In 2018, thousands of entities in Australia became subject to a new law that mandates reporting of modern slavery risks in operations and supply chains. The law is one of the first of its kind in the world, forcing entities to assess their exposure and involvement in slavery-like practices. Below we break down what the Act means for your entity, what your obligations are, and how to comply.
What is the Modern Slavery Act?
The Modern Slavery Act 2018 (Cth) (Act) requires entities earning over AU$100 million in consolidated revenue to report on the actions they have taken to assess and address risks of modern slavery in their operations and supply chain. The Act seeks to address the issue of modern slavery in supply chains through increased transparency and corporate integrity. Australia is leading the way in regulating modern slavery reporting, and is the only country to have mandatory reporting criteria.
What is the difference between the Modern Slavery Act 2018 (Cth) and Modern Slavery Act 2018 (NSW)?
The Modern Slavery Act 2018 (Cth) is a piece of Commonwealth legislation that applies at the Federal level, meaning that all states and territories in Australia are subject to this Act. The Modern Slavery Act 2018 (NSW) is a piece of state legislation that only applies in New South Wales. The Modern Slavery Amendment Bill 2021 (NSW) was introduced to address inconsistencies between the Federal and NSW Acts. The amendment introduced a requirement for State-owned entities to voluntarily report under the Federal Act, established an Anti-Slavery Commissioner, and removed supply chain transparency reporting requirements. Entities with a consolidated revenue over AU$100 million are still required to report under the Federal Act.
Who needs to report under the Act?
Under the Act, entities with over AU$100 million in consolidated revenue must report on their modern slavery risks. An entity refers to an individual, partnership, association, company, trust, superannuation and investment organisations. This includes commercial and not-for-profit entities. Foreign entities who operate in Australia and meet the revenue threshold are also required to comply, even if they are also reporting entities in another country (e.g. under the UK Modern Slavery Act).
What are the reporting requirements?
To comply with the MSA, reporting entities must submit an annual modern slavery statement to the Australian Border Force that meets the mandatory criteria. There are seven mandatory criteria that must be included in each statement:
- Identify the reporting entity
- Describe the entity’s structure, operations and supply chains
- Describe the risks of modern slavery in the operations and supply chains of the reporting entity and entities it owns or controls
- Describe actions taken by the entity and entities it owns or controls to assess and address the risks (this includes due diligence and remediation)
- Describe how the reporting entity assesses the effectiveness of the actions
- Describe the process of consultation with entities that the reporting entity owns or controls
- Provide any other relevant information
The Modern Slavery Statement must be approved by the principal governing body of the reporting entity and signed by a responsible member of the reporting entity (usually the principal governing body.
When is the modern slavery statement due?
Submission of a modern slavery statement is an annual obligation. Reporting entities must submit their statement to the Australian Border Force Modern Slavery Register within six months after the end of their reporting period. The reporting period is the financial year that your entity follows. For most Australian companies, their reporting period will run from July 1st to June 30th. Other companies may operate on the calendar year (January 1st to December 31st), while foreign companies may operate from May 1st to April 30th.
During 2020, entities were granted a one-off three month extension due to the impacts of covid-19. This extension was not extended in 2021.
What happens if I don’t comply with the MSA?
There are currently no penalties for reporting entities who do not comply with the MSA, although under the Act the Government has the right to request remedial action from the entity, or publicly name entities who are deliberately non-compliant.
How to write a Modern Slavery Statement
A Modern Slavery Statement is designed to outline how your entity is identifying, assessing, and addressing the risks of modern slavery in your operations and supply chain. The only requirement of a Modern Slavery Statement is that it addresses all of the mandatory reporting criteria. There is no official template for a modern slavery statement, so the formatting is up to you. However, using the mandatory criteria as topic headings can help to organise information and provide a clear structure for your statement.
To write a modern slavery statement you will need to:
- Review the official Guidance for Reporting Entities from the ABF
- Address all seven of the mandatory reporting criteria
- Consult with any owned or controlled entities
- Have the Board (or other principal governing body) review, approve, and sign the statement
- Upload the statement to the Modern Slavery Register
We’ve summarised the Guidance for you. Read it here.
How do I submit a Modern Slavery Statement?
Modern Slavery Statements must be submitted via the Australian Border Force Modern Slavery Register. After creating and verifying your account, you will be able to upload your entities MSS. Statements will not be immediately publicly available on the register as they are subject to review by the ABF and released on a monthly basis.
Legal Obligations and Directors Duties
Submitting a modern slavery statement is a legal obligation for all reporting entities under the Modern Slavery Act. This includes addressing all seven of the mandatory reporting criteria. The principal governing body of the entity must sign the statement before it is submitted, indicating that they have reviewed and approved the statement.
For a company, the principal governing body is the Board of Directors. In this instance, one of the directors would sign the modern slavery statement on behalf of the board.
For entities who do not have a Board of Directors, such as smaller private companies, the highest ranking staff member (e.g. CEO) would sign the statement.
In the instance of a joint statement, the highest governing body, such as the parent company, would sign the statement alongside the director of the reporting entity.
While there are currently no penalties for non-compliance with the Act, publishing inaccurate or misleading statements may result in regulatory action for breach of director’s duties or consumer or shareholder action.
Entities who do not meet the requirements to be a mandatory reporting entity can voluntarily submit modern slavery statements. Even though these statements are submitted voluntarily, they still need to fulfil all of the mandatory reporting requirements such as addressing each of the seven mandatory criteria and being approved and signed by the principal governing body.
Should I submit a voluntary Modern Slavery Statement?
Submitting a modern slavery statement can provide a number of benefits. Firstly, the process of identifying, assessing, and mitigating modern slavery risks in your supply chain gives you greater insight into your supply chain and business practices, and supports other risk mitigation measures.
Secondly, publishing a modern slavery act can strengthen your company’s reputation and competitive advantage by showing customers and business partners that you are a responsible entity.
Lastly, your business partners may ask you to submit a voluntary modern slavery statement as proof that you are addressing risks in your business. Preparing and writing a modern slavery statement is considerable undertaking, especially for smaller entity who may lack the appropriate resources to adequately meet the reporting criteria.
Need more guidance? Fair Supply can help prepare your modern slavery statement.