Modern Slavery Act – Compliance

In case you haven’t noticed, Australia now have two modern slavery acts. One for NSW (which was passed first) and one for Commonwealth.

Slavery has been illegal for many years, so why do we need these new pieces of legislation?

The answer is that there are more slaves now than at any other time in history. It is estimated that in Australia alone, 15000 people work in slavery-like conditions. These people could be pickers working in horticulture, cleaners cleaning your offices after hours or staff working behind the scenes in your favourite local take-away place.

Overseas the number of slaves is even higher. Estimates of global slavery agree that approximately 40 million people live in slavery like conditions. And while these numbers are staggering, it is important to remember that every single one of these slaves is a human being, with a beating heart and a family they miss somewhere in the world.

This is of course not acceptable, and for that reason the government (both NSW and the Commonwealth of Australia) decided to act by introducing legislation to address this issue.

The Modern Slavery Acts are both designed to drive transparency.

Both Acts define slavery and stipulate what actions companies must take to make this abhorrent practice visible and holding themselves to account. Companies who reach the revenue threshold must submit a Modern Slavery Statement.

Intimately understanding the internal workings of any business has always been a well-established path to drive efficiency, increase profits and market reach. Understanding what is going on deep in the supply chain on the other hand has traditionally been considered someone else’s responsibility.

Because of this attitude, it was easy to claim ignorance – and with good justification.

This is not the case anymore though. With the Modern Slavery Acts, companies are required to report on their efforts to secure a slave free supply chain.

Both pieces of legislation define 7 mandatory reporting criteria, which any reporting entity must cover:

  1. Reporting Entity & Structure,
  2. Operations and Supply Chain mapping,
  3. Risks of Modern Slavery,
  4. Steps taken to assess and address the risks,
  5. Evaluate how effective the steps taken are at addressing modern slavery risks,
  6. Describe the internal consultation,
  7. Any other relevant information.

 

The two Acts have some minor differences, as highlighted in the table below.

Requirements NSW Modern Slavery Act Commonwealth Modern Slavery Act
Revenue Threshold $50 – $100M +$100M
Penalties for non-compliance Up to:

$1.1M for failure to prepare a statement

$1.1M for failure to publish a statement

$1.1M for providing false or misleading information

Option to “Name & Shame”
Anti-slavery commissioner Yes No
Body overseeing reporting Independent Anti-slavery Commissioner Business Engagement Unit /

Modern Slavery Engagement Unit

Pathway to voluntary Reporting No/To be determined Yes
Commencement To be determined 1 January 2019

 

It is not intended for businesses to duplicate work and report twice, so if you are above the $50 million revenue threshold, you will either report to NSW or to the Commonwealth.

The application of the act is to be Risk based, and there is no expectation that companies must get it right in the first go.

However, there is an expectation that this legislation will drive increased transparency and board level oversight. Ad to this what the Corporations act says about “providing false and misleading information” and the driving forces to do something is quite substantial.

A good place to start is to develop the right policies and start enquiring with suppliers on what actions they are taking to safeguard you. Another recommended (initial) step, is to prepare a Self-Assessment Questionaire (SAQ), which you can send to your suppliers for commentary. The responses to SAQ’s are never perfect (they should be taken with a grain of salt), but it is a starting point, allowing you to understand where the shortcomings are.

Looking further into your supplier base is also a good idea, but it should be risk based (ideally based on the outcome of the SAQ).

Conversely, if you are a supplier to a larger business, you can expect that they will reach out to you to understand what is being done to safeguard them against modern slavery. Having a good response to this can easily put you in front of your competitors who haven’t yet considered this an issue to be addressed.

There are many other steps that can be taken, but as with so many other things, the journey starts with the first step.

If you would like further information, please feel free to get in touch with our accountants in North Sydney, or Crows Nest.

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This article was written by Carsten Primdal, a Bramelle Partners client.

Carsten works at Zoic Environmental Pty. Ltd. Where he leads the sustainability team lead. He is a Sustainable Supply Chain Expert with extensive experience in Australia, Asia and Europe.

Carsten can be reached at 0413 089 020 / carsten.primdal@zoic.com.au if you would like to understand some of the aspects of the Modern Slavery Act better.