The Australian Government has recently announced its intention to introduce reforms to the Modern Slavery Act 2018 (Cth) (Act). The proposed changes signal a more demanding compliance environment for large businesses, including financial penalties for non-compliance.

What is the Modern Slavery Act, and who does it apply to?

The Act was introduced in 2018 as part of Australia’s commitment to combating modern slavery in global supply chains. Modern slavery encompasses a broad range of exploitative practices, including forced labour, debt bondage and deceptive recruiting. Globally, modern slavery is a significant concern affecting approximately 50 million people.

Currently, the Act attempts to address modern slavery concerns by requiring Australian entities, or foreign entities carrying on business in Australia, with an annual consolidated revenue of $100 million or more to report annually on (amongst other things) the risks of modern slavery in their operations and supply chains, and the steps that entity has taken to address such risks.

Since the Act’s introduction, it has garnered criticism for lacking enforcement measures to drive meaningful change in this space. That is, the Act does not impose any civil or criminal consequences for entities who fail to comply with the reporting requirements. Clearly, the Australian Government has heeded such feedback, and the proposed reforms are designed to address these shortcomings and deliver a legislative framework with teeth.

What reforms have been proposed?

The key features of the reforms proposed by the Australian Government include:

• the introduction of a new criminal offence where companies with an annual consolidated revenue over $100 million fail to prevent modern slavery in their supply chain;
• a defence for this new criminal offence will be available, if a company can demonstrate it took “reasonable steps” to prevent modern slavery;
• in looking at the reasonable steps a company has taken, it appears consideration will be given to whether adequate processes and steps are in place, flagging that appropriate due diligence is key to discharging criminal liability; and
• civil penalties and associated enforcement powers being granted under the Act, to address non-compliance with existing reporting obligations.

What does this mean for businesses?

Consultations for these reforms are still upcoming, and the form has not yet been drafted or confirmed. However, their direction is clear. Entities caught by the Act should begin preparing for the reformed regime now, to ensure they are well prepared for increased scrutiny of their supply chain due diligence practices.

Specifically, we recommend that businesses:

• consider whether they are meeting their current obligations under the Act;
• undertake a thorough review of their past and current modern slavery statements and practices, to identify any gaps in their strategy; and
• assess whether they can demonstrate they have taken “reasonable steps” to identify, prevent and address modern slavery risks within their supply chains.

The Australian Government has indicated that any reforms will be complemented by practical guidance and education initiatives to assist businesses to better identify, manage and remediate modern slavery risks in their supply chains.

How can we help you?

We regularly advise clients on modern slavery compliance and supply chain due diligence, drafting modern slavery statements and policies, conducting modern slavery training for all levels, and assisting businesses to implement practical measures to combat modern slavery risks.

If you would like tailored advice about the new enforcement environment or support to review current practices, please get in touch.

This article was written by Laura Young, Partner, Kaitlyn Firnigl, Solicitor and Hana Kolar, Law Graduate.