Reporting under the UK Modern Slavery Act (2015) and the Australian Modern Slavery Act  (2018): A comparison

Author

Harriet von Spiegel

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updated: 12/11/2019

Drawing upon the UK Modern Slavery Act, the Australian Modern Slavery Act and the corresponding practical guides issued by the British and the Australian governments, this brief guide outlines the key content-specific differences in reporting requirements between the two laws.

Why do you need to be aware of the differences between the two Modern Slavery Acts?

In 2018, following the example of the UK, the Australian government adopted the Australian Modern Slavery Act; it requires organizations to annually disclose information on the steps taken to identify and address potential human rights risks in their own operations and supply chains. Companies may be subject to both regulations and, although the Austrian Act is similar to the UK Modern Slavery Act (2015), the reporting requirements for each law differ notably. Consequently, even if your company has published a modern slavery statement in compliance with the UK Modern Slavery Act, compliance with the Australian Act is not guaranteed. To ensure that your company complies with relevant legal requirements in both jurisdictions, it is important to be aware of the differences between the two modern slavery laws.

Are you obliged to report under the respective legislation?

The UK and the Australian Modern Slavery Act target domestic as well as foreign corporations. Any organization carrying out business or part of its business in the UK and/or Australia and has an annual turnover of £36m (UK) or AUD $100m (£56m [1]) (AU) is required to publish a modern slavery statement annually. The Australian Act extends further, requiring the public sector also to publish a statement. Organizations are required to provide information on the measures taken to identify, address and prevent modern slavery in the organization’s supply chains.

[1] £-AUD exchange calculated on 09 April, 2019

What information do you need to disclose in your Modern Slavery Statement?

1.     Publication

The Australian Modern Slavery Act requires that the modern slavery statement is approved by “the principle governing body of the reporting entity” and is signed by a responsible member of the entity. The statement must also be provided to the Australian Border Force which will publish the statement on an online central register.[2]

 

Depending on the type of organization, the UK Modern Slavery Act requires the statement to be approved and signed by a director, member or partner of the organization. The UK does not have a central online register[3] but instead organizations are obliged to publish their statement on the organization’s website with a clearly visible link to the statement on the website’s homepage.

 

2.     Technical information

The Australian Modern Slavery Act requires organizations to clearly identify the reporting entity and to provide information on the organization’s structure, its business and its supply chains. Also not mandatory under the UK legislation, background information on the reporting entity is requested in order to help understand the context within which the modern slavery statement is conducted.

3.     Organizational modern slavery policies

The development and incorporation of human rights policies signal the reporting entity’s commitment to respect human rights within their business operations and is essential to prevent and mitigate negative human rights impacts. Neither the Australian Modern Slavery Act nor the UK Modern Slavery Act requires organizations to provide information on the reporting entity’s modern slavery policies; it is however, recommended by both Acts. According to the UK MSA government guidance, a modern slavery statement should include information on the organization’s human rights policies (e.g. recruitment policies or supplier code of conduct).[4] Similarly the Australian government highlights the importance of developing, reviewing and communicating modern slavery policies in order to effectively assess and address modern slavery risks.[5]

[2] For more information on how to submit a statement see Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities   (p.64-65).

[3] Based on the Australian Act, the second independent review of the UK Modern Slavery Act requests the establishment of a government-run online Modern Slavery Statement Register (Independent Review of the Modern Slavery Act: second interim report (22 January, 2019).

[4] Transparency in Supply Chains etc. A practical guide (p.12)

[5]Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (p.52)

4.     Steps taken to prevent modern slavery

Both laws require the disclosure of information on the steps taken to prevent modern slavery within the organization’s operations and supply chains. The Australian Act specifically requires the disclosure of information on due diligence and remediation practices.[6] In so doing, the Australian Act acknowledges the importance of due diligence to effectively mitigate modern slavery risks. According to the guidance published by the Australian government, due diligence is defined as a continuous process including a) identification of actual and potential negative human rights impacts, b) integration of the findings and implementation of an adequate response mechanism, c) monitoring the effectiveness of the adopted measures, and finally d) public disclosure of the procedure.[7]

On the contrary, organizations subject to the UK Modern Slavery Act are only obliged to provide information on “the steps taken to prevent modern slavery”.[8] This requirement does not specifically dictate the disclosure of information on due diligence. The British government nonetheless recognizes that human rights due diligence constitutes international best practice and is essential to address modern slavery risks.[9] Consequently, although not legally obliged, the UK Modern Slavery Act advises organizations to conduct due diligence in order to mitigate risks and to improve reporting.

