Australia’s Modern Slavery Laws Are Evolving
On 16 July 2026, Attorney-General Michelle Rowland announced the Albanese Government’s intention to introduce a new criminal offence for large companies that fail to prevent modern slavery in their supply chains. For companies that have approached modern slavery compliance primarily as a reporting exercise, this announcement represents a significant shift in the legal landscape.
This article sets out what has been proposed, what it means in practice, and where the key uncertainties lie ahead of consultation.
What Has Been Proposed
The proposed criminal offence would apply to entities with annual consolidated revenue exceeding A$100 million, which is the same threshold that currently triggers reporting obligations under the Modern Slavery Act 2018. Under the proposed framework, a company would commit a criminal offence if it fails to prevent modern slavery from occurring within its operations or supply chains.
A defence would be available where a company can demonstrate it took “reasonable steps” to prevent modern slavery. The intent is to protect companies that have put in place genuine due diligence and risk mitigation measures, while holding to account those that have not taken meaningful action.
Alongside the criminal offence, the Government has announced its intention to introduce civil penalties and corresponding enforcement powers for non-compliance with existing reporting obligations under the Modern Slavery Act 2018. Until now, the Act has imposed only reporting obligations, requiring entities to publish annual Modern Slavery Statements addressing seven mandatory criteria, with no financial penalty for non-compliance or inadequate reporting.
The announcement also flagged consultation on a deferred prosecution agreement scheme and a remedies mechanism for victims of modern slavery. No legislation has been drafted at this stage. Key details, including the penalty quantum, the precise scope of the “reasonable steps” defence, and which entities are captured, will be determined through the upcoming consultation process.
The International Context
The United States Government has threatened new tariffs of up to 12.5% on Australian imports, in part due to concerns about Australