Update on the Modern Slavery Act Review

With the introduction of the Modern Slavery Act in 2018, Australia became a leading jurisdiction in combating Modern Slavery, which is defined as the exploitation of workers where offenders use coercion, threats or deception to exploit employees, and undermine their freedom.

The Act made provisions for a statutory review of the act, which commenced in 2022 and concluded with the release of the Report of the statutory review of the Modern Slavery Act 2018 (Cth) by the Attorney General's Department on 25 May 2023.

The report made 30 recommendations for government consideration, including:

• amendments to the Act, such as the threshold and scope of entity reporting;
• allowing for the optional reporting period of 3 years, with an informational update to the full statement provided in the intervening years;
• introducing penalties for specific non-compliance;
• expanding guidance material (including requiring reporting entities to have a due diligence system in place); and
• the role of the Anti-Slavery Commissioner in relation to the Act.

The various recommendations were made to strengthen the Act to address what was seen as three main weaknesses in its current state:

• the standard of modern slavery reporting is variable;
• the reporting obligation is not properly enforceable; and
• the process is at risk of being drowned by a sea of large and incompatible statements.

While the Government is yet to detail to what extent the recommendations will be adopted and enshrined in law, there has been an indication that they are committed to strengthening Australia’s response to Modern Slavery through pre- and post-election commitments, including:

• establishing an independent office of Anti-Slavery Commissioner;
• the introduction of a penalties regime; and
• the ability for the Minister or the Commissioner to declare that a region, location, industry, product, supplier or supply chain is regarded as carrying a high modern slavery risk.

A key consideration for organisations is the recommendation to extend the reporting obligation under the Act to businesses with an annual consolidated revenue of $50m or more, compared to the current reporting threshold is $100m. This would increase the number of reporting entities significantly, with over 2,000 businesses estimated to become mandated to report against the Act under this lower threshold, generating a significant regulatory burden for them.

The review and proposed recommendations should be noted and considered by organisations whether they are currently reporting under the Act or may be required to with the new reporting threshold. It is also worthwhile being conscious of the proposed recommendations relating to a penalties regime as well as the additional or varied mandatory reporting requirements that build on the already prescriptive expectations of the Act. Furthermore, for organisations with a developed, or those in the process of developing, an Environmental, Social and Governance (ESG) framework, undertaking activities to combat Modern Slavery in supply chains, and reporting under the Act fits squarely in the ‘S’ and ‘G’ of your framework.

For advice and assistance in relation to the Modern Slavery Act, please contact our team. Grant Thornton have supported a variety of organisations to prepare both mandatory and voluntary reporting under the Act, and we have our own statement here.