The confusion and uncertainty surrounding the NSW Modern Slavery Act looks set to be clarified with the relevant NSW Minister referring the NSW legislation to the Standing Committee on Social Issues for review.

We have been assisting many clients prepare for the Commonwealth Modern Slavery Act which is already in force and requires large organisations to report annually on mandatory issues (such as due diligence and remediation processes taken to address the risk of modern slavery in their supply chains).

However, confusion and concern has surrounded the application and development of the NSW Modern Slavery Act, which is not yet in force but was ‘expected to commence on 1 July’. Instead, developments in NSW Parliament have made it clear that the NSW Modern Slavery Act will not commence in July but will instead be reviewed.

All of the uncertainties surrounding the NSW regime have finally been acknowledged by the NSW Government and will hopefully be clarified thanks to a review by the Standing Committee on Social Issues. Last week Minister Don Harwin was frank about the current ‘defects’ with the NSW regime when he responded to questions about the progress of the legislation in Parliamentary Question Time. He stated: “The reality is that the Commonwealth legislation creates an inconsistency of laws in several respects, resulting in a section 109 problem with the Act. That is why it has to be amended and cannot proceed on 1 July”.

The chief concern for organisations was the potential duplication between the State and Commonwealth regime, as well as potential inconsistencies between the two separate regimes. A key concern for organisations was that the NSW Modern Slavery Act (which has a lower threshold for compliance) imposed a financial penalty for non-compliance with reporting requirements, whereas the Commonwealth Modern Slavery Act does not.

The Minister revealed in Question Time in the NSW legislative Council that:

• He has received advice from the Department of Premier and Cabinet that the NSW Modern Slavery Act in its current form ‘contains a number of defects requiring urgent attention’.
• These defects could be fixed by amending the NSW Modern Slavery Act, but this course of action may not be appropriate as other provisions are open to constitutional challenge.
• Given these issues, he has referred the NSW Modern Slavery Act, the amendment bill (that has been drafted to address potential issues) and the draft regulation that has been prepared by the Department of Premier and Cabinet under the NSW Modern Slavery Act to the Standing Committee on Social Issues for its inquiry and report.
• It is open to the Standing Committee on Social Issues to:
  • endorse proposed amendments to the NSW regime (which would presumably fix the duplication and inconsistency issues under the NSW regime)
  • determine that either all or part of the NSW regime is unnecessary (given the Commonwealth regime is already in force).

Either outcome should address the uncertainty that has surrounded the interaction, inconsistency and potential duplication between the State and Commonwealth regime.

Next steps for organisations

The decision by the Minster is not at all unexpected given the confusion that has surrounded the NSW regime.

Organisations should be aware that the Minister’s decision does not impact the Commonwealth Modern Slavery Act in any way. Organisations who are caught by the Commonwealth Modern Slavery Act (or are close to the $100 million consolidated revenue threshold) should be well on their way to developing a robust compliance strategy consistent with the detailed draft Guidelines released by the Commonwealth Government.

Organisations which are currently caught by the NSW Modern Slavery Act (which is under review) because it has employees in NSW supplying goods and services for profit and has a total turnover in a financial year of at least $50 million should:

• continue to monitor progress of the Standing Committee on Social Issues review but
• be taking preliminary steps towards addressing issues of modern slavery risks in their supply chain.

We will continue to update you on developments in respect of both the NSW and Commonwealth regimes.