Does your business need to give a modern slavery statement?

_{Co-authored by Olivia Camilleri}

Introduction

Modern slavery can taint the supply chain of any Australian business. To mitigate this risk the Modern Slavery Act 2018 (Cth) requires certain entities and encourages others to give annual modern slavery statements to the Commonwealth Attorney-General’s Department.

What is modern slavery?

Generally modern slavery refers to serious crimes and human rights abuses such as human trafficking, forced and child labour, and forced marriages. Modern slavery remains prevalent within Australia and across the globe. Recent statistics published by the International Labour Organisation estimated that 50 million people were subjected to slavery on any given day in 2021.

Modern slavery is increasingly an issue in commercial litigation

Modern slavery disputes affecting businesses and their supply chains are increasingly appearing in commercial litigation. Examples from court decisions across the globe include:

• A labour hire company in Australia which hired employees from Vanuatu and underpaid them and deprived them from access to adequate food and accommodation.[1]
• A labour hire company in the United Kingdom which failed to pay the minimal wage and provide access to food, water and rest to its Lithuanian workers who were contracted to catch chickens for a major supplier of poultry products to various retailers.[2]
• Multinational chocolate manufacturers in the United States sourcing cocoa from a part of the world rife with people trafficking and child slavery.[3]
• A Canadian mining company using the forced labour of Eritrean military conscripts in one of its mines.[4]

What is the Modern Slavery Act all about?

The Modern Slavery Act 2018 (Cth) mandates entities publicly report their actions to address modern slavery risks in their supply chains. This involves the entity giving the Commonwealth Attorney-General a modern slavery statement within six-months after the end of their reporting period (usually by 31 December at the end of each year). The statements are then registered on the Modern Slavery Statements Register which is available for public inspection without charge on the Internet.

Which businesses must give a slavery statement?

The Modern Slavery Act 2018 (Cth) requires that every ‘reporting entity’ gives a modern slavery statement. As far as businesses are concerned, this means entities which have a consolidated revenue of at least $100 million for the reporting period that carry on business in Australia or that are an ‘Australian entity’. Businesses may also volunteer statements if they choose.

What must be included in Modern Slavery Statements?

Modern slavery statements must satisfy these mandatory criteria:

1. identify the reporting identity;
2. describe the entity’s structure, operations and supply chains;
3. describe the risks of modern slavery within their entity;
4. describe actions including due diligence and remediation processes that have been implemented to prevent slavery within the entity;
5. describe how they assess the effectiveness of these actions;
6. describe the process of consultation within their controls and other entities; and
7. include any other relevant information.

Treatment of corporate groups

The Modern Slavery Act 2018 (Cth) facilitates reporting by corporate groups by permitting joint modern slavery statements. This does not allow one of the entities merely signing off for the others but requires consultation between each reporting entity in the group.

What if my business does not comply?

There are no penalties for failing to give a modern slavery statement. However, the Commonwealth Attorney-General can publicly ‘name and shame’ businesses who do not comply by publishing details of contraventions on the Modern Slavery Statements Register.

Reforms on the horizon

The Australian Government released the ‘Report of statutory review of the Modern Slavery Act 2018 (Cth) The first three years’ by Professor John McMillan in 2023. The report made numerous recommendations to amend and ‘toughen’ the Modern Slavery Act 2018 (Cth). Some of the more notable recommendations include:

• Lowering the threshold of what constitutes a ‘reporting entity’ to those with a consolidated revenue of $50 million for the reporting period;
• adding the following mandatory criteria to statements;
  • the incidents and risk of modern slavery the entity identified during the reporting year;
  • any complaints and/or grievances expressed to the entity by staff and or other people regarding modern slavery; and
  • any modern slavery risk management consultations held within and outside of the entity during the reporting period.
• Penalty offences for reporting entities when they:
  • fail to provide a modern slavery statement (without explanation);
  • knowingly provide false information in the statements;
  • fail to comply with reporting requirements and take remedial action following a government request;
  • fail to enact a due diligence system.

For more information on the modern slavery statement, please contact Coleman Greig’s Commercial Advice team.

^{[1] Fair Work Ombudsman v Maroochy Sunrise Pty Ltd [2017] FCCA 559}

^{[2] Galdikas v DJ Houghton Catching Services Ltd [2016] EWHC 1376 (QB); Antuzis v DJ Houghton Services Ltd [2019] EWHC 843 (QB); Antuzis v DJ Houghton Catching Services [2021] EWHC 971 (QB)}

^{[3] Néstle USA, Inc and Cargill, Inc v John Doe 929 F 3d 623 (2021)}

^{[4] Nevsun Resources Ltd v Araya [2020] 1 SCR 166}