The Modern Slavery Act 2018 (NSW) (the NSW Act) seeks to combat modern slavery (serious exploitation such as slavery, forced labour and human trafficking) and provide assistance and support for victims. A key feature of the NSW Act concerns transparency of business supply chains through the implementation of a mandatory reporting mechanism under which relevant reporting entities are required to report on the risks of modern slavery occurring in their operations and supply chains.
The NSW Act was passed on 21 June 2018 but did not come into force, after the NSW Government took the unusual step of deferring commencement of the legislation indefinitely and initiating a parliamentary inquiry into it. This move raised doubts about whether the NSW Act would ever see the light of day, particularly in circumstances where the Federal Modern Slavery Act 2018 (the Federal Act) commenced operation on 1 January 2019.
The NSW Legislative Council's Standing Committee on Social Issues (the Committee) was tasked with inquiring into the Act, some proposed amendments to the Act and some proposed regulations. It received 102 submissions, held a public hearing in November 2019, and issued its final report last Wednesday (25 March 2020).
We set out below some of the key issues considered by the Committee along with its views and recommendations on those issues.
|Issue||Committee View / Recommendation|
|Is the NSW Act necessary now that the Federal Act is in force?||The Committee expressed clear support for the commencement of the NSW Act, stating that an appropriate harmonisation of reporting requirements and processes with those of the Federal Act should allay any concerns about confusion between the two pieces of legislation.|
|Harmonisation between the NSW and Federal schemes||The Committee concluded that the draft regulations are aligned with provisions in the Federal Act, particularly around mandatory content of statements, timing and method of publication of statements, and provision of joint statements.|
|'Turnover' v 'consolidated revenue'||
The Committee recommended an amendment to the reporting threshold terminology in section 24 of the NSW Act to replace the term 'turnover' with 'consolidated revenue'.
The Committee was persuaded that the term 'consolidated revenue' is a more commonly understood concept under Australian corporate law and accounting standards, and that use of this term would result in greater consistency with the Federal Act.
|Statutory review||The Committee recommended that the NSW Government seek to amend the NSW Act to include a statutory review, to be conducted in conjunction with the Australian Government's statutory review of the Federal Act. The primary aim of this review is to establish whether the NSW Act is working efficiently and to ascertain how the NSW and Federal Acts are working in tandem.|
The Committee acknowledged the potential for confusion with different reporting thresholds. However, the Committee viewed the $50 million threshold in the NSW Act as reasonable, particularly in light of the comparable threshold set out in modern slavery legislation in force in the UK.
The Committee also took the view that that future harmonisation of the reporting thresholds would be a desirable reform and recommended that the NSW Government work with the Australian Government to seek harmonisation of the reporting thresholds, ideally at $50 million to create a national approach to this issue.
|Penalties for non-compliance||
The Committee was persuaded by arguments in favour of penalties (the NSW Act currently provides for fines up to $1.1 million for failure to prepare a modern slavery statement, failure to publish a statement, or providing false or misleading information) as a necessary tool to encourage compliance with the NSW Act.
Further, the Committee recommended amendments to the NSW Act to specify a relevant authority responsible for conducting prosecutions (Anti-Slavery Commissioner or Director of Public Prosecutions).
|Charities and not-for-profits||
The Committee supported an exemption from reporting requirements for charities and not-for-profits, at least for the initial period following the commencement of the NSW Act.
However, the Committee did not support an exemption for not-for-profit registered clubs.
|Small businesses||The Committee supported the small business exemption as currently set out in the NSW Act. This means that small businesses which employ fewer than 20 employees will not be subject to the reporting requirements under the NSW Act.|
|Franchises||The Committee recommended that the Anti-Slavery Commissioner examine and report on the appropriateness of bringing franchisors under the NSW Act, to report on behalf of franchisees not otherwise captured.|
|Voluntary reporting||The Committee was in favour of voluntary reporting for businesses falling under the $50 million threshold, and recommended that the NSW Government finalise the development of a voluntary reporting mechanism with a view to rolling it out following the statutory review.|
|State owned corporations||The Committee noted that the position of State owned corporations under the NSW Act is currently unclear. The Committee supported the Amendment Bill which seeks to address this uncertainty by treating State owned corporations as commercial organisations.|
The Committee noted that the position of local councils under the NSW Act is currently unclear. The Committee recommended that the NSW Government develop legislative amendments to be introduced following the statutory review to implement procurement and reporting obligations for local councils equivalent to those imposed on NSW Government agencies.
The Committee also recommended that these amendments include a regulation-making power to exempt any council or class of councils from such obligations.
The NSW Act currently provides for the Anti-Slavery Commissioner to maintain a publicly available electronic register which identifies any:
The Committee acknowledged significant stakeholder concern regarding the public register, particularly the potential that being 'named and shamed' on the register will discourage reporting entities from taking genuine steps to identify modern slavery risks in their operations and supply chains.
The Committee noted that the NSW Government proposes to address this concern by requiring the publication of all modern slavery statements on a 'statements register', along with an amendment to the NSW Act to enable the Anti-Slavery Commissioner to combine the statements register with the public register to ensure all modern slavery statements are made publicly available in one location.
The Committee supported amendments to the NSW Act which seek to remove any potential conflict between the NSW and Commonwealth legislation, as proposed by the NSW Government in its Draft Amendment Bill. These amendments include repealing the provisions for Modern Slavery Risk Orders; removing the new offence targeting internet service providers and content hosts administering platforms used to deal with child abuse materials; limiting the slavery, servitude and forced labour offence so that it applies only within NSW; and amending the offence regarding child forced marriage to align it with the equivalent provision in the Commonwealth Criminal Code.
Once those changes are adopted, it appears the Committee is confident there is no constitutional impediment to legislating in relation to modern slavery reporting requirements notwithstanding the fact that the Federal Government has already implemented similar modern slavery legislation in this field.
The Committee's Report and its recommendations will now be considered by the NSW Government. The Committee has recommended that the NSW Act commence on or before 1 January 2021.
We will update you as soon as we hear more.