The Modern Slavery Act Australia: What you need to know
With the Modern Slavery Act fully operational, your organisation may now be subject to stringent annual reporting obligations. Here, we take a deep dive into everything you need to know about how the Modern Slavery Act may affect your organisation and what you need to do to stay compliant.
What is Modern Slavery?
While different countries use different legal terminology, ‘Modern Slavery’ generally describes the situation where coercion, threat or deception is used to exploit a person and to undermine their freedom. The term includes crimes of human trafficking, slavery and slavery-like practices such as servitude, forced labour, forced or servile marriage, the sale and exploitation of children and debt bondage.
How does Modern Slavery affect Australia?
Australian businesses may be unaware of the risk of slavery in their operation or supply chain. Globalisation has made it increasingly difficult to know if products offered in the Australian market profit from or exploit Modern Slavery somewhere within their production process.
In Australia alone, the Global Slavery Index estimated that 15,000 people were living in “conditions of modern slavery” in 2016.
On a global scale, it is estimated that over 40 million people are engaged in Modern Slavery and US$150 billion per year is generated from forced labour in the global private economy. An approximate two-thirds of the global slave trade is predicted to be occurring in the Asia-Pacific, with some of Australia’s biggest trading partners, including China, Malaysia, Indonesia and Thailand, as host to some of the most egregious crimes.
So even if the internal practices and tier 1 suppliers of your organisation may not display signs of Modern Slavery, there may be traces of slavery found in your deeper tiers. In fact, a 2015 survey of retailers and their tier 1 suppliers found a 71% likelihood of slavery in their supply chains. Unfortunately, this means that if you haven’t identified Modern Slavery in your operation, then it may be because you are not looking in the right places.
The Modern Slavery Act and who needs to report?
On 1 January 2019, the Modern Slavery Act 2018 (Cth) (Modern Slavery Act) became effective and its requirements are now fully operational.
If your entity is based or operating in Australia, with annual consolidated revenue in excess of $100 million, then you are now required to submit an annual Modern Slavery Statement within six months after the end of your financial year. This Statement requires board approval and is to outline the risk of Modern Slavery in your operations and supply chains (including any entities owned or controlled by your entity), the actions taken to address those risks and the effectiveness of your responses. Once submitted, these statements will be kept by the Minister for Home Affairs in a central registrar and may be accessible by the public.
It is estimated that over 3,000 Australian businesses will be required to report under these obligations. Other entities that are based, or operating, in Australia may report voluntarily.
What are the risks of non-compliance with the Modern Slavery Act?
While at this stage, there are no financial penalties for non-compliance, there is the risk of reputation damage for any organisation choosing not to comply. Additionally, the Minister is authorised to ‘name and shame’ any entity failing to meet the reporting obligations, which may risk public criticism and shareholder activism.
What should your affected organisation do?
If your organisation is required to submit a Modern Slavery Statement, then you should begin by considering the requirements of the statement and reviewing your policies, training, whistle-blower mechanisms and contracting practices. You should put in place a plan to meet the requirements of the Act, which will require input stakeholders from across the relevant business units of your organisation.
At Informed 365, we have been helping some of Australia’s largest organisations prepare for their Modern Slavery reporting statement. We would be most happy to walk you through the process we have taken with other reportable entities and assist you in your process. Please call us on 1300 552 335 to speak further.