What is Australia's Modern Slavery Act and How To Comply?

Companies are under pressure to meet the requirements of the Modern Slavery Acts in Australia and the United Kingdom. Momentum is also growing for other G20 countries to adopt similar laws.

What is “modern slavery”?

Slavery is, unfortunately, not a thing of the past. “Modern slavery” is an umbrella term that includes the following practices:

• Human trafficking;
• Slavery;
• Servitude;
• Forced labor;
• Debt bondage;
• Forced marriage; and
• The worst forms of child labor.

The term does not refer to workplace practices, such as substandard working conditions or the underpayment of workers, but these practices may be present in some modern slavery situations.

Modern slavery can occur in every industry and business sector. It exists today in Australia and around the world. In 2016, an estimated 40.3 million people across the globe were working in conditions of modern slavery and the pandemic may be trapping even more people in modern slavery practices. 24.9 million of those 40.3 million were trapped in some form of forced labor and approximately 16 million of those trapped in modern slavery work in the private sector.

What has the Australian government done to combat modern slavery, through Australia’s Modern Slavery Act?

In 2018, the Australian government enacted a new law, the Modern Slavery Act, to require companies to do more to assess and address the modern slavery risks in their business operations and supply chains. Companies subject to this new law are required to submit a statement to the Australian government each year that provides transparency on what they have done to assess, address, and remediate modern slavery risks in their business operations and supply chains. These reports will be available in a publicly accessible online register maintained by the Australian Border Force so that you and others can see what companies are doing to combat modern slavery risks.

Similar ethical sourcing and modern slavery transparency laws exist around the globe, including in the United Kingdom and in the State of California in the United States. Momentum is growing for other G20 countries to adopt similar laws requiring companies to identify and address modern slavery risks in their operations and supply chains.

Australia’s Modern Slavery Act is unique in many ways:

• It requires covered companies to submit an annual report through an online, and publicly accessible, central government registry.
• The report must explain what the company is doing to assess and address the risks of modern slavery practices in its operations and supply chains.
• This report must be approved by the Board of Directors and signed by a director of the company.
• The report is an annual exercise and expects “continuous improvements.”
• The first reporting deadline is only months away.

The challenges presented by these modern slavery laws are substantial. Compliance calls for an agile, scalable process for surveying hundreds of suppliers, assessing risks, and managing remediation of issues.

What needs to be addressed in the modern slavery statements that some companies are required to submit to the Australian government to comply with Australia’s Modern Slavery Act?

If a company is subject to the reporting requirement under Australia’s Modern Slavery Act, the company will need to identify and address the modern slavery risks it faces in its domestic and global operations and supply chains and in the operations and supply chains of any entities owned or controlled by the company. This is a first step, but a required step, to complete the company’s annual statement for submission to the government’s online central register.

Australia’s Modern Slavery Act does not require companies to certify that their business operations and supply chains are slavery free. A company should, however, aim to highlight the following in its first statement:

(1) How the company is taking meaningful action to assess and address its modern slavery risks;

(2) Why the company is prioritizing certain risks and actions; and

(3) How the company plans to improve their modern slavery compliance program over time.

Even if your company is not required to submit an annual statement to the Australian government, your company may be a supplier to one or more companies that are required to submit a statement. These reporting companies may reach out to your company and ask that your company complete an assessment questionnaire to help them assess and address the modern slavery risks in your company’s operations and supply chains.

These questionnaires may be lengthy and require your company to provide specific information and documentation about your company’s geographic footprint, current modern slavery compliance program, workplace practices, and supplier oversight programs.

Since the Modern Slavery Act is new and many companies are learning how to navigate these new requirements, it make take everyone longer to circulate, review, complete, and respond to these questionnaires. However, this process should be collaborative – so if you have questions about anything in these questionnaires, reach out to the sender for clarification.

The annual reporting requirement under Australia’s new law means that compliance is not a “one and done” exercise. The Australian government expects reporting companies to take a “continuous improvement” approach to compliance and drive a “race to the top” to improve workplace practices. Annual statements should improve in quality and demonstrate progress over time as companies increase their understanding of their unique and evolving modern slavery risks. This means that suppliers will need to be prepared to respond to these questionnaires each year – and the questions asked may change each year.

CENTRL’s Modern Slavery Compliance Platform (MSA360) is a purpose-built fully automated tool for companies to efficiently assess the risks presented by their suppliers on a recurring basis. It comes out-of-the-box with pre-built assessment templates, scoring frameworks, regulatory reports, and management dashboards. It requires little set-up and can be implemented quickly.

To learn more about the reporting requirements, see Annual Reporting Requirements for Modern Slavery Act Compliance.