OPINION
Modern slavery legislation – what it means for SMEs Accord’s innovation and education manager Dr Jennifer Semple weighs in on the implications of Australia’s Modern Slavery Act. Modern slavery has been a hot topic leading up to and following the Modern Slavery Act 2018 (Cth) (the Act) entering into force in Australia on 1 January this year, and with NSW also passing its own Modern Slavery Act 2018 (NSW) that – at the time of print – is scheduled to commence on 1 July 2019. This is a good thing. Shining a light on labour crime is something all responsible businesses – and indeed all people – should embrace. With an estimated 40 million victims of modern slavery around the world, and increasing global procurement, it is possible that even the most responsible businesses may have undetected modern slavery in their supply chains. As a crime that is “hidden in plain sight”, modern slavery is not always easy to uncover. And Australia is not immune, with up to 1900 people estimated to be living in conditions of modern slavery.
Requirements of the Act The Modern Slavery Act requires certain entities to prepare annual modern slavery statements describing their actions to assess and address risks in their business and supply chain. These entities include the Federal Government itself. But which businesses are required to report? And what about smaller businesses – ones that do not have to report themselves, but that supply reporting entities down the supply chain – what, if any, will be the implications for them? And what about NSW businesses – are the requirements the same and, if not, which legislation takes precedence? Ever since this issue has come into prominence, Accord has been engaging with the federal government to seek clarification for our member companies on questions such as these, and to voice our concern that SMEs below the reporting threshold may be unintentionally and overly burdened as reporting entities seek to pass on their obligations down the supply chain. Accord members heard directly from the Modern Slavery Business Engagement Unit at the Department of Home Affairs – responsible for implementing the Act – at our AGM industry briefing. The Unit did an excellent job clarifying the above and more questions relating to the new legislation.
Which businesses are required to report? Reporting entities are Australian entities with consolidated revenue of at least A$100 million over a 12-month reporting period. The Modern Slavery Business Engagement Unit was able to clarify how this revenue should be calculated.
60 INCLEAN July/August 2019
It would include revenue from off-shore subsidiaries of an Australian-owned company. But a parent company’s revenue would not have to be included for an Australian subsidiary. And, if there are two or more Australian subsidiaries of the same overseas parent company but they have been established to be independent of each other in Australia, they are considered to be separate.
What about non-reporting entities – what if your business receives a request for information from down the supply chain? Non-reporting businesses have no legal obligations under the Act to comply with requests for information relating to modern slavery. However, businesses will need to consider the potential ramifications of non-assistance. How will this affect the business relationship? It may be helpful to consider exactly what reporting entities are required to do and what they are not. The Modern Slavery Business Engagement Unit identified that, at this stage, it is acceptable for reporting entities to show a meaningful attempt to identify risks of modern slavery in their organisation and supply chain, to describe progress and areas for future focus, rather than to have mapped the entire supply chain, identified and addressed all risks. Your business may wish to consider how difficult or timeconsuming it will be to assist the reporting entity. Can you provide some information? How can the entity support you in this? It is also appropriate to emphasise how your business size, capacity, structure, risk profile and leverage with sub-suppliers impact your ability to provide information and take action.
How does the NSW legislation fit in? Like the federal legislation, the NSW Modern Slavery Act will require businesses to provide an annual statement identifying the risk of modern slavery in their operations and supply chains, and how they are addressing the risk. Unlike the federal legislation, it will apply to commercial organisations with employees in NSW and an annual turnover of $A50 million or more, require reporting on employee training provided, and include punitive penalties for non-compliance. More will be known when the legislation is implemented. Accord is the national industry association for manufacturers and suppliers of all types of cleaning, hygiene, disinfectant and specialised products for use in commercial, institutional and industrial applications. www.accord.asn.au