Global Modern Slavery Developments (Part II): A Review of the New Australian Modern Slavery Act – By Shamistha Selvaratnam

Editor’s note: Shamistha Selvaratnam is a LLM Candidate of the Advanced Masters of European and International Human Rights Law at Leiden University in the Netherlands and a contributor to the Doing Business Right project of the Asser Institute. Prior to commencing the LLM, she worked as a business and human rights solicitor in Australia where she specialised in promoting business respect for human rights through engagement with policy, law and practice.


Soon after the introduction of the UK Modern Slavery Act (UK Act) in 2015, discussions about establishing similar legislation in Australia commenced. In February 2017, the Attorney-General asked the Joint Standing Committee on Foreign Affairs, Defence and Trade (Committee) to commence an inquiry into establishing a Modern Slavery Act in Australia. The terms of reference of the inquiry included, inter alia, considering the ‘prevalence of modern slavery in the domestic and global supply chains of companies, businesses and organisations operating in Australia’ and whether a Modern Slavery Act comparable to the UK Act should be introduced in Australia. The Committee released an interim report in August 2017 and then a final report in December 2017 – both reports supported the idea of developing a Modern Slavery Act in Australia and set out the Committee’s recommendations with respect to the parameters of a corporate reporting requirement. In the meantime, the Australian Government also published a consultation paper and regulation impact statement outlining its proposed reporting requirement for an Australian Modern Slavery Act.

In June this year, the first draft of the Modern Slavery Bill 2018 (Cth) (the Federal Bill) was introduced into the Australian Parliament. It set out a reporting requirement for large Australian entities to submit a statement on risks of modern slavery in their operations and supply chains. The Explanatory Memorandum to the Federal Bill stated that it supports ‘large businesses to identify and address modern slavery risks and to develop and maintain responsible and transparent supply chains. It will drive a ‘race to the top’ as reporting entities compete for market funding and investor and consumer support.’ On 29 November 2018 the Federal Bill passed both houses of the Australian Parliament incorporating amendments made by the Upper House of Parliament. The amendments resulted in the inclusion of a provision giving the Minister power to request explanations from entities that fail to comply with the reporting requirement (discussed in further detail below) and gives the Minister the power to cause an annual report to be prepared providing an overview of compliance by entities and identifying best practice modern slavery reporting. 

This second blog of a series of articles dedicated to the global modern slavery developments provides an overview of the main elements of the Federal Bill and how it compares to the UK Act. It also discusses the Modern Slavery Act 2018 (NSW) (NSW Act), which was introduced by New South Wales (NSW), a State in Australia. The introduction of NSW Act was relatively unexpected given the movement at the Federal level to introduce national legislation addressing modern slavery in the corporate context. Therefore, this blog will discuss the NSW Act’s interplay with the Federal Bill. It will be followed by a final piece on the modern slavery developments in other jurisdictions in the corporate context.


Key Aspects of the Federal Bill

The Federal Bill requires reporting entities with at least $100 million global consolidated revenue to submit an annual modern slavery statement on the risks of modern slavery in their operations and supply chains.

What is ‘modern slavery’?

As stated in the first blog post in this series, while there is no globally agreed definition of ‘modern slavery’ under international law, it does appear that modern slavery is an umbrella term that covers a range of exploitative practices. As summarised by Anti-Slavery International, human exploitation characterised by only one of the following features is classed as ‘modern slavery’: (i) coercion to work through either mental or physical threat; (ii) being owned or controlled by an employer, usually through mental or physical abuse or the threat of abuse; (iii) being dehumanised or treated as a commodity; or (iv) being physically constrained or with limited freedom of movement.

The Federal Bill defines ‘modern slavery’ by reference to certain offences in the Australian Criminal Code, including slavery, servitude, forced labour, trafficking in persons, forced marriage, child trafficking, debt bondage and other slavery-like practices, and certain forms of child labour. Accordingly, the acts caught by the term ‘modern slavery’ under the Federal Bill are broader than the acts caught under the UK Act, which states that the offences of ‘modern slavery’ are slavery, servitude, forced or compulsory labour and human trafficking.

Who is required to report?

