Australia’s modern slavery reporting requirement for businesses

On 29 June 2018, the Australian Government introduced to the Federal Parliament its much anticipated Modern Slavery Bill. This Bill requires certain business entities to disclose on an annual basis their actions to address modern slavery (exploitation such as slavery, forced labour and human trafficking) in their operations and supply chains.

This alert explains the Bill and the actions that will be required when the Bill becomes law.

Modern slavery reporting requirement

Entities required to report

The reporting requirement will apply to:

  • Australian entities;
  • Foreign entities carrying on business in Australia;
  • Australian Government (on behalf of all non-corporate Commonwealth entities);
  • Corporate Commonwealth entities; and
  • Commonwealth companies.

Australian entities are widely defined and are included irrespective of whether such entities are Australian residents for tax purposes.

Foreign entities will be considered to be carrying on business in Australia if: they have a place of business in Australia; establish or use a share transfer or registration office in Australia; or administer, manage or deal with property situated in Australia as an agent, legal personal representative or trustee. This will capture a foreign entity that carries on business in Australia through an Australian subsidiary.

Australian or foreign entities that are not required to report can ‘opt in’ to the reporting requirement. Such entities must comply with the reporting requirement in the same way as reporting entities.

Revenue threshold

Entities with a total annual revenue below $100 million will not be required to report. “Revenue” includes the consolidated revenue of the reporting entity and any entities it controls. The revenue threshold is calculated based on the reporting entity’s own financial year or reporting period. Consolidated revenue is to be determined in accordance with the Australian Accounting Standards, even if those standards do not otherwise apply to the entity.

Modern slavery statements

Reporting entities (or ‘opt in’ entities) depending on their corporate structure, may prepare either single or joint modern slavery statements. Modern slavery statements must identify the reporting entity and address mandatory criteria:

  • the reporting entity’s structure, operations and supply chains;
  • modern slavery risks in the reporting entity’s operations and supply chains (including subsidiary entity operations and supply chains);
  • actions taken (including actions by subsidiary entities) to assess and address those modern slavery risks, including due diligence and remediation processes;
  • how the reporting entity assesses effectiveness of the actions taken;
  • the process of consultation with subsidiary entities in preparing the modern slavery statement; and
  • any other information the reporting entity considers relevant.

All joint statements must address the mandatory criteria for each and every reporting entity covered by the statement.

The Australian Government is to provide formal administrative guidance on the terms ‘risks’, ‘operations’, ‘supply chains’, ‘due diligence’ and ‘remediation processes’. It is anticipated that these definitions will align with the UN Guiding Principles on Business and Human Rights. It is not intended that entities report on all modern slavery risks or on identified incidences of modern slavery. The initial expectation is to report on the most severe modern slavery risks which is not restricted to tier 1 or direct suppliers.

Formal guidance will also be provided on each form of exploitation that comprises the term ‘modern slavery’: slavery; servitude; forced labour; forced marriage; debt bondage; deceptive recruiting for labour or services; trafficking in persons; harbouring a victim; and the worst forms of child labour. Relevant definitions in the Commonwealth Criminal Code and international human rights law will be drawn upon for this purpose.

Further, a template modern slavery statement will be provided to assist businesses in reporting.
The Bill also enables a business to submit a revised (single or joint) modern slavery statement.

This allows reporting entities to correct any false or misleading statements, errors, or to revise market sensitive information.

Approval of modern slavery statements

Single reporting entities must ensure their modern slavery statement is approved by the principal governing body of the entity (e.g. board of directors) and signed by a responsible member (e.g. director, trustee).

Joint reporting entities have three options for approval and signature:

  1. principal governing body and responsible member of each reporting entity covered by the statement approve and sign; or
  2. principal governing body and responsible member of the entity which is in the position to influence or control each reporting entity covered by the statement approve and sign; or
  3. if the first and second options are not practicable, the principal governing body and responsible member of at least one reporting entity covered by the statement approve and sign, accompanied by an explanation as to why the other approval options were not practicable.

Statements (single or joint) may be signed electronically.

The Bill authorises the Minister to make rules to clarify the terms ‘principal governing body’ and ‘responsible member’ for specific entity types.

Timeframe for reporting

The timeframe for submission of modern slavery statements depends on an entity’s financial year or other annual accounting period (reporting period).

Single reporting entities will be required to submit their modern slavery statement within 6 months from the end of the entity’s reporting period.

Joint reporting entities will be required to submit their modern slavery statement within 6 months from the end of the reporting period that applies to all reporting entities covered by the statement or within a period to be determined by the Minister.

Modern slavery statements register

The Bill establishes a Modern Slavery Statements Register in the form of a public website that will be freely accessible and also requires the Minister to register modern slavery statements. Entities can also make their statements available on their business webpages if they wish to do so.

The Minister may decline to register a modern slavery statement that does not comply with the mandatory reporting criteria or relevant approval, signature and timeframe for reporting requirements. This discretion is not subject to merits review. It is anticipated that the exercise of the discretion to decline registration would only apply in cases of egregious non-compliance and after reasonable attempts to work with such entities in rectifying issues.


The Bill will commence on a fixed date by Proclamation or six months from Royal Assent. This is to enable the reporting requirement to commence at the beginning of either the Australian calendar year or the Australian financial year.

Entities subject to the Modern Slavery Act (NSW)

On 21 June 2018, the NSW Parliament passed its Modern Slavery Act. This Act also establishes a modern slavery reporting requirement for certain business entities.

The NSW Act will not apply to entities required to prepare a modern slavery statement under the Australian Government’s reporting requirement (when in force) if such reporting requirement is prescribed as a corresponding law under the NSW Act.

Actions businesses need to take

The modern slavery reporting requirement means businesses with more than $100 million in annual revenue will need to gain visibility into their global supply chains and take action to manage identified risks. This will involve a range of operational measures and updating of supplier contracts.

Operational measures include:

  • establishing a policy for responsible supply chains that articulates a commitment to responsible business conduct in its own operations and sets out expectations of suppliers;
  • undertaking due diligence, such as the pre-screening of suppliers and supplier assessments or audits;
  • designing and implementing a strategy to respond to identified risks, which may involve a range of responses such as corrective action plans, training and assistance to suppliers;
  • verifying that the actions taken have been effective, which involves the development of performance indicators and data monitoring;
  • training key personnel in the entity’s own business as well as training suppliers on how to identify and mitigate modern slavery; and
  • establishing a clear chain of responsibility and assigning senior level approval for policy oversight and in relation to the modern slavery statement.

Supplier contracts should be updated to include:

  • assessment/audit rights, including the right to undertake announced and unannounced assessments/audits, assessments/audits by third parties, and the requirement for full cooperation;
  • immediate notification of actual or potential non-conformance with policy;
  • a commitment to follow corrective action plans in instances of non-compliance with policy;
  • the right to suspend or terminate the contract for failure to meet policy standards, failure to cooperate with an assessment or audit process or failure to follow a corrective action plan; and
  • the right to inform relevant authorities of the above.

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


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


Shaky ground for ‘maximum term’ contracts? Full Bench paves the way for unfair dismissal claims

Key takeaway

A recent decision by the Full Bench of the Fair Work Commission has opened access to unfair dismissal laws for workers employed on successive, maximum term contracts. Maximum term or ‘outer limit’ contracts are contracts for a specific period of time which may also be terminated before the end of that period by the giving of notice.

The Full Bench in Khayam v Navitas [2017] FWCFB 5162 (Navitas) has determined that, in the context of a dismissal, the Fair Work Commission (FWC) should not simply look at the expiry of the most recent contract, but take into account the employment relationship as a whole. Where, for example, an employee has been engaged on a succession of contracts and is not offered a fresh contract due to performance issues, the termination of employment may now be seen to give access to the unfair dismissal regime.

However, importantly for employers, where the terms of a maximum term contract (written or otherwise) reflect a genuine agreement as to the conclusion of the employment relationship on expiry of the term, the employee will remain precluded from accessing the unfair dismissal jurisdiction.

The pre-Navitas landscape

Maximum term contracts have, until now, precluded employees from accessing unfair dismissal protections. This was because the termination of the employment on expiry of such a contract was not seen as a dismissal at the employer’s initiative, but rather one occurring due to the contract reaching its agreed expiration date. This form of employment and termination had been legitimised in cases such as Department of Justice v Lunn (2006) 158 IR 410) (Lunn).

Lunn concerned an employee of the Attorney-General’s Department who had been employed on five successive maximum term contracts between 1998 and 2005. The employee was told that her final contract would not be renewed or extended. The Full Bench decided that the termination of the employment should be considered only in the context of the last maximum term contract. The Full Bench then held that the employment had simply terminated due to the expiry of the last contract and this precluded the employee from accessing the unfair dismissal regime.

This case legitimised the ability of employers to not continue employment (by extending or renewing a contract), even where performance issues played a role in that decision. It is important to note that the Lunn decision was based on the unfair dismissal provisions of the old Workplace Relations Act 1996, although it has been followed numerous times by the FWC under the new legislation.

The decision of Navitas

The case of Navitas concerned an employee of an education provider engaged on successive, maximum term contracts between April 2012 and May 2016. At the conclusion of the latest employment contract, the employer determined not to provide the worker with further employment due to performance issues. The employee challenged that decision, but the FWC held that the termination was not an unfair dismissal. The employee appealed.

On appeal, the Full Bench considered a number of recent cases which had criticised the approach taken in Lunn and determined that the principles in Lunn where incorrect and did not apply to the Fair Work Act.

Rather than simply viewing the last maximum term employment contract in isolation, the Full Bench held that the proper approach was to view the dismissal in light of the entire employment relationship. That is to say, from when the period of employment with the organisation first commenced.

The primary focus of the FWC will now be whether there was a step or action on the part of the employer that was a principal contributing factor in the termination of the employment relationship.

The Full Bench referenced situations in which an employee is provided successive, maximum term contracts and an understanding arises between the employer and employee that a new contract will be forthcoming unless there is a performance or other issue. Such an example may give rise to an unfair dismissal claim if the employee is not offered a further contract.

Maximum term contracts must reflect a genuine agreement as to the conclusion of the employment contract and the employment relationship if the employer wishes to avoid an unfair dismissal claim.

Deliberate avoidance of the unfair dismissal provisions

The Full Bench also considered the operation of section 386(3) of the Fair Work Act. This anti-avoidance provision states that if an employee has been employed under a contract of employment for a specified period of time and a substantial purpose of that arrangement is to avoid the unfair dismissal regime, then the exemption from an unfair dismissal claim will not apply.

In Navitas the Full Bench agreed with the decision of the Commissioner that this provision had not been contravened by the employer. However, employers should remain wary that employees may also look to utilise this provision if their attempts to bring unfair dismissal claims are frustrated by successive, maximum term contracts.

Mutual Trust and Confidence – Dead and Buried!

In one of the most significant employment law decisions in decades, the High Court of Australia has today decided that a term of mutual trust and confidence should not be implied into all employment contracts.


Stephen Barker was made redundant by the Commonwealth Bank in 2009. Unfortunately, his redeployment process miscarried. He sued the Bank. He argued that the Bank’s failure to comply with its redeployment policy caused him to lose an opportunity to be redeployed. His claim was successful and he was awarded damages of $317,500.

At trial, the Federal Court held that the Bank’s failure to comply with its redeployment policy breached an implied term that parties will not, without reasonable cause, engage in conduct likely to destroy the relationship of trust and confidence that must exist between an employer and employee.

On appeal, a majority of a Full Court of the Federal Court (Jacobsen and Lander JJ, Jessup J dissenting) agreed that a term of mutual trust and confidence was implied by law into Mr Barker’s contract. However, that term was not breached by the Bank’s non-compliance with its redundancy policy. Instead, it was breached by the Bank not taking positive steps to consult with Mr Barker about alternative positions and not giving him an opportunity to apply for those positions.

High Court’s decision

In a unanimous decision (French CJ, Kiefel, Bell, Gageler and Keanne JJ), the High Court upheld the Bank’s appeal. The Court found that the implication of the term was “a step beyond the legitimate law-making function of the courts” and “should not be taken”1. The Court (in three separate judgments) considered the different bases on which terms can be implied in the contracts. All Justices agreed that it was not necessary to imply a term of mutual trust and confidence into Australian employment contracts.

All Justices adopted a cautious approach to the implication of terms and, when doing so, shied away from “complex policy considerations”2. Their Honours felt these considerations made the possible implication of such a term a matter more appropriate for the Parliament, rather than courts, to determine.


Employees, particularly those that do not have access to the unfair dismissal regime, will feel aggrieved. They may well ask – is it fair that we are subject to a “duty of good faith” to our employers, but they are not subject to a reciprocal duty towards us?

The answer to this question may well be – it’s not fair, but that does not make implication of the term a necessity. On that point, Mr Barker’s landmark case failed. Consequently, most employers will breath a sigh of relief.
1. French CJ, Bell and Keanne JJ, paragraph 1
2. French CJ, Bell and Keanne JJ, paragraph 40