The Modern Slavery Act 2018 (Cth) (MSA) was widely hailed as a critical first step by Australia towards tackling the global problem of modern slavery, with the government proclaiming that it would transform the way businesses respond to modern slavery by prompting a business-led ‘race to the top.’

Four years into its operation, with more than 6,000 statements published on the government’s modern slavery register, the extent to which the legislation is transforming business practices or making a tangible difference to the lives of workers remains highly uncertain. The three-year review of the MSA was released in May and noted that ‘there is no hard evidence that the Modern Slavery Act in its early years has yet caused meaningful change for people living in conditions of modern slavery.’

Australia’s modern slavery laws: A recap

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The MSA establishes a reporting requirement for reporting entities, to publish annual public statements on their modern slavery risks and the steps taken to address these risks in their operations and supply chains.

Beyond the Commonwealth legislation, NSW has also adopted its own modern slavery legislation. The NSW-based Modern Slavery Act 2018 imposes a reporting requirement on NSW state-owned corporations. As of 1 January 2022, NSW government bodies, councils and state-owned corporations must review their supply chains and publish a form of modern slavery reporting. Commercial businesses in NSW are only required to report under the Commonwealth MSA if they qualify as a relevant reporting entity. Recently, a bill was tabled in the ACT Parliament to respond to modern slavery in the territory including by establishing an ACT Anti-Slavery Commissioner.

Research conducted over two years by the Australian Human Rights Institute (UNSW Sydney) in collaboration with four other universities (RMIT, University of Melbourne, Notre Dame University, and University of Western Australia) and three human rights organisations (Business and Human Rights Resource Centre, the Human Rights Law Centre, and Baptist World Aid) has found that while the MSA has been very effective in raising awareness of the issue of modern slavery, it is failing to drive meaningful change to mitigate modern slavery in supply chains. In our survey of nearly 90 business groups, we found that, in the best case, the MSA is “generating widespread awareness, but in the worst case, it provides a shiny veneer for a business model that contributes to modern slavery”.

What’s next for Australia?

Australia’s timely review of the MSA comes at a critical time for assessing the efficacy of the law. Research shows an appetite from businesses for strengthening Australia’s approach to modern slavery. The Review makes 30 recommendations aimed at strengthening corporate modern slavery responses and increasing regulatory oversight of the law, including:

• Requiring reporting entities to have a due diligence system in place that will identify, monitor, and address modern slavery risks
• Introducing penalties for reporting entities that fail to submit a modern slavery statement, for including false information in a statement and for failing to have a due diligence system in place
• Recommending the government establish a central complaints mechanism
• Introducing new reporting criteria that require reporting entities to report on modern slavery incidents identified annually
• Establishment of an Anti-Slavery Commissioner

The Australian MSA and the NSW law are consistent with a growing global trend towards requiring companies to report on ‘social issues’ such as labour rights risks in their operations and supply chains. However, some countries are looking to go further and move beyond reporting to mandate companies undertake human rights due diligence to support greater transparency and action on modern slavery and labour exploitation.

The implications of the review of the modern slavery law are expected to increasingly affect the profession as well as general consumer sentiment. Here’s an overview of corresponding issues to be aware of:

• Understand what human rights due diligence requires: Human rights due diligence is the key means by which businesses can identify, prevent, and address human rights harms within their operations or supply chains. It involves companies identifying and assessing actual or potential harms that they may be causing or contributing to; taking appropriate action and tracking the effectiveness of these measures to assess whether they are working; and communicating with stakeholders about how the impacts are being addressed. Advising on human rights due diligence means focusing on risks to people who are potentially impacted by a company’s activities, rather than focusing on risks to the company.
• Understand the benefits of advising on a human rights due diligence approach: Incorporating a human rights due diligence requirement into the MSA will provide increased legal certainty, level the playing field, and, importantly, will help ensure better respect for human rights by business (thereby mitigating associated reputational, legal, and operational risks), leading to better outcomes for both businesses and workers.
• Stay up to date on global legislative trends: There is a growing global trend towards requiring companies to report on human rights risks and undertake human rights due diligence that extends beyond the current obligations in the MSA. Human rights due diligence laws have already been adopted in France, the Netherlands, Norway, and Germany. In late May 2023, the European Parliament voted on and passed European Union (EU) Directive on Corporate Sustainability Due Diligence. Subject to final approvals, it is anticipated it will be implemented into domestic legal systems by 2027.