The term ‘reporting entity’ is defined as any of the following:

  • An Australian entity or an entity carrying on a business in Australia with a consolidated revenue of at least $100 million for the reporting period.
  • The Commonwealth.
  • A corporate Commonwealth entity or Commonwealth company which has a consolidated revenue of at least $100 million for the reporting period.
  • An entity that volunteers to comply with the Federal Bill.

Accordingly, similarly to the UK Act, the Federal Bill applies to an entity regardless of its geographic location, so long as it carries on at least a part of its business in Australia. A body corporate carries on a business in Australia if it, inter alia, has a place of business (i.e. a business address) in Australia.[1] Entities that do not meet the definition of a ‘reporting entity’ can voluntarily produce a Modern Slavery Statement. However, the monetary threshold in the Federal Bill is higher than that in the UK Act and, accordingly, a smaller group of entities will be captured under the Federal Bill. It is anticipated that approximately 3,000 entities will be captured.

What are reporting entities required to report on?

Unlike the UK Act which sets out optional criteria which Modern Slavery Statements may include information about, the Federal Bill sets out mandatory criteria which such Statements must cover, namely: 

a)     the identity of the reporting entity;

b)     a description of the structure, operations and supply chains of the reporting entity;

c)     a description of the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;

d)     a description of 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;

e)     a description of how the reporting entity assesses the effectiveness of such actions;

f)      a description of the process of consultation with any entities that the reporting entity owns or controls; and

g)     any other information considered relevant.

Accordingly, the Federal Bill is prescriptive about the content of Modern Slavery Statements and goes beyond the optional criteria in the UK Act by requiring reporting entities to not only report on modern slavery risks in their operations and supply chains, but also on how they assess the effectiveness of the actions they take to address those risks.

Further, the Federal Bill allows for joint statements to be published by a reporting entity on behalf of the reporting entities that it owns or controls. The parent entity must consult with the boards of the relevant subsidiaries when preparing the statement on their behalf.

Who is responsible for reporting?

Similarly to the UK Act, the Board of directors will bear the ultimate responsibility for Modern Slavery Statements with the Federal Bill requiring the Board to approve the statement and a director to sign the statement.

How can published Modern Slavery Statements be accessed?

Unlike the UK Act, the Federal Bill provides for a Modern Slavery Statements Register to be established and maintained by the Minister, with Statements being available for public inspection online.

What happens if reporting entities do not report?

In the event that a reporting entity that is required to report under the Federal Bill does not report, similarly to the UK Act, no financial penalties will be imposed on that entity. However, the Minister does have the power to request an explanation from an entity about its failure to comply with a requirement in relation to Modern Slavery Statements, and may also request that the entity undertake remedial action in relation to that requirement. If the entity fails to comply with the request, the Minister may publish information (including the identity of the entity) about the failure to comply on the Modern Slavery Statements Register or elsewhere. The publication of such information is likely to result in public, shareholder and investor criticism, which can be costly to the reputation of reporting entities.


The critiques of the Federal Bill

While the Federal Bill is very young, it has received some critiques.

Human Rights Watch has argued that the Federal Bill ‘falls short of an effective response to the widespread and growing role of modern Slavery in Australia’s supply chains.’ Among other things, it stated that the monetary threshold is too high thereby limiting the scope of application of the Federal Bill. Further, it contends that because the Federal Bill does not require entities to carry out due diligence, they may simply engage in a ‘”checking the box” exercise’. It recommends that minimum guidelines for due diligence that are ‘proportional to the size of a company’s supply chain and modern slavery risk’ be introduced in the Federal Bill. It has also strongly recommended the inclusion of financial penalties for failure to report under the Federal Bill in order to provide an ‘additional incentive toward compliance’ by businesses.

Oxfam International notes that the Federal Bill is ‘not strong enough’ as it is ‘missing critical elements to ensure companies will be compelled to take the urgent action needed to protect’ victims of modern slavery in their operations and supply chains. It argues that the Federal Bill should include penalties for entities that fail to report and an independent oversight body should be established to monitor the implementation of the Bill. 

