The Australian government has released its response to the independent review of the Modern Slavery Act – signalling what key reforms to the reporting regime are in the pipeline. We take a look at what directors need to know.
Key takeaways:
- The government is set to consult this year on reforms recommended by the Modern Slavery Act Review, including:
- The introduction of civil penalties for non-compliance;
- Expanded mandatory reporting criteria; and
- The declaration of high-risk regions, products and suppliers to assist businesses assess modern slavery risks.
- Review recommendations not being pursued by government at this time include:
- A lowering of the reporting threshold from $100 million to $50 million annual consolidated revenue; and
- A requirement for entities to have a due diligence system in place given related global developments in this area.
In December 2024, the Australian government issued its response to the independent review of the Modern Slavery Act 2018 (Cth), led by Professor John McMillan AO.
The review’s findings, released in 2023, concluded that the Act has had a positive impact in raising awareness of modern slavery amongst the business community. However, it identified a need for further clarity on reporting requirements, expanded guidance material and stronger enforcement mechanisms to ensure compliance with regime.
The government’s response to review recommendations builds on the recent appointment of Australia’s first Anti-Slavery Commissioner, Chris Evans. The establishment of an Anti-Slavery Commissioner is intended to strengthen the work undertaken across government, business and civil society to combat modern slavery, and will play a key role in shaping the implementation of future reforms.
Key outcomes
The review made 30 recommendations. The government has “agreed” or “agreed in principle” to 25 recommendations and “noted” five. Key outcomes worth noting for directors include:
1. Retaining the current $100 million reporting threshold
The government has opted to retain the current reporting threshold of $100 million annual consolidated revenue in a reporting year, instead “noting” the Review’s recommendation to lower the reporting threshold to $50 million.
The government did not consider it was appropriate to lower the revenue threshold at this stage given the need to first assess how other key reforms would impact reporting requirements.
The AICD, in its submission to the review, strongly opposed the lowering of the reporting threshold below $100 million. We encouraged future reforms to be aimed at lifting the quality of reporting by Australia’s largest entities, not increasing the compliance burden on SMEs and NFPs.
The Attorney-General’s Department and Anti-Slavery Commissioner will develop tailored guidance for small and medium-sized entities on complying with the reporting requirements of the Act on a voluntary basis.
Further clarity on definition of ‘reporting entity’ and joint reporting
The government has agreed to provide further clarity to assist entities determine whether they fall within the definition of a ‘reporting entity’ and have obligations under the Modern Slavery Act. The government has also agreed to further engage with reporting entities on the challenges encountered with submitting a joint statement that covers one or more entities in a corporate group to support further guidance in this area.
2. Introduction of penalties for non-compliance
Consistent with the government’s 2022 election commitment, the government has “agreed in principle” to introduce penalties for non-compliance with the Act.
The government will consult with stakeholders on civil penalties to apply under the reporting regime where an entity:
- Fails to submit a modern slavery statement;
- Provides false information in a modern slavery statement; or
- Fails to comply with a request for specified remedial action.
The government also recognises that a spectrum of regulatory powers and enforcement tools may be necessary to respond proportionally to instances of non-compliance and provide an alternative to court proceedings. For example, information-gathering powers, powers to issue an infringement notice or enter into an enforceable undertaking.
3. Additional mandatory reporting criteria
The government has agreed in principle to consult further on changes and additions to the mandatory reporting criteria. This comes in response to stakeholder criticism during the review that the current criteria are not sufficiently robust to identify and address modern slavery risks in supply chains.
The review recommended new mandatory reporting criteria to include:
- Modern slavery incidents or risks identified by the entity during the reporting year (including cases referred to law enforcement or other regulatory bodies);
- Grievance and complaint mechanisms made available by the entity to staff members, staff of suppliers and members of the public to notify the entity of modern slavery risks; and
- Internal and external consultation undertaken by the entity during the reporting year on modern slavery risk management.
4. No obligations for a due diligence system, for now
The government has opted not to proceed at this time with the introduction of a requirement for reporting entities to have a due diligence system.
The government’s response comes in recognition that:
- The Act already requires entities to describe the actions taken to assess and address modern slavery risks, including due diligence and remediation processes; and
- Broader global developments towards human rights due diligence means that some reporting entities may also have due diligence reporting obligations across multiple jurisdictions (for example, the European Union’s Corporate Sustainability Due Diligence Directive – discussed further below).
The Attorney-General’s Department will undertake further consultations to identify how the Act could be amended to enhance its due diligence requirements.
5. Declarations of high-risk matters
The government has agreed in principle to empower the Anti-Slavery Commissioner to make written declarations of regions, locations, industries, products, suppliers or supply chains that are regarded as carrying high modern slavery risk.
In our response to the review, the AICD strongly encouraged the government to empower the Anti-Slavery Commissioner with this function. A published list of high-risk matters would serve as an important reference point for entities - not only when undertaking due diligence on existing supply chains in accordance with the Act, but also before entering into new supplier arrangements where the degree of risk may be less well understood.
Next steps
The government is set to consult on the proposed reforms to the Act throughout 2025. The AICD will be an active participant to ensure director perspectives on the design and operation of measures to strengthen the Act are heard.
The government has also agreed in principle to a further review of the Act following the implementation and operation of future reforms.
Given the federal election anticipated in early 2025, it remains to be seen whether the Coalition adopts these recommendations if it returns to government. The Coalition has previously expressed support for efforts to combat modern slavery, including the establishment of an independent Anti-Slavery Commissioner and maintaining the current reporting threshold of $100 million annual consolidated revenue.
Related developments
EU’s Corporate Sustainability Due Diligence Directive
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) was adopted in 2024, requiring large EU and non-EU companies (with EUR 450 million or more in EU turnover) to identify and address adverse human rights and environmental impacts in their operations.
The CSDDD will apply to Australian subsidiaries where the parent is an “in scope entity”, as well as have an impact on any Australian businesses doing business with “in-scope entities”. For example, Australian businesses may be subject to contractual terms in supply and other commercial agreements requiring the notification of risks and/or verification of compliance with human rights and environmental standards.
ACCC guidance on collaboration to combat modern slavery
The ACCC released its final guidance on Sustainability Collaborations and Australian Competition Law in December, following stakeholder feedback in 2024.
While the guidance is primarily focused on informing business on how they may collaborate on environmental sustainability initiatives without contravening Australian competition law, the principles also apply to other types of sustainability collaborations – such as initiatives combating modern slavery.
The guidance includes examples of how businesses may lawfully work together to reduce the likelihood that their industry is dealing with suppliers that engage in modern slavery practices (for example, by conducting joint audits of supply chains or notifying competitors of suppliers that are credibly engaging in modern slavery prevention practices).
Modern slavery resources for directors
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