The Australian Government has announced proposed reforms that could significantly strengthen Australia's modern slavery laws. The Government has proposed introducing a new criminal offence for certain businesses that fail to prevent modern slavery in their operations or supply chains. It has also announced plans to introduce civil penalties and stronger enforcement powers under the Modern Slavery Act 2018 (Cth).

These reforms signal a clear shift in regulatory expectations. Businesses should no longer view modern slavery compliance as simply preparing an annual statement. Instead, organisations should begin reviewing whether they have robust and practical systems in place to identify, assess and reduce modern slavery risks throughout their supply chains.

If your business is currently sourcing products internationally or managing higher-risk suppliers, now is the time to review your modern slavery compliance program.  Ask yourself one simple question:

If regulators investigated our business tomorrow following a modern slavery incident somewhere in our supply chain, could we clearly demonstrate the practical steps we took to identify, assess, prevent and respond to that risk?

What Does This Mean For Retailers?

Retail businesses typically operate large and complex supply chains involving manufacturers, subcontractors, logistics providers, labour hire companies and overseas suppliers.

Modern slavery risks can arise across many areas of retail operations, including:

• Apparel, footwear, textiles and fashion accessories.

• Furniture, homewares, bedding and household products.

• Electronics, electrical products, appliances and consumer technology.

• Cosmetics, personal care products, beauty products and their packaging.

• Toys, children's products, sporting goods and recreational products.

• Food, beverages, imported grocery products and agricultural supply chains.

• Imported consumer goods sourced from higher-risk jurisdictions.

• Private label and own-brand manufacturing.

• Overseas manufacturing, factories and subcontracting arrangements.

• Warehousing, distribution, freight, shipping and logistics services.

• Labour hire, temporary staffing, seasonal workers and outsourced workforce arrangements.

• Cleaning, security, facilities management and other contracted services.

• Raw materials, packaging suppliers and component manufacturers.

The proposed reforms suggest regulators will increasingly focus on whether businesses have practical controls that reduce these risks, rather than simply whether they have published an annual Modern Slavery Statement. The proposed criminal offence would apply to businesses with annual consolidated revenue exceeding A$100 million. These businesses are already subject to Australia's Modern Slavery Act reporting requirements and would be the primary organisations affected by the proposed offence.

The Government has indicated that a business would have a defence if it can demonstrate it took reasonable steps to prevent modern slavery. Importantly, this does not mean businesses would be expected to guarantee that modern slavery never occurs within their operations or supply chains. Rather, the focus is likely to be on whether the business can demonstrate that it implemented appropriate, proportionate and well-documented systems to prevent exploitation.

However, smaller businesses should not assume these reforms are not relevant to them. Many retailers, importers, wholesalers and manufacturers below the reporting threshold supply larger organisations that will increasingly expect suppliers to demonstrate effective modern slavery controls. Businesses may therefore experience increased due diligence requests, contractual requirements and supplier audits even if they are not directly captured by the proposed offence.

What Should Businesses Be Doing Now?

Although the reforms have not yet commenced, businesses should be reviewing their current compliance framework against likely future expectations.

In particular, businesses should assess whether they have:

✔ clear executive ownership of modern slavery risks

✔ documented supply chain risk assessments

✔ effective supplier due diligence processes

✔ modern slavery clauses within supplier agreements

✔ responsible purchasing practices

✔ ongoing supplier monitoring

✔ documented incident response procedures

✔ practical training for procurement and sourcing teams

✔ evidence demonstrating the effectiveness of their controls

✔ records that could support a future 'reasonable steps' defence.

If several of these areas are underdeveloped or undocumented by your business, now is an ideal time to strengthen your program before any legislative changes take effect.

Why Evidence Will Become Increasingly Important

One of the most significant aspects of the proposed reforms is the emphasis on 'reasonable steps'. While the legal test has not yet been finalised, businesses should expect that evidence will become increasingly important. 

Policies alone are unlikely to be sufficient. Businesses should be able to demonstrate the practical work they have undertaken through supplier due diligence records, risk assessments, audit findings, training records, board reporting, procurement reviews and documented decisions. If regulators ever ask what your organisation actually did to prevent modern slavery, your records may become one of your strongest protections.

How Watchdog Compliance Can Help

Whether your organisation already reports under the Modern Slavery Act or is preparing for increasing customer and regulatory expectations, now is the time to get on top of this issue. We can assist with:

• Modern slavery compliance reviews

• Gap analysis against the proposed reforms

• Supply chain risk assessments

• Supplier due diligence frameworks

• Supplier questionnaires

• Procurement and purchasing practice reviews

• Contract clause reviews

• Incident response procedures

• Modern Slavery Statement reviews

• Practical staff training

• Executive and board briefings

• Evidence frameworks designed to support future 'reasonable steps' requirements.

The reforms are still being developed, but the message from Government is already clear. Modern slavery compliance is moving beyond disclosure and towards demonstrating practical prevention. Businesses that begin strengthening their systems now will be far better placed when the new regime is introduced.