01 April 2020
The New South Wales Modern Slavery Act 2018 (NSW Act) was the first to be passed in Australia. With a threshold comparable to the UK Modern Slavery Act, significant penalties for failing to report and a focus on victim support, it was considered one of the most progressive pieces of anti-slavery legislation in the world.
But just six months later, the passing of the Commonwealth Modern Slavery Act 2018 (Commonwealth Act) threw the progressive NSW Act into doubt. There was widespread concern regarding inconsistencies between the two pieces of legislation, particularly in respect of the supply chain transparency obligations and, consequently, the NSW Act was returned to the NSW Legislative Council’s Standing Committee on Social Issues’ (Committee) for review.
Last week, the Committee released its report with strong support for some of the key elements of the NSW Act. Provided the NSW Government accepts the recommendations in the report, certain entities with a consolidated revenue of more than $50 million and with at least one employee in NSW will be required to report under the NSW Act and there will be penalties of up to A$1.1 million if they fail to do so.
On 25 March 2020, the Committee tabled its anticipated Report 56 with the Clerk of the Parliaments (Report), following its inquiry into the NSW Act.
The Report follows a lengthy public consultation process in which the Committee considered the operability and effect of the NSW Act, a proposed amendment Bill and Regulations designed to address concerns in the Act, particularly harmonisation of the reporting requirements with the Commonwealth Act. You can read more about this process and the NSW Act here.
The Committee found that the NSW Act had significant stakeholder engagement with over 100 submissions and 27 pieces of evidence provided in person. Its robust features such as a strong supply chain transparency scheme for business and government, an Anti-Slavery Commissioner, the creation of new modern slavery offences, support for victims and the establishment of a parliamentary committee to provide oversight, were particularly supported.
However, the Committee also recognised that there was room for improvement, particularly with the advent of the Commonwealth Act. So, while remaining true to the spirit of the NSW Act, they recommended some key changes aimed to:
We explain these recommendations in more detail below, but the key takeaway of the Committee’s review, found in the first of 17 recommendations, is that despite concerns to the contrary (and provided the Committee’s recommendations are accepted) the NSW Act is here to stay.
A key theme of the stakeholder submissions was that having both state and federal modern slavery legislation with different supply chain transparency schemes may impose a large administrative burden on business.
In an attempt to overcome these concerns, the Committee:
The Committee recommended that the NSW Government retain the $50 million reporting threshold under the NSW Act. Many submissions from business saw the reporting threshold as unfair, as it is lower than the Commonwealth’s $100 million threshold. However, the Committee saw merit in NSW maintaining the $50 million threshold in order to use it as leverage in threshold harmonisation discussions during the statutory review proposed for 2022, and to encourage the Commonwealth to lower its threshold at that time.
Notably, the lower threshold would bring the Commonwealth in line with the recommendations of the Joint Standing Committee on Foreign Affairs Defence and Trade - Inquiry into establishing a Modern Slavery Act, which originally proposed a reporting threshold of $50 million.
The Committee also recommended that the NSW Government amend the NSW Act to replace the term ‘turnover’ with ‘consolidated revenue’ to bring it in line with the Commonwealth.
Entities who are covered by the NSW Act are subject to penalties of up to $1.1 million if they fail to prepare or publish a statement or provide false or misleading information in a statement. However, entities with a turnover of $100 million or more falling under the Commonwealth Act are not subject to penalties.
The penalties in the NSW Act are considered one of the robust features characteristics of the NSW Act and were strongly supported by modern slavery advocates in the Committee’s review.
While the Committee acknowledged that the disparity in penalties is not ideal, it determined to retain penalties in order to be in a position to encourage the Commonwealth to strengthen its Act by adopting penalties at the 2022 Statutory Review.
Significantly, rather than stepping back from the idea of penalties, the Committee recommended that the NSW Government specify a relevant authority responsible for commencing prosecutions against businesses for breaches of section 24 of the Act (transparency of supply chains).
The Committee also made a number of other recommendations including to:
The Committee’s Report provides a lifeline to the NSW Modern Slavery Act which many thought may fade into obscurity in the face of the Commonwealth Act. However its proclamation is not yet assured.
The Committee has recommended commencement of the NSW Act by 1 January 2021. In the meantime, we await the Government’s response to the report. If positive, the NSW Act must then return to the Legislative Council which must in turn accept and adopt the recommended changes.
The COVID-19 pandemic may have an impact on the legislative timetable in NSW and so the future and timing of the Act will remain unclear until we have an indication of the Government’s intent.
However, if everything goes to plan, if an entity that is not a charity, not-for-profit organisation or small business has a consolidated revenue of $50 million and at least one employee in NSW, it will have to report on the risks of modern slavery in its supply chain and describe what it is doing to address those risks, with significant penalties for failing to do so.
If you would like more information about the NSW Act, clarification on whether you are likely to be a reporting entity, questions about next steps, or some assistance in the process of preparing your modern slavery statement, please contact us using the details listed.
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.