[6] Modern Slavery Act, No. 153, 2018, 16 (c)

[7] Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (p.47)

[8] UK Modern Slavery Act (2015), 54, 4(a)

[9] Transparency in Supply Chains etc. A practical guide (p.33)

5.     Modern slavery risks in supply chains

As outlined above the identification of potential modern slavery risks in supply chains is part of due diligence. The Australian Modern Slavery Act thus specifically requires organizations to provide information on how their business operations might cause, contribute to or be directly linked to issues of modern slavery.[10] This criterion does not require disclosure of specific examples.[11]

 

Although not mandatory under the UK MSA, it does encourage organizations to identify areas at risk of modern slavery. The UK government guidance specifically suggests organizations conduct modern slavery risk assessments in order to identify risks in relation to the operating country, industry, product and business partners. Identifying and prioritizing modern slavery risks serves as a foundation for the adoption of action plans and is an essential first step to tackling modern slavery.

 

[10] Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (p.40) 

[11] Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (p.41)

6.     Remediation

In cases where an organization’s business operations caused and/or contributed to modern slavery, the Australian Modern Slavery Act requires organizations to report on remediation mechanisms.[12] Remediation can take various different forms (e.g. the provision of grievance mechanisms).

The UK Modern Slavery Act does not prescribe the disclosure of information on remedies but the practical guide outlines the importance of remediation and expects organizations to implement adequate steps in response to incidents of human rights violations e.g. implementation of policies on access to remedy and compensation.[13]

 

7.     Measuring the effectiveness of the actions taken to prevent modern slavery

The implementation of actions to mitigate and prevent modern slavery is meaningless if organizations lack monitoring systems to measure the effectiveness of the respective action plans. As a result, the Australian MSA requires organizations to report on the steps taken to evaluate the effectiveness of actions taken to assess and address slavery risks. Possible methods to measure effectiveness may include: formal internal systems to review and adjust existing policies or provisions; use of external expertise to carry out independent reviews; or, the implementation of feedback mechanisms.[14] Organizations are however not required to report on whether measurements are indeed effective or not.

 

Organisations subject to the UK MSA are requested but not obliged to report on the effectiveness of their actions to prevent modern slavery. The UK government guidance specifically points out the usefulness of using key performance indicators to measure the effectiveness and progress of an organization in tackling modern slavery.[15]

[12] Commonwealth Modern Slavery Act 2018 Guidance for Reporting Entities (p.46)

[13] Transparency in Supply Chains etc. A practical guide (p.12 and p.15)

[14] Transparency in Supply Chains etc. A practical guide (p.44)

[15] Transparency in Supply Chains etc. A practical guide (p.36)

 

8.     Modern slavery training

The provision of modern slavery training to employees, suppliers and further business partners is a useful tool to raise awareness and to prevent and mitigate risks. The UK and Australian Modern Slavery Acts do not mandate the disclosure of information on modern slavery training but do encourage it.

 

9.     Consultation with other controlled/owned entities

The final criterion of the Australian MSA requires information on the reporting entity’s process of consultation with any entity that it owns or controls. This requirement aims to ensure that the actions implemented to prevent modern slavery are communicated across all related entities. The reporting entity can freely decide on the type and scope of consultation. The UK MSA does not require such information to be disclosed. 

Concluding remarks: so what is the main difference?

Although the Australian Modern Slavery Act and the UK Modern Slavery Act cover similar content, the level of obligation differs significantly. Whereas the UK legislation in the main provides its guidance on what organizations “should aim to include” [16] in their Modern Slavery Statement in the form of suggestions, the Australian law takes a stronger line and sets out clearly more mandatory reporting criteria.

 

With the exception of publication-specific requirements, a modern slavery statement drafted in compliance with the Australian Modern Slavery Act is also very likely to be compliant with the UK Modern Slavery Act. However, this does not necessarily apply vice versa and indeed a UK compliant modern slavery statement may very well fall short of meeting the requirements set out by Australia’s Modern Slavery Act.

 

[16] Transparency in Supply Chains etc. A practical guide (p.12)