Home Insights The Modern Slavery Act 2018 – is your business affected, and how?
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The Modern Slavery Act 2018 – is your business affected, and how?

UPDATE (5/04/19): The Draft Guidance on the Modern Slavery Act has been released and is now open for consultation. Submissions on the draft are due by 19 May 2019.

The operative provisions of the Modern Slavery Act 2018 (Cth) (Act) came into effect on 1 January 2019. This means that if your business has an annual revenue of over $100 million and is based, or carries on business, in Australia, you may have to report annually on the risks of modern slavery in your operations and supply chains, and what you are doing to address those risks.

The first things to ask are:

  • whether your business is an entity that falls within the scope of the Act; and if so,
  • what your initial reporting period will be.

If you do fall within the Act, you will be required to complete annual reports addressing mandatory criteria. These reports will be known as Modern Slavery Statements, and will be held by the Minister for Home Affairs in a public online register.

Will your organisation be required to report?

Entities with a revenue of $100 million or more that are required to prepare a Modern Slavery Statement include:

  • companies that are Australian residents within the meaning of the Income Tax Assessment Act 1936 (Cth);
  • trusts, where the trust entity is a resident trust estate;
  • corporate limited partnerships that are Australian residents;
  • other partnerships or entities that are either:
    • formed or incorporated within Australia; or
    • the central management or control of the entity is in Australia; and
  • entities that carry on business in Australia at any time in the reporting period.

It is important to consider whether foreign-based parent entities could be considered to carry on sufficient business in Australia to require them to report under the Act also.

Groups of companies may submit joint modern slavery reports if they choose to do so.

The Commonwealth must comply with the Act., So must corporate Commonwealth entities and Commonwealth companies, if the entity or company has at least $100 million revenue for the reporting period.

State agencies and State corporate entities that meet the revenue requirement will also be required to report, unless they are entitled to invoke the immunity of the Crown in the right of a State.

Entities that do not fall within the scope of the Act may volunteer to report. By doing so you may demonstrate both transparency and accountability in supply chains that can assist in ESG and other non-financial reporting.

If your entity has an annual turnover of between $50-100 million and you have employees in New South Wales, you may fall within the scope of the Modern Slavery Act 2018 (NSW). At the time of writing the New South Wales Act has not entered into force.

When is your first reporting period?

If you fall within the scope of the Act, you must report within six months after the end of each financial year.

The first modern slavery statements will be required for the 2019/2020 financial year, and must be submitted by 31 December 2020.

For organisations that have given the Commissioner of Taxation notice of an alternative accounting period in accordance with the Income Tax Assessment Act 1936 (Cth), the first reporting period will be the first accounting period that commences after 1 January 2019. The first statement must be furnished within six months of the end of that accounting period.

For companies with an annual accounting period of 1 January to 31 December, the first reporting period will be 1 January 2020 to 31 December 2020, with the first report due by 30 June 2021.

What are you required to report on?

The Act has mandatory reporting criteria. These require the Modern Slavery Statement to identify the reporting entity and describe:

  • its structure, operations and supply chains;
  • the risks of modern slavery practices in the entity's operations and supply chains, and those of any entities that it owns or controls;
  • the actions the entity has taken – or that any entity it owns or controls has taken – to assess and address those risks, including due diligence and remediation processes. For example, this may include the development of policies and processes to address modern slavery risks, and providing training about modern slavery to staff;
  • how the entity measures the effectiveness of those actions;
  • a description of the entity's consultation process with entities covered under the statement; and
  • any other information that may be relevant.

Where to begin?

It is expected that most entities will find either modern slavery or risks of modern slavery in their supply chains. Reporting entities are responsible for identifying, assessing, preventing, and mitigating these risks where possible.

If your organisation is within the scope of the Act, the first steps will be to identify someone to be responsible for leading the process. We recommend the establishment of a cross-functional team to help map your organisation's structure, operations and supply chain.

It is important to note that you must report in respect of your own operations globally, and the global operations of the entities you control. Further, while some of the companies within a corporate group may not be reporting entities or within the parent entity’s control, their activities may still form a substantive aspect of the parent company’s operations for the purposes of reporting.

Also, consider how the group of entities will report – as one group, a number of groups or individually – and how consultation will be conducted to enable this.

It is likely that a modern slavery policy will need to be developed, and consistency with current procurement and contracting policies established. It will also be necessary to train employees and in some cases suppliers.

If you would like more information about the Act, clarification on whether you are a reporting entity, questions about next steps, or some assistance in the process of preparing your modern slavery statement, please call Heidi Roberts, Partner or Phoebe Wynn-Pope, Head of Business and Human Rights.


Authors

WYNN-POPE_Phoebe_SMALL
Dr Phoebe Wynn-Pope

Head of Business and Human Rights


Tags

Government Employment, Labour and Safety Corporate

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.