What potential changes in Australia can tell us about the future of UK modern slavery law

Like its UK equivalent, Australia’s Modern Slavery Act requires businesses over a certain size to report on their efforts to eradicate modern slavery from their operations and supply chains.

However, a public consultation on Australia’s legislation has shown that changes are being considered which could set a new standard for modern slavery reporting.

With a new UK Modern Slavery Act supposedly being prepared in response to commitments made by Queen’s speech to Parliament in May, this consultation will provide UK legislators with food for thought in two key areas.

  • Firstly, the consultation considers the introduction of penalties for companies who fail to comply with their modern slavery reporting obligations.
  • Secondly, the consultation asks whether a set of mandatory modern slavery reporting criteria should be harmonised across jurisdictions.  

We set out below what the implication of these changes would be if the UK chooses to follow suit.

1) Penalties for companies who fail to comply

No changes in law have occurred since the UK government’s commitment to introduce penalties for companies who fail to comply with their modern slavery reporting obligations.

In contrast, Australia’s consultation is considering a list of penalties including fines, exclusion from public contracts, and sanctions against the company representatives responsible for reporting, all of which would establish an important precedent and set a remarkable change in tone.

Such a move could be a game-changer for UK modern slavery reporting, which often struggles with issues of non-compliance. Research published earlier this year, for example, showed that one in ten companies affected by the UK legislation were failing to provide a modern slavery statement at all.

If Australia chooses to remedy its own issues of non-compliance using penalties, it could pave the way for the UK government’s decision-making, and UK firms may soon need to up their game.

2) Harmonisation of mandatory reporting criteria

No changes in law have occurred since the UK government’s pledge to introduce legally mandated criteria for modern slavery statements. However, recent developments in Australia again have the potential to force the UK government’s hand on this issue.

The Australian Modern Slavery Act already mandates that companies should report on important issues such as due diligence processes, remediation, and consultation with owned entities.

Far from questioning whether these mandatory reporting criteria are beneficial, this latest consultation on the Australian law seems more interested in asking how they can be ‘harmonised’ across jurisdictions, implicitly encouraging foreign modern slavery legislators to follow their lead.

Again, there are signs that such a change might be beneficial in the UK. Research published last year, for example, found that, without mandatory reporting criteria, many modern slavery statements in the UK included only the ‘bare minimum’ of information.

If the UK government is spurred into action on this issue, as a result of the developments in Australia, it could again raise the bar on modern slavery reporting significantly, with affected companies required to address a much broader range of issues in order to remain compliant.

What happens next

The latest announcement that there are an estimated 50 million victims globally will bring the issue of modern slavery back into focus.

UK ministers will be feeling this pressure as they draft their revised Modern Slavery Act. However, looking to their counterparts in Australia will provide them with plenty to consider.

The challenge for companies in the meantime will be to prepare themselves for a future which could bring significant changes in the scope of modern slavery reporting, both in terms of the issues on which they are legally required to report, and the consequences for failing to do so.

For more information contact: Michael.Pollitt@KPMG.co.uk or Simon.Stiggear@KPMG.co.uk.

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