NSW introduces modern slavery reporting for business

The global movement to eradicate modern forms of slavery has taken another step forward. And, again, much of the responsibility for this progress is being placed on corporates.

On 21 June 2018, the NSW Parliament passed its Modern Slavery Act. This Act will commence on a day to be appointed.

The Act seeks to combat modern forms of slavery (serious exploitation such as slavery, forced labour and human trafficking) and provide assistance and support for victims. Importantly, a key feature of the Act for corporates concerns transparency of business supply chains. The Act requires mandatory disclosure of steps taken by commercial organisations to ensure that their goods and services are not products of supply chains in which modern slavery is taking place.

This alert explains the NSW transparency of supply chains provisions and details the chief differences between these provisions and the Australian Government’s proposed modern slavery reporting model. This alert also sets out other notable features of the NSW Act.

NSW Transparency of Supply Chains

Application

A range of commercial organisations will be captured by the NSW transparency of supply chain provisions. This includes companies, partnerships, associations and other bodies. The provisions will apply to organisations that have employees in NSW and which supply goods or services for profit, with a total annual turnover of $50 million (or more).

Reporting requirement

Commercial organisations will be required to prepare a modern slavery statement for each financial year where the revenue threshold is exceeded.

Statements must detail the steps taken to ensure that goods and services are not a product of supply chains in which modern slavery is taking place. The regulations may require statements to include information about:

  • the organisation’s structure, business and supply chains;
  • the organisation’s due diligence processes in relation to modern slavery within its business and its supply chains;
  • the parts of the business and supply chains where there is a risk of modern slavery taking place and the steps taken to assess and manage that risk; and
  • training about modern slavery available to the organisation’s employees.

Commercial organisations will need to make their statements publicly available (with further details of this requirement to be provided by regulations).

Penalties for non-compliance

The Act imposes penalties of up to $1.1 million for:

  • failure to prepare a modern slavery statement;
  • failure to make the modern slavery statement public (in the manner required) ; and
  • false or misleading information in a modern slavery statement.

Australian Government Transparency of Supply Chain

In February 2017, a Parliamentary Committee commenced its inquiry into establishing a Modern Slavery Act in Australia.  This included consideration of whether a modern slavery supply chain reporting requirement for business should be adopted in Australia.  This would require businesses to disclose publicly their actions to address modern slavery in their supply chains.

In its interim report in August 2017, the Committee expressed its strong support for the introduction of a mandatory reporting requirement for entities operating in Australia.  Following the Committee’s interim report, the Australian Government announced its support for a reporting requirement and released a proposed model.  The Committee, in its final report, responded to the Australian Government’s proposed model.  The Australian Government is currently considering the Committee’s recommendations.  Draft legislation is expected in the first half of 2018.

There are two key differences between the Australian Government’s proposed model and NSW transparency of supply chain provisions.  The Australian Government’s model has a revenue threshold of $100 million, compared to NSW’s $50 million, and does not propose to include punitive penalties for non-compliance.

Another possible point of difference is that the federal legislation is likely to provide for a public register of all statements (not just those which have disclosed that the organisation’s goods or services are or may be the product of supply chains in which modern slavery may be taking place), whereas the NSW Act provides for a register of organisations (not their statements) which have identified a supply chain modern slavery issue, along with whether those organisations have taken steps to address the identified issues.

Notably, any commercial organisation that is required to prepare a modern slavery statement under the Australian Government’s reporting requirement (when enacted) is not likely to be required to prepare a statement under the NSW provisions.

Other features of the NSW Act

Establishment of an Anti-Slavery Commissioner

The Act appoints an Anti-Slavery Commissioner. The functions of the Commissioner include advocating for and promoting action to combat modern slavery and monitoring modern slavery statements.

The Commissioner’s powers extend to consulting with the Auditor-General and the NSW Procurement Board to monitor the effectiveness of due diligence procedures in place to ensure that the procurement of goods and services by NSW government agencies are not the product of modern slavery.

The Commissioner’s powers do not extend to investigating or otherwise dealing with individual complaints.

Public register

The Act requires the Commissioner to keep a register of commercial organisations that have in a modern slavery statement disclosed that their goods or services are or may be the product of supply chains in which modern slavery may be taking place. This register can also include any organisation that has voluntarily disclosed to the Commissioner that its goods or services are or may be the product of supply chains in which modern slavery may be taking place

The register is to be publicly available and accessible free of charge.

Establishment of a Modern Slavery Committee

This Committee will consist of Members of the NSW Parliament (both Houses). The Committee will inquire into and report on matters relating to modern slavery.

New offences

The Act also creates some important new offences in relation to the forced marriage of children, slavery and slavery-like conduct and the administration of digital platforms dealing with child abuse material.

The Act also empowers courts to make “modern slavery risk orders” where a person has been convicted of slavery or slavery-like offences with a view to reducing the risk of that person again engaging in prohibited conduct.

Related alert: Implications for Australian businesses following release of landmark modern slavery and supply chains report, December 2017