Similarly to Oxfam International, Justine Nolan and Fiona McGaughey have also stated that a shortcoming of the Federal Bill is the lack of penalties for non-compliance with the reporting requirement. They argue that enforcement is effectively left to NGOs, shareholders and investors to ‘put pressure on the companies to comply with their reporting obligations’. They also state that the lack of independent oversight raises questions regarding the ‘efficacy’ of the reporting requirement.

Modern Slavery Act in New South Wales

In June 2018, prior to the passing of the Federal Bill, the NSW Act was passed (for more on the NSW MSA, see here and here). The NSW Act requires ‘commercial organisations’ to prepare an annual Modern Slavery Statement. ‘Commercial organisations’ are organisations with more than one employee in NSW that supply goods and services for profit or gain with a total global turnover of not less than $50 million per financial year. The criteria that must be satisfied by the Statement will be set out in regulations that have not yet been introduced in the NSW Parliament. However, the criteria may include information about the following:

a)     the organisation’s structure, its business and its supply chains,

b)     its due diligence processes in relation to modern slavery in its business and supply chains,

c)     the parts of its business and supply chains where there is a risk of modern slavery taking place, and the steps it has taken to assess and manage that risk,

d)     the training about modern slavery available to its employees.

Unlike both the UK Act and the Federal Bill, the NSW Act has teeth as failure to report may result in financial penalties of up to $1.1 million being imposed on the relevant organisation. Further, failure to make a Modern Slavery Statement public or to provide false or misleading information in a Statement carry financial penalties of up to $110,000.

The position as to whether entities will be required to report under both the Federal Bill and the NSW Act is still unclear. However, the NSW Act does state that it will not apply to a commercial organisation where it is subject to obligations under a Commonwealth law that is ‘prescribed as a corresponding law’. The Federal Bill is yet to be prescribed as a ‘corresponding law’. If it is so prescribed, then entities that would otherwise be required to report under the Federal Bill and the NSW Act will only be required to report under the Federal Bill. Accordingly, the NSW Act will capture entities with a total global turnover of between $50 million and $100 million.



The Federal Bill and the NSW Act are part of the wider movement towards greater corporate regulation and transparency with respect to human rights. It marks another steps towards the implementation of the UN Guiding Principles on Business and Human Rights globally and aims at fostering corporate respect for human rights.

It is clear that the Federal Bill and NSW Act have been heavily influenced by the UK Act but have addressed some of the shortcomings of the UK MSA discussed in the first blog post. In particular, the Federal Bill has mandatory criteria that reporting entities are required to report on and it is likely that the NSW Act will also have similar mandatory criteria. The UK Act on the other hand has optional criteria meaning that business are only required to publish a Modern Slavery Statement that is signed by a director and approved by the Board – the content of the Statement is irrelevant. The use of mandatory criteria is more likely to inspire change within businesses in Australia with respect to their practices relating to addressing and preventing modern slavery.

Similarly to the UK Act, the Federal Bill does not impose financial penalties on businesses that fail to comply with the reporting requirement. It does however give the Minister power to request an explanation from an entity about its failure to comply with a requirement in relation to Modern Slavery Statements, and to publish information in the event of non-compliance with such a request. The effectiveness of this provision will depend on whether the Minister invokes it. The NSW Act goes beyond both the UK Act and Federal Bill by imposing financial penalties on businesses that fail to comply with its reporting requirement. This is a big step forward in the fight against modern slavery as it is likely to incentivise businesses to take active steps to combat modern slavery in their operations and supply chains.

The Federal Bill will come into force on 1 January 2019. It is likely that the NSW Act will come into force around the same time. Accordingly, the first Modern Slavery Statements will be due by 1 January 2021. The date on which the first Modern Slavery Statements will be due under the NSW Act will be known once the regulations have been introduced. It is likely that the reporting dates of the Federal Bill and the NSW Act will be aligned in order to decrease the administrative burden on entities.

[1] An body corporate will also carry on a business in Australia if it establishes or uses a share transfer office or share registration office in Australia, or in the State or Territory, as the case may be, or administers, manages, or otherwise deals with, property situated in Australia, or in the State or Territory, as the case may be, as an agent, legal personal representative or trustee, whether by employees or agents or otherwise.


Comments are closed