Modern Slavery Act – the implications for businesses in Australia


Modern Slavery Act – the implications for businesses in Australia

When we think of slavery, we don’t think of Australian businesses. However, more than half of our imported goods come from Asia and the Pacific, an area that accounts for 62% of the global estimate of people in modern slavery.[1] This represents a real risk that modern slavery is part of Australian supply chains and has led to the Federal Government enacting the Modern Slavery Act 2018 (Act).

What’s the deal?

The “Modern Slavery Reporting Requirement” introduced by the Act will require certain entities to submit annual Modern Slavery Statements (Statement) to the Australian Border Force (ABF) as soon as 20 September 2020. Failing to comply with a reporting obligation under the Act could lead to reputational harm and flow-on consequences for your business.

What is a Modern Slavery Statement?

While there isn’t a template for Statements, in substance the report must address 7 mandatory criteria.

Very generally speaking, the content of a Statement will:

  • describe your business operations and its supply chain, as well as those of other businesses it controls;
  • identify modern slavery risks in those supply chains and operations, and steps taken to address those risks; and
  • explain how your business engages with and consults businesses it controls to work together to address the risk of modern slavery.

Statements will be submitted to the ABF, and published online via a public register.

Does my business need to submit a Statement?

Quite possibly! The reporting obligation is mandatory for those businesses that, within their 12 month reporting period (i.e. their financial year, or other accounting period used by that business):

  • carry on business in Australia; and
  • have a consolidated revenue of AU$100 million.

Carrying on business in Australia” captures both:

  • Australian entities – i.e. those resident in Australia for tax purposes, or incorporated in Australian, or centrally managed and controlled in Australia; and
  • a foreign entity doing business in Australia.

Your business’ consolidated revenue will need to be calculated using Australian Accounting Standards (even if your business isn’t usually subject to these standards). While your consolidated revenue will not include the revenue of your parent company, it will include the revenue of any subsidiaries of your business. This is the case even if those subsidiaries carry on business outside Australia.

Voluntary reporting is also encouraged under the Act.

But my business doesn’t engage in “Modern Slavery”! 

It may be difficult to accept, but modern slavery does happen in Australia, and it does occur in Australian supply chains. There is a very high risk that it could be present in your supply chain, without your knowledge – Government estimates indicate that there were 1,567 victims of modern slavery in Australia alone between 2015 and 2017.

The concept of “modern slavery” may seem a world apart from your business, but practically, it can present in varying forms, such as:

  • deducting from employee wages the amount of “debts” to their employers, such as the cost of transport, accommodation, or meals;
  • misleading workers as to work conditions, their minimum wage, and workplace rights; and
  • trading with suppliers that engage in these practices.

Preparing Statements gives businesses the opportunity to identify and address risks of modern slavery in their supply chains. The end goal is for businesses to be responsible and transparent, so that the business community can work together to reduce the incidence of modern slavery.

When do I need to submit a Statement?

Your business’ 12-month reporting period will determine when your Statement is due:

Your annual reporting period First reporting period under the Act Statement Due Date
1 July – 30 June

(Australian Financial Year)

1 July 2019 – 30 June 2020 No later than 31 December 2020
1 January – 31 December

(Calendar Year)

1 January 2020 – 31 December 2020 No later than 30 June 2021
1 April – 31 March

(Foreign Financial

Year  – including United

Kingdom and Japan)

1 April 2019 – 31 March 2020 No later than 30 September 2020

And if I don’t comply?

The Act gives the Government power to name-and-shame entities that do not comply with their reporting obligations. The impact of this could flow on to matters that harm your business, such as reputational harm, loss of business opportunities and trading partnerships, and the reduction in the perceived value of your business.

Also turn your mind to each contract you sign under which you have warranted that you will comply with all applicable laws. These warranties should be taken seriously, as often a breach of warranty entitles the other party to a contractual right to terminate.

How can I prepare my business for reporting?

Ensure that your business has adequate reporting, monitoring due diligence and reviewing  mechanisms in place now, in anticipating of filing your Statement.

My parent company submitted a Modern Slavery statement in the UK. Can I just submit that to the ABF?

UK statements may be helpful guides to businesses preparing their Statements to submit to the ABF – but they won’t necessarily meet all requirements of the Act. You should seek legal advice prior to submitting your UK statement to the ABF to ensure that your business is complying with its reporting obligations in doing so.

If you’re unsure about your business’ obligations under the Act, Hunt & Hunt can provide advice in relation to whether you will need to submit a Statement, and assist in the preparation of your Statement to ensure that it meets the requirements of the Act.

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[1] 2018 Global Slavery Index

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