Many organisations are working through the challenging task of identifying modern slavery risks to satisfy the Commonwealth Modern Slavery Act 2018 (the Act) reporting requirements. COVID-19 has added more complexity to that task.
For those organisations required to comply 1 under the Act, their first annual modern slavery statements may be due this year. Importantly, directors are required to approve the statement, and so it is crucial that directors educate themselves about how to identify, assess, mitigate and report on modern slavery risks.
Update: Extension of reporting deadlines
On 29 April 2020, the Australian Government announced that it has extended the deadline for entities due to lodge statements in 2020 under the Act by three months.
This deadline extension recognises that the coronavirus pandemic is significantly impacting many reporting entities due to submit modern slavery statements in 2020.
The announcement aims to support these entities to meet their obligations under the Act by providing them with additional time to assess changing modern slavery risks linked to COVID-19 and prepare and submit their modern slavery statements.
For entities with a reporting period:
- 1 April 2019 to 31 March 2020, the original deadline for submission of their modern slavery statement of 30 September 2020 has been extended to 31 December 2020; and
- 1 July 2019 to 30 June 2020, the original deadline for submission of their modern slavery statement of 31 December 2020 has been extended to 31 March 2021.
The Australian Border Force (ABF) has recognised that COVID-19 is severely impacting the Australian business community and placing a strain on resources. To assist, the ABF has released guidance (found here) for entities on:
- how to address the impact of COVID-19 in entities’ modern slavery statements; and
- how to reduce the risk of vulnerable workers becoming exposed to modern slavery as a result of the coronavirus pandemic.
Addressing the impact of COVID-19 in modern slavery statements
As set out in the AICD’s modern slavery guide (found here), every modern slavery statement must address all the mandatory criteria set out in the Act. While the ABF advises that entities must continue to assess, address and report on modern slavery risks during the COVID-19 pandemic, it acknowledges that it may be difficult for entities to provide detailed responses to some criteria. For example, entities may have limited capacity to prepare statements (including as a result of staffing changes) or there may have been significant changes to entities’ supply chains. Where this is the case, this should be clearly explained in the modern slavery statement.
The ABF also acknowledges that COVID-19 may impact entities’ steps to address modern slavery, such as the ability to engage with suppliers and provide face-to-face training. The ABF encourages entities to include information about relevant activities implemented or resumed between the end of their reporting period (e.g. 30 June for many Australian companies) and the deadline for submitting their statements (being 31 December, for 30 June reporting entities).
The guidance includes some useful hypothetical case studies setting out how a reporting entity may be impacted and how it could explain these impacts in its modern slavery statement.
Reducing risks for vulnerable workers
Importantly, the ABF outlines how the impacts of COVID-19 may increase the vulnerability of workers across global supply chains, including in Australia. Factories closing, order cancellations and changes to supply chain structures are just some of the ways that can disproportionately affect many workers making them more exposed to modern slavery and other types of exploitation.
Organisations should consider these impacts and take steps to protect and support workers in their operations and supply chains so far as practicable. The ABF sets out some ways this can happen.
Directors should take steps to ensure their organisations are considering this guidance, including by ensuring that senior management are aware of the risks for vulnerable workers in light of the crisis, and are considering taking steps to:
- Maintain supplier relationships. This can be achieved by:
- Honouring current contracts where possible, recognising that last-minute orders may increase modern slavery risks for workers;
- Considering options to support vulnerable workers, including paying for completed work and extending orders over time to ensure ongoing cash flow for suppliers; and
- Asking suppliers for information on steps they have taken to protect their workers from COVID-19 (e.g. providing PPE or providing sick leave to workers);
- Collaborate with suppliers, workers, business peers, investors, civil society and peak bodies to identify best-practice approaches to protect and support vulnerable workers;
- Review key international resources and implementing, where applicable, guidance to support acceptable working conditions in supply chains.
Of particular note, the ABF has encouraged organisations to provide information about modern slavery risks to the board or executives as part of COVID-19 updates. The AICD supports this initiative and suggests that directors request this information from their management teams.
- AICD Modern Slavery Risk Oversight tool
- The ABF’s Modern Slavery Business Engagement Unit is available to assist reporting entities to understand their obligations under the Act, including how to report on COVID-19 impacts. The Unit can be contacted at email@example.com.
Update on NSW Modern Slavery Act
The NSW Standing Committee on Social issues has published its report on the Modern Slavery Act 2018 (NSW Act), which is set to apply to 1,650 businesses in NSW.
The Committee’s report included 17 recommendations and determined that the NSW Act has essential work to do in addressing modern slavery and should commence as soon as reasonably practicable. It strongly recommended a target commencement date of on or before 1 January 2021.
Importantly, the Committee has recommended that the NSW Government should work with the Commonwealth Government to harmonise the reporting threshold, ideally at $50 million consolidated revenue. We are of the view that the Commonwealth Government are unlikely to move on the current $100m consolidated revenue threshold.
Notably, the report does not mention COVID-19 and the implications for the NSW, Australian and global economy. The NSW government is yet to respond to the report, and it is unclear how the current pandemic will disrupt the process.
1 The Act requires all entities that are based or operating in Australia, which have annual consolidated revenue of at least $100 million, to report annually on their modern slavery risks in their global operations and supply chains. It applies to a wide range of entity types, including individuals, companies, superannuation funds, not-for-profit entities and charities.
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