Modern Slavery Reporting Requirements For Australian Subsidiaries and Foreign Entities in Australia

As we approach mid-year, many Australian subsidiaries of multinational corporations and foreign entities registered in Australia should be preparing their modern slavery statements. This article examines the reporting obligations under Australian laws, including the critical issue of revenue consolidation that often catches foreign-owned entities by surprise.

The Reporting Obligation Australia’s Modern Slavery Act 2018 (Cth) (the “Act”) requires entities to submit annual modern slavery statements if they meet the revenue threshold. The statement must be lodged within 6 months after the end of the reporting entity’s financial year.

Who Must Report? The Act captures: •    Australian entities with annual consolidated revenue of at least $100 million •    Foreign entities carrying on business in Australia (e.g. Australian branch of overseas companies) with annual consolidated revenue of at least $100 million The legislation uses consolidated revenue worked out in accordance with the Australian accounting standards, meaning it may be necessary to look beyond the single legal entity and to the wider corporate group.

The $100 Million Threshold: Consolidated Revenue The $100 million threshold is based on consolidated revenue, not the Australian subsidiary’s standalone revenue. This is an often overlooked point when businesses determine whether they are under reporting obligations.  This means multinational corporations with Australian operations and/or subsidiaries will need to take particular care and potentially apply the threshold test at both the parent entity level and the subsidiary level. By way of example: •    a foreign company with an Australian subsidiary with local revenue of only $30 million may still have reporting obligations if it also carries on business in Australia apart from the subsidiary (e.g. through an Australian branch or otherwise) and has global revenue of $80 million (in addition to the Australian subsidiary’s revenue);  •    an Australian subsidiary with local revenue of only $30 million may still have reporting obligations if it controls other downstream foreign entities with overseas-sourced revenue of $80 million.  This catches many Australian entities and branches off-guard, particularly those of Asia-Pacific, European, and North American parent companies operating substantial global operations.

Mandatory Content Requirements Each statement must address seven mandatory criteria: 1.    Identity of the reporting entity; 2.    Structure, operations and supply chains; 3.    Modern slavery risks in operations and supply chains; 4.    Actions taken to assess and address those risks, including due diligence and remediation processes; 5.    Effectiveness of actions taken; 6.    Consultation process with owned or controlled entities; and 7.    Any other relevant information.

The Public Register All statements are published on a public, searchable register maintained by the Attorney-General’s Department (https://modernslaveryregister.gov.au/). This creates reputational risk for non-compliance or inadequate disclosure. Further, where an entity fails to comply with its reporting obligations, the Minister has powers under the Act to request an explanation and remedial action. If the entity does not comply with this request, the Minister may publish the entity’s name and details on the public register, which may result in reputational damage.

Enforcement Landscape: Penalties Are Coming The current absence of penalties has created a false sense of security. This is about to change.

The McMillan Review In May 2023, Professor John McMillan AO completed a comprehensive statutory review of the Act’s first three years. His findings were stark: the Act had “not yet caused meaningful change for people living in conditions of modern slavery” and modern slavery statement reporting was 'frequently deficient'. The review made 30 recommendations to strengthen the Act, with civil penalties as a central reform. The review recommended penalties for: •    Failing to submit a modern slavery statement; •    Knowingly providing false or misleading information in statements; •    Non-compliance with Ministerial requests for remedial action. While specific penalty amounts were not recommended, the review referenced comparable regimes with penalties ranging from CAD $250,000 (Canada) to AUD $1.1 million (former NSW regime). The review also recommended lowering the reporting threshold from $100 million to $50 million in annual consolidated revenue, which would extend reporting obligations to a significantly wider group of entities. The Government has not adopted this recommendation at this stage, but entities with consolidated revenue approaching $100 million should monitor developments closely.

Government Response In December 2024, the Australian Government published its response. Importantly, the Government “agrees in principle” to introduce civil penalties for non-compliance, with stakeholder consultation to follow on the penalty framework design. Additionally, Chris Evans commenced as Australia’s first Anti-Slavery Commissioner on 2 December 2024, with a mandate to increase compliance, support businesses, and prepare updated guidance for reporting entities. The Commissioner is expected to have powers to publish lists of non-compliant entities and declare high-risk industries, regions and products. Although no implementation timeline has been announced, the direction of reform is clear – civil penalties are expected to be introduced, the Anti-Slavery Commissioner is now operational and may publish lists of non-compliant entities, and entities that have never reported despite meeting the threshold face potential exposure across multiple reporting periods, alongside potential “bluewashing” claims under section 18 of the Australian Consumer Law.  Entities that continue to ignore their obligations risk creating permanent public records of non-compliance and exposure to penalties that may apply once the penalty regime commences.

Practical Steps for Compliance Australian subsidiaries and branches of multinational corporations should: 1.    Assess the obligation immediately: determine whether consolidated revenue exceeds $100 million; 2.    Identify the reporting entity: determine whether the Australian subsidiary or parent company will report; 3.    Consider joint statements: a parent and one or more of its Australian subsidiaries may submit a joint statement provided that the consultation requirements under the Act are met; 4.    Map supply chains: identify modern slavery risks in operations and procurement; 5.    Document due diligence processes: collate evidence of risk assessment and remediation; and 6.    Prepare for disclosure: ensure statements can withstand public and regulatory scrutiny once published on the register.

Assistance with Compliance Modern slavery reporting is not a box-ticking exercise. Statements become permanent public records, and with the reforms described above now imminent, inadequate disclosure carries reputational, regulatory, contractual and consumer law risks. Reporting entities – particularly those navigating revenue consolidation, supply chain risk, or cross-border group structures – should consider obtaining professional advice before lodging. H & H Lawyers has assisted many multinational corporations and their Australian subsidiaries and foreign branches with modern slavery compliance, including: •    Revenue threshold assessments and obligation determination; •    Statement preparation, review and lodgement; •    Supply chain risk assessments across multiple jurisdictions; •    Due diligence, process design and various internal documentation; •    Coordination with overseas parent companies and group entities, supported by our bilingual capabilities; and •    Remediation of past non-compliance. For many multinational corporations, their Australian subsidiary’s reporting obligation only becomes apparent when consolidated revenue is properly analysed. We encourage all subsidiaries and branches of multinational corporations to assess their position and achieve compliance before the penalty regime commences. The cost of doing so may well be modest compared with the reputational damage, penalty exposure and operational disruption of non-compliance.

For assistance with modern slavery reporting obligations, please contact us.