On 24 May 2024, as foreshadowed, amendments to the Modern Slavery Act 2018 were passed, as the Act and its operation were reviewed by the Attorney General’s Department.

The Government has introduced new powers to spearhead the reforms, including appointing a new Anti-Slavery Commissioner. The Commissioner will also play a crucial role in assisting victims of Modern Slavery Act (MSA) violations and spearheading educational initiatives on modern slavery issues within Australia.

Anticipated Future Amendments

Australian businesses should prepare for forthcoming amendments that will be made under the purview of the new Commissioner. The review of the Modern Slavery Act, accepted universally foreshadowed:

• Stricter Penalties: Businesses failing to prepare an annual modern slavery statement or knowingly including materially false information in their statement could face civil penalties. We note that many Modern Slavery Statements appear to be just that, a statement. Be aware that the ACCC is monitoring and is actively asking for the basis of the information in statements to be produced. Social washing is the new greenwashing, and the ACCC has powers to enforce penalties now against companies who engage in misleading and deceptive conduct. However, specific penalties for breaching the Modern Slavery Act will soon be introduced. In NSW, the current maximum penalty for Modern Slavery Act contraventions is 10,000 penalty units ($1.1M). If this is a guide as to the penalties to be applied, businesses need to stand up now and start working hard to ensure that accompanying actions are implemented to support the claims made within Modern Slavery Statements and that this new area of risk is understood and mitigated.
• Lower Reporting Threshold: The reporting turnover threshold will be reduced from $100 to $50 million. This change will bring more entities under the legislation’s purview.
• Mandatory Due Diligence System: Reporting entities will be required to establish a Due Diligence System to address Modern Slavery risks within their supply chains, and not simply write about activities in a Modern Slavery Statement. We believe that this system could draw inspiration from the requirements of the Illegal Logging Act 2012.
  If so, it will encompass:
  • Identification and assessment of modern slavery risks in your supply chain;
  • Actions taken to mitigate these risks;
  • Performance and KPIs in risk mitigation;
  • Processes involved in risk mitigation.

• Evolution of Reporting Requirements: The content of the reporting requirements will evolve in light of the new due diligence requirements. The reforms have shown that entities will be required to investigate modern slavery incidents and risks identified during a reporting period. This could lead to the establishment of a prescribed grievance mechanism to identify victims or cases and to implement means to redress any situation discovered.

What About New Zealand?

In New Zealand, a proposed modern slavery law is currently under consultation since April 8, 2024. This law will mandate all entities to undertake due diligence to prevent, mitigate, and remedy worker exploitation. Medium-sized entities will be required to report annually on their due diligence processes, while larger entities will have additional due diligence obligations. The disclosure law is expected to receive royal assent in 2025, with the first statements due in 2026.

These dates are subject to change as the legislation progresses. Businesses need to stay informed about these developments to ensure compliance when the law comes into effect.

As always, it’s recommended to consult with a legal expert or advisor for the most accurate and up-to-date information.

What does this all mean?

If you are reporting now, ensure that you are doing so in a way that prepares you for the future. Remember that even if you are under the current reporting threshold, you may be dragged into this world by your large end users or retailers who have reporting obligations. If your timber ends up in a LendLease site for example, they will need to know about Modern Slavery in the supply chain, as will your paper if it is transformed into paper bags in Woolworths.

Recommendations

1. Understand where your products are going. If you are supplying products, determine whether your customers will likely require supply chain information from you. If so, you will need to have processes in place to be able to pass on accurate information as requested about those you purchase from. There will likely be indemnities in your contract, as your customer will need to rely on the information you provide for their own reporting purposes. Hence, understanding what is happening within your supply chain is crucial.
2. Review your purchases in the context of risk. Review your purchase history. What is the risk of modern slavery occurring within the supply chains of your purchases? Remember, this is not just everything you sell, but everything you buy and use), as well. What countries do your supply chains run through? Is there risk in those countries? How do you prioritise and tackle the suppliers with the greatest level of risk in their supply chains? How do you then use this information in your reporting?
3. Understand how certifications change the risk profile. Is your product certified to a voluntary certification scheme? What about BSCI or SEDEX? What does being certified actually mean, and how do different certification schemes map with the law? Are they useful? How do they change the prioritisation of the risk within your supply chain?
4. Implement a Control System. Review your requirements, and implement a structured supplier onboarding system suppliers to agree to certain provisions, but also consider what’s in your supply contracts in the event that the information they give you is not correct. Make sure you can ratchet the system up and down depending on the risk and prove how you mitigate risk.

At the end of the day, the law is getting teeth and you need to be able to demonstrate that what you do actually means something – it can’t be just words on an annual statement.

We can help

We can help you cost effectively design a bespoke modern slavery management system that can not only meet the law now, but be set up to prepare you for what is coming.

Best,