27 June 2018

Modern Slavery Reporting Requirement - NSW first mover on supply chain transparency

This article was written by Monique Carroll.

Last year we reported on the Federal Government’s proposal to introduce legislation to combat modern slavery, in line with the UK’s Modern Slavery Act which came into force in 2016. Now, New South Wales has become the first mover by introducing the Modern Slavery Act 2018 (NSW) (MSA). The MSA in many respects mirrors proposed legislation being considered by the Federal Parliament but goes further in key respects, in particular the imposition of penalties for non-compliance or false and misleading statements.

The key provisions of the MSA are as follows.

Key provisions of the MSA

  1. Commercial organisations will be required to publish annually a modern slavery statement prepared in accordance with the regulations which may prescribe the steps to be taken by commercial organisations during the financial year to ‘ensure that its goods and services are not a product of supply chains in which modern slavery is taking place’. Commercial organisations includes any association or corporation, having employees in NSW, with a total turnover in a financial year of at least $50 million.
  2. It will be an offence, punishable by a fine of up to $1.1 million, for a commercial organisation to not publish a complying modern slavery statement or to provide information in a modern slavery statement which is known to be (or ought to be known to be) false or misleading in a material particular.
  3. Supply chain is not defined and so will be defined according to its ordinary meaning in the context of your business.
  4. An Anti-slavery Commissioner will be appointed and will be responsible for education, monitoring and advising in respect of combatting modern slavery and for keeping a public register identifying commercial organisations that have disclosed in their modern slavery statements, or otherwise, that their goods or services are, or may be, a product of a supply chain in which modern slavery is taking place, and whether the commercial organisation is taking steps to address the concern.
  5. A parliamentary committee will also be established to inquire into and report on modern slavery.
  6. Commercial organisations will be exempt if they are subject to a law of the Commonwealth or another State which is prescribed as a corresponding law. This may include any modern slavery reporting requirement adopted by the Federal Parliament.

Read our previous alerts on the proposed Federal legislation here and here.

Implications

All commercial organisations will be required to publish a compliant modern slavery statement unless they are subject to a prescribed corresponding law.

Over recent years there has been heightened discussion about the need for effective laws to combat modern slavery in supply chains (as defined in the Criminal Code Act 1995 (Cth)).As previously reported, the Commonwealth Government is considering introducing a reporting requirement in respect of steps taken to eradicate modern slavery in supply chains for commercial organisations with an annual turnover greater than $100 million. This MSA is recognition of the growing sentiment in favour of laws requiring companies to exercise control over their supply chains.

The MSA substantially overlaps with the reporting requirement implemented in the U.K and proposed at the Federal level in Australia. The key differences apparent at this stage are that the MSA imposes penalties for failure to publish a complying modern slavery statement and for publishing a modern slavery statement which is known, or ought to be known, to be false or misleading in a material particular. These penalties, will need to be viewed in light of the ultimate requirements regulated for the contents of a modern slavery statement, but are likely to result in a stricter reporting requirement. It is not clear whether these differences, if they remain, will impact any Commonwealth law’s status as a ‘corresponding law’.

How to comply?

The MSA indicates that the regulations may require that a modern slavery statement include information regarding:

  1. the organisation's structure, its business and its supply chains;
  2. the organisation's due diligence processes in relation to modern slavery in its business and supply chains;
  3. the parts of the organisation's 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
  4. the training about modern slavery available to its employees.

As mentioned above, it will be an offence to a commercial organisation to not publish a complying modern slavery statement or to provide information in a modern slavery statement which is known to be (or ought to be known to be) false or misleading in a material particular. Commercial organisations should therefore commence, as soon as possible, reviewing their policies and procedures in respect of modern slavery and auditing their supply chain to identify and eradicate modern slavery risks. If this cannot be achieved prior to commencement of the legislation, the commercial organisation will likely be required to identify in its modern slavery statement those risks of modern slavery in its supply.

How can KWM help?

We can help you to:

  • develop internal anti-slavery policies and advise on a framework for monitoring the implementation of these policies;
  • audit your supply chains;
  • consider and amend your procurement agreements;
  • develop culture and corporate governance guidelines;
  • conduct awareness seminars for boards and executives; and
  • prepare a crisis management or response plan if modern slavery is identified in your supply chain.

Contact us for an in confidence and privileged discussion, or about how we can help you undertake an independent review and develop the right policies, procedures and culture to be in the best position once the reporting requirements are finalised.

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