Update: review of the Commonwealth Modern Slavery Act 2018
By Meg Lee, Fay Calderone and Nathan Kennedy
The Australian Government has released an issues paper for public consultation on the effectiveness of the first three years of the Modern Slavery Act 2018 (Cth). The paper is part of the mandatory statutory three-year review under section 24 of the Act, which requires the Minister to prepare a review considering:
- the operation of the Act and any rules over the period of three years after this section commences;
- compliance with the Act and any rules over the period;
- whether additional measures to improve compliance with the Act and any rules are necessary or desirable, such as civil penalties for failure to comply with the requirements of the Act;
- whether a further review of the Act and any rules should be undertaken, and if so, when;
- whether it is necessary or desirable to do anything else to improve the operation of the Act and any rules; and
- whether the Act or any rules should be amended to implement review recommendations.
The review will be completed by Professor John McMillan, AO with the support of the Attorney-General’s Department. It seeks to assist the Government’s commitments to eliminating modern slavery domestically and internationally. The three-month consultation period for the review closes on 22 November 2022. Further, the review will be completed by 31 March 2023, followed by a final report to be tabled in Parliament.
Requirements under the Act
Under the Act, entities based, or operating in Australia, which have an annual consolidated revenue of more than AU$100 million, the Australian Government, and a Commonwealth company or corporate entity with an annual revenue of more than AU$100 million, must report annually on the risks of modern slavery practices in their operations and supply chains, and actions to address those risks. These reports are held by the Minister in a public repository known as the Modern Slavery Statements Register.
Modern slavery is defined in the Act as conduct that is either a criminal offence under the slavery provisions of the Criminal Code (Divisions 270 and 271) or that falls under one of the two international instruments (the Trafficking Protocol and the Worst Forms of Child Labour Convention). Examples of modern slavery include forced labour, human trafficking, debt bondage and serious child labour.
Findings of the issues paper
Promisingly, more than 6,000 entities have reported under the Act. This indicates significant engagement with the Act by both business and society. The sectors which had the highest number of reports include financial, insurance and real estate, construction civil engineering and building products, and food and beverages, agricultural and fishing industries. Conversely, waste, cosmetics and toiletries, and cleaning and security services had the least number of reports submitted.
The paper posed various questions to be considered in the consultation process including:
- is AU$100M consolidated annual revenue an appropriate threshold to determine which entities are required to submit an annual statement under the Modern Slavery Act? Does the Act impose an appropriate revenue test for ascertaining the $100m threshold?
- should the Modern Slavery Act require annual submission of a modern slavery statement? Does the Act contain appropriate rules for ascertaining the annual reporting timeline for entities?
- does the Modern Slavery Act appropriately define ‘modern slavery’ for the purpose of the annual reporting obligation?
- is further clarification required of the phrase ‘operations and supply chains’, either in the Modern Slavery Act or in administrative guidelines?
- are the mandatory reporting criteria in the Modern Slavery Act appropriate – both substantively and in how they are framed?
- should the Modern Slavery Act impose civil penalties or sanctions for failure to comply with the reporting requirements? If so, when should a penalty or sanction apply?
Although the Act currently does not contain any offence or civil penalty for non-compliance with the reporting requirement, the Albanese Government announced that they are committed to introducing penalties for non-compliance, with the aim of holding eligible entities accountable.
Overseas developments
The review comes at a time when Ansell and Kimberly-Clark, two well-known healthcare providers, are facing serious charges in the US for allegedly ‘knowingly profiting’ from exploitation by contracting a factory located in Malaysia (and owned by Brightway) to make latex gloves. US Customers and Border Protection investigated Brightway and found that the factory met 10 of the 11 United Nations signs of forced labour and, as a result, has banned the products from entering the US.
The high-profile nature of the case is likely to increase pressure in Australia to amend the existing Act to include additional and stronger measures such as penalties for non-compliance and potential bans on goods entering Australia.
Our approach to tackling modern slavery
Hall & Wilcox is dedicated to our community and corporate social responsibility. We recognise our responsibility to contribute to the elimination of modern slavery and that responding effectively to modern slavery is a process of continuous improvement. We established a modern slavery working group to implement our response to modern slavery risks in our operations and supply chains. To address the potential modern slavery risks identified in our Modern Slavery Statement, we implemented the following strategies:
- required existing suppliers to complete a self-assessment questionnaire;
- applied a two-step process to identify potential modern slavery risks with new suppliers;
- developed a procurement policy;
- are developing a human rights policy; and
- required all workers to complete a modern slavery training module.
A reminder to our clients
The review comes at a time when there is a heightened focus on Environmental, Social & Governance (ESG) due diligence and reporting requirements as well as regulator and third-party litigation, so it is perhaps an opportune time for clients to reassess their approach to ESG risk management.
We encourage our clients to participate in the consultation process by providing their opinion on the effectiveness of the operation of the Act and compliance measures.
This article was written with the assistance of Cassandra Goldman, Paralegal.