By Luke Geary, Partner, and Georgia Davis, Associate

Slavery and slavery-like offences have been illegal under the criminal law in Australia for a long time. Now, a new law, the Modern Slavery Act 2018 (Cth) (MSA), is compelling big businesses in Australia to consider Modern Slavery in a way that they’ve never been obligated to before. The main object of the MSA is to assist the business community in Australia to take proactive and effective actions to address Modern Slavery and specifically Modern Slavery practices occurring in the operations and supply chains of those organisations in Australia.

With the commencement of the MSA on 1 January 2019, any entity that carries on business in Australia with annual consolidated revenue of at least $100 million is now a “reporting entity”. Reporting entities must submit a statement annually to the Department of Home Affairs and Australian Border Force for publication that, among other details, describes the risks of Modern Slavery in their own business and supply chains, as well as clearly stating what they are doing to help combat it.

On 1 December 2020, the first tranche of Modern Slavery statements was published on the Australian Border Force’s online register – marking a new era of transparency in this area. Much like the introduction of privacy laws or workplace health and safety laws some years ago, this is a new regulatory requirement for business that is here to stay, requiring ongoing attention and internal capabilities to provide that attention.

It is worth repeating the word “publication”; the statements are published on a public register and may be read by a wide cohort including the Australian Government, the media, customers, employees, investors, suppliers, business partners, business peers, civil society/members of the public and academics. The statements are published whether they are compliant with the legislation, or not.

There is also a public element to non-compliance. Whilst there are currently no financial penalties for noncompliance with the MSA (though under a similar NSW law, which is yet to commence, there may be fines of up to $1.1m), the MSA provides for a “naming and shaming” regime. Under the MSA, the Minister of the Department of Home Affairs may request that a reporting entity provide an explanation for its failure to comply, and/or require the entity to undertake specified remedial action, within a set time. Where the entity fails to adequately reply to any such request from the Minister, the Minister may publish the identity of the entity as well as details of their failure to comply with the Minister’s request.

As such, legal compliance in this area is accompanied by the muscle and might of the reputational and commercial risks that non-compliance with this piece of legislation poses. If your organisation were to reveal its approach to Modern Slavery as lacklustre, how will your stakeholders react? How does your organisation wish to present in the public forum that it is compliant with the MSA? Specifically, purpose driven organisations risk standing out as being substantially behind their peers, or even diverging from, or appearing inconsistent with, their core values or charitable purpose.

The commercial risk is different for every organisation. The ‘for purpose’ sector in Australia has built a reputation of integrity, and the trust that the community has in this sector is crucial in inspiring the confidence of donors and volunteers that play an essential role in furthering the mission of many organisations. The maintenance of this reputation is naturally, therefore, a key priority for many such organisations.

While some businesses will see this solely as a compliance issue, this legislation involves a serious human rights issue that is impacting the lives of vulnerable people all over the world. Modern Slavery is a term used to describe only the most serious forms of exploitation. It does not include practices like underpayment of workers, workplace health and safety failings and substandard working conditions, though these practices may develop into Modern Slavery over time. Modern Slavery includes practices like human trafficking, slavery, servitude, forced labour, debt bondage, forced marriage and the worst forms of child labour.

The United Nations and the Walk Free Foundation estimate that there are currently approximately 40 million victims of Modern Slavery globally. In July 2019, about half a year after the MSA came into effect, the Birmingham Crown Court in England heard the United Kingdom’s largest human trafficking case.  Judge Mary Stacey, in sentencing, stated “Any lingering complacency after the 2007 bicentenary celebrations of the abolition of the English Slave Trade Act was misplaced. The hard truth is that the practice continues, here in the UK, often hiding in plain sight”, the prosecutor describing the exploitation as a scenario where “human beings have become commodities”. Modern Slavery has severe consequences for its victims and often disproportionately impacts women and girls.

The nature and prevalence of Modern Slavery mean that there is a high risk that it could be present in any entity’s operations and supply chains.  The Department’s guidance materials state that “every entity has Modern Slavery risks in its operations and supply chains”.[1] There is no requirement under the MSA that entities certify that their operations and supply chains are completely slavery-free. This piece of legislation rather aims to help businesses to understand that if you haven’t looked for something, you probably haven’t found anything, but that does not mean it does not exist.

Charitable organisations in Australia need to promptly consider whether their compliance with the MSA will be driven by legal risks alone, reputational risks and perception, or the ethics that are at the core of this piece of law – a desire to help eradicate the serious exploitation of individuals through Modern Slavery.

Mills Oakley Partner Luke Geary is one of Australia’s leading specialists in Modern Slavery, having acted for many victims of Modern Slavery over more than 15 years, as well as supporting many large organisations in designing their responses to this new law.  If your organisation would like assistance in this space, please do let us know, as we would be pleased to assist.

[1] Department of Home Affairs, Commonwealth Modern Slavery Act 2018: Guidance for Reporting Entities (Publication, 2019).