What does the NSW Modern Slavery Act mean for your business?

The NSW Modern Slavery Act (2018) has now come into force in an amended form, with the reporting requirement focused primarily on government bodies, such as councils. Here we set out what the Act is, and what your entity needs to know if you have operations or people in NSW.  

What is the NSW Modern Slavery Act?

The NSW Modern Slavery Act in its amended form 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.

What has changed in the amended Act?

In its initial draft (2018), the NSW Act applied to businesses across NSW, or with employees in NSW, who met a $50 million annual revenue reporting threshold. It established criminal penalties for failure to publish or for the provision of false or misleading information with a maximum penalty of $1.1 million[1].

The Amendment Act represents three significant changes:

  1. It repeals the reporting obligations for commercial businesses in NSW as well as the $50 million annual reporting threshold.
  2. It focuses the reporting requirements on government bodies, local councils and state-owned corporations who are not otherwise required to report under the Commonwealth Modern Slavery Act (2018). These entities must voluntarily produce modern slavery statements that demonstrate they have assessed modern slavery risks and undertaken actions to ensure goods and services they procure.     
  3. It includes the establishment of an Anti-Slavery Commissioner, who has broad oversight of government policies addressing modern slavery, issue codes of practice, and maintain a public register of non-compliant government agencies[2]. The Commissioner will also be an advocate for actions to combat modern slavery and support victims of modern slavery[3].
  4. The Amendment Act also removes civil liability for whistle-blowers who submit information or documents to the Commissioner or who are exposed to liability by complying with a requirement under the NSW Act.

What are the four priorities for your entity in response to the NSW Act?

  1. Work out if you have an obligation to report.

If you are a commercial business in NSW, you are only required to report under the Commonwealth Government’s Modern Slavery Act – which has a threshold of $100 million consolidated revenue. Those who do not meet the threshold can still voluntarily report against the NSW Act, but there is no requirement or government expectation to do so. The Commonwealth Act does not currently have penalties for non-compliance, but that does not mean there are not negative repercussions to poor reporting, such as scrutiny from stakeholders.

However, if you are a government body or state-owned corporation, you are required to report on your risks, due diligence actions, and steps taken to ensure goods and services procured were not the product of modern slavery. This can be part of an annual report and must be publicly available.

2. Prepare for greater modern slavery due diligence if you provide goods and services to government entities in NSW.

With government bodies, local councils, and state-owned corporations required to produce a voluntary report under the Commonwealth Act, there will be increased due diligence on organisations who supply goods and services to them. One of the key functions of the NSW Anti-Slavery Commissioner is monitoring the reporting of modern slavery in government supply chains.[4] As a result, suppliers to government entities will need to strengthen their understanding of their own operation and supply chain risks to adequately respond to due diligence and modern slavery questionnaires. They should prepare to be subject to modern slavery audits and greater scrutiny on their labour processes and country of manufacture of any products sold to government entities.

3. Align your business’ human rights approach to the UN Guiding Principles for Business and Human Rights, which may mean closely examining risks to people, including those in ‘safer’ geographies like Australia.

Whether reporting under the NSW or Commonwealth Act, or meeting customer demands for due diligence, it is critical to address the risk of modern slavery to people in both your supply chain and operations. Organisations frequently assume there is little to no modern slavery risk if they operate in Australia, or their suppliers are based in Australia. While Australian legislation provides robust protections for workers, minority and vulnerable groups are still at risk of exploitation in Australian, notably in certain sectors. Recent years have seen evidence of restrictions on migrant worker or student visas,[5] inadequate wages for disabled workers,[6] loopholes for labour hire providers, inadequate contractor protections, commonplace wage theft,[7] and inconsistent legislation governing prison labour.[8] It is important for reporting entities to consider their onshore risks as well as their overseas supply chain.

4. Prepare for ongoing regulatory change by focusing on continuous improvement.

The statutory review of the Commonwealth Act is due to commence in 2022, and the amended NSW Act stipulates a 12-month review. As both Acts come up for review shortly, many stakeholders are calling on governments to consider opportunities to encourage greater quality in disclosures around modern slavery. While the NSW Act ultimately removed the threat of penalties, this concept is not off the table for future legislation. To ready your organisation for future regulatory change,  focus on ensuring continuous improvement in your approach, in line with the spirit of the Commonwealth Act. This includes strengthening due diligence for modern slavery and human rights more generally, avoiding ‘set and forget’ approaches, and taking a risk-based approach to your supply chain.    

If you are curious to understand reporting, legislative, and best practice requirements on a deeper level, feel free to contact annabel.hart@pointadvisory.com or emily.dafter@pointadvisory.com.

[1] d’Apice, Bill and Grant, Joanne, How will the NSW Modern Slavery Act affect you, 2019

[2] NSW Government News, NSW appoints first anti-slavery commissioner, 2022

[3] NSW Government News, NSW appoints first anti-slavery commissioner, 2022

[4] Withane, Trevor, NSW modern slavery regime will change in the new year (2022) – Here is what you need to know, 2021

[5] McKenzie, Nick, Sydney Morning Herald, 2017, “Pacific Islands seasonal farm workers allege slave-like conditions in Govt. aid programme

Uibu, Katri, Australian Broadcasting Corporation, 2020, “‘There are no human rights here

[6] Henriques-Gomes, Luke, The Guardian, 2022,”People with disability working for legal pay as low as $2.27 an hour, inquiry hears

[7] Mitchell, Sue, Australian Financial Review, 2021, “Wage underpayments ‘rife’ in grocery sector

[8] Crellin, Zac, The New Daily, 2022 “The companies profiting from prison labour authorities don’t want you to know about