6 July, 2019
Let's first deal with the "stop" in New South Wales.
The NSW Government has deferred the commencement of its Modern Slavery Act. The Special Minister of State has received advice that the Act "contains a number of defects requiring urgent attention," with some of those defects rendering "some provisions of the Act inoperable" and others "open to the risk of constitutional challenge." The Minister has now referred the Act, a draft amendment Bill and some draft Regulations to the Stranding Committee on Social Issues for inquiry and report.
The future of this legislation is now uncertain. Perhaps behind the scenes the wisdom of having this legislation, in light of the passing of similar Federal legislation (see below), is being questioned. Perhaps this legislation will survive in another form, maybe without the reporting requirement. Certainly the creation of an Anti-Slavery Commissioner in NSW was a welcome reform (and not one replicated in the Federal arena) and should be retained.
We are aware that, in the next few weeks, Professor Jennifer Burn (who holds the position of NSW Interim Anti-Slavery Commissioner) plans to hold briefing sessions about the NSW Act, the draft amendment Bill and draft Regulations. If you are interested in attending any of these sessions please let us know and we will pass on the relevant details.
Now for the "go." In the Federal jurisdiction, for entities with a financial year ending on 30 June, the first reporting period under the Commonwealth's Modern Slavery Act begins on 1 July 2019. This legislation applies to entities such as companies and trusts with annual revenue of AUD 100 million or more. When calculating this revenue, the revenue of owned and controlled entities must be counted.
In another development, the Department of Home Affairs has released draft "Guidance" to assist entities which are covered by the Federal regime meet their reporting obligations. The draft Guidance contains useful information to help entities work out if they need to report, including stating that when calculating "consolidated revenue" to determine whether the reporting threshold has been reached, revenue from intercompany transactions can be disregarded.
The Guidance also contains definitions of some of the key terms used in the Act, such as "structure," "operations," "supply chain," "due diligence" and "risks of modern slavery practices," all of which are relevant to the content of a modern slavery statement. Unfortunately, not all these definitions resolve some of the uncertainties about the reach of the Act and, because of the non-punitive nature of this regime, we are unlikely ever to receive judicial clarification of these matters. So, reporting entities will have to live with this uncertainty (unless improvements are made before the Guidance is published in its final form).
Elsewhere the Guidance contains many helpful suggestions about writing modern slavery statements, satisfying the mandatory reporting criteria, conducting due diligence of suppliers and supply chains, establishing remediation processes, assessing the effectiveness of actions taken to address modern slavery risks and consultation with entities that are covered by the reporting entity's statement, much of which is based on international best practice relying on instruments such as the United Nations Guiding Principles on Business and Human Rights.
Interestingly, the Guidance indicates that Joint Statements by reporting entities can only be made by related entities.
For further information, please contact:
Sean Selleck, Partner, Baker & McKenzie
sean.selleck@bakermckenzie.com
