Modern Slavery Bill 2018: Government moves – a little – on non-compliance

The Modern Slavery Bill 2018 aims to establish a modern slavery reporting requirement to strengthen Australia’s approach to combating modern slavery.  Under the Bill, entities with $100 million annual consolidated revenue must prepare a ‘modern slavery statement’ each financial year.  The modern slavery statement must identify the reporting entity and describe:

  • its structure, operations and supply chains;
  • the risks of modern slavery practices in its operations and supply chains, and those of any entities that the reporting entity owns or controls;
  • the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes.  This may include the development of policies and processes to address modern slavery risks, and providing training for staff about modern slavery; and
  • the consultation process with entities that the reporting entity owns or controls.

Follow this link for our previous Alert on the introduction of the Modern Slavery Bill.

On 12 September 2018, the Bill received its second reading in the House of Representatives.  The Labour Party moved a number of amendments:

  • the definition of modern slavery exclude forced marriage;
  • the Minister be required to report annually to Parliament on compliance by reporting entities, including a list of entities required to report and entities that have failed to report;
  • a civil penalty ($210,000) for reporting entities that fail to submit a modern slavery statement within the first two years;
  • a civil penalty ($210,000) for reporting entities that fail to submit, or submit inadequate modern slavery statements, to be introduced after two years; and
  • the appointment of an Anti-Slavery Commissioner.

These amendments were defeated.  The Bill is now before the Senate.  It is anticipated that further debate on these matters will occur at the next sitting of the Senate in November 2018.

With this in mind, the Government has moved to address the central issue of non-compliance, introducing into the Senate amendments to improve the operation of key aspects of the Bill, including by leaving the door open for the future introduction of civil penalties.  Whether the Government’s preparedness to look at penalties in the future is enough to secure passage of the Bill in its current form remains to be seen.

Non-compliance

The Government has proposed empowering the responsible Minister to require a suspected non-compliant entity to explain why it has not complied with a modern slavery reporting requirement or to require that entity to undertake specified remedial action.  Remedial action may include a requirement to give a modern slavery statement or revise an existing statement to ensure all necessary criteria have been addressed.  Reporting entities will have at least 28 days to respond.

If a reporting entity does not comply, the Minister may then publicly identify the entity and disclose:

  • the date and details of the request made, including the period for response and any extensions given;
  • the reasons why the Minister is satisfied the entity has failed to comply with the request; and
  • if the request relates to the entity’s failure to provide a joint modern slavery statement, the identities of the entities covered by that joint statement.

This information could be published on the publically accessible Modern Slavery Statements Register which is proposed by the Bill, or in any other way the Minister considers appropriate.

Any decision by the Minister to identify a non‑compliant entity will be subject to review by the Administrative Appeals Tribunal.  This will ensure that a reporting entity that considers it may have been incorrectly publicly identified by the Minister is able to seek a formal review of the Minister’s decision.

Other Government amendments

The Government has also proposed that the responsible Minister report annually to the Parliament about the implementation of the legislation.  The annual report must include an overview of compliance by entities (e.g. the number of entities that have submitted modern slavery statements) and identify best practice modern slavery reporting.

Another amendment seeks to clarify the focus of the three-year review of the legislation.  This review must evaluate the operation of the legislation generally and determine whether amendments are required, including the need for introduction of civil penalties or other compliance mechanisms.  No doubt this amendment will attract some debate.

Family and Domestic Violence Leave

From 1 August 2018, all award covered employees are entitled to five days unpaid family and domestic violence leave.

Background

As part of the four yearly review of modern awards, the Australian Council of Trade Unions (ACTU) made a claim to provide all employees experiencing family and domestic violence with 10 days of paid leave.

On 3 July 2017, the Full Bench of the Fair Work Commission rejected the ACTU’s claim for paid leave, but expressed a preliminary view that unpaid leave should be available. On 26 March 2018, the Full Bench confirmed this view, deciding to provide five days unpaid leave to all award employees experiencing and needing to deal with the impact of family and domestic violence. In making its decision, the Full Bench said:

“Retaining employment is an important pathway out of violent relationships … Absent an entitlement to unpaid family and domestic violence leave, employees will be reliant on the goodwill of their employer.”

On 6 July 2018, the Full Bench delivered a decision finalising the content of the term for unpaid family and domestic violence leave to be inserted into all Modern Awards.

Further to that decision, on 27 July 2018, the Full Bench issued Determinations which vary all Modern Awards by inserting the approved term. The Determinations provide for the new entitlement to come into effect at the start of the first full pay period that commences on or after 1 August 2018.

The Determinations

The Determinations provide:

  • five days’ unpaid leave to deal with family and domestic violence for permanent and casual employees;
  • the leave is available if it would be impractical for the employee to deal with the impact of the family and domestic violence outside their ordinary work hours;
  • the five days is available at the start of each 12 month period of the employee’s employment and does not accumulate from year to year;
  • by agreement between the employer and the employee, the period of unpaid leave may be less than a day or more than five days;
  • the leave does not count as service, but does not break the continuity of service;
  • the employee must give notice of the leave as soon as practicable to the employer and advise the employer of the expected duration of the leave;
  • the employer may require evidence that would satisfy a reasonable person that the leave is being requested to deal with family and domestic violence;
  • employers must take steps to ensure that the notice and evidence of taking leave is treated confidentially.

Next Steps

Employers are not required to provide this new entitlement to non-award covered employees. However, now that a standard has been set, “employers of choice” are likely to follow, to the extent they have not already conferred an entitlement like this on their employees.

The Federal Government has foreshadowed legislation extending this entitlement to all employees in Australia covered by the Fair Work Act 2009.

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

 

Minimum wages to increase by 3.5%

The Fair Work Commission’s panel for annual wage reviews released its Annual Wage Review 2017-2018 decision on 1 June 2018.

The decision provides that minimum award wages will increase across the board by 3.5% effective 1 July 2018.

This decision will result in the following increases to the Federal minimum wage rates:

  • Weekly minimum wage: from $694.90 to $719.20 (increase of $24.30);
  • Hourly minimum rate: from $18.29 to $18.93 (increase of 64 cents).
    • The proportion of employees that are paid at the adult Federal minimum wage rate is estimated to be only around 1.9%. However, the 3.5% increase will also apply to the minimum rates of pay contained in all modern awards. Increases to minimum weekly wages will be rounded to the nearest 10 cents. The Panel determined that casual loading in modern awards will remain at 25%.
    • In fixing the increase at 3.5% (up on last years 3.3% increase), the Panel observed that modest and regular minimum wage increases do not result in dis-employment effects or inhibit workforce participation. The Panel did accept that there had been a decline in current enterprise agreement making for a number of reasons many of which are unrelated to increases in the national minimum wage and modern award minimum wages.

Employers should now start to review their employees’ existing rates of pay to ensure compliance with minimum rates when the above changes commence on 1 July 2018. It is also important for employers whose employees are covered by an existing enterprise agreement to review the actual rates of pay paid to these employees. Employers are required to ensure that agreement covered employees are paid no less than the equivalent base rate of pay that would be payable under the underlying modern award following the minimum rate of pay increase in all modern awards.

Annual Wage Review 2017-18 [2018] FWCFB 3500