Act and the Cth Bill is predominantly based on 'naming and shaming', by having offenders' names kept on a public register. The UK Act, in contrast, includes a number of penalties and sentencing options, including life imprisonment for an indictable offence for human trafficking or slavery and enabling the court to order convicted individuals and companies to pay compensation to a victim of modern slavery.
In addition, neither the NSW Act nor the Cth Bill contain provisions regarding victim protection or redress for survivors of modern slavery. Leading barristers, academics and anti-slavery groups, with the backing of several Labor and Liberal MPs, have put forward a proposal under which slavery survivors would be able to seek compensation of up to A$100,000. The NSW Act and the Cth Bill also do not address orphanage trafficking or Australia's visa framework and the criminal justice response.
The 2017 report recommended the introduction of an independent slavery commissioner to assist with enforcing reporting requirements. The NSW Act provides for the appointment of a commissioner, who will not be subject to the control of the NSW premier or any other minister. This commissioner will be tasked with advocating against modern slavery, making recommendations, and providing advice and information on actions to prevent, investigate and prosecute modern slavery offences. However, the Cth Bill does not provide for the appointment of any sort of commissioner, independent or otherwise.
Melanie Harwood and HollyAnn Walters-Quan are infrastructure law experts and Neil Carslaw is a regulatory law expert at Pinsent Masons, the law firm behind Out-Law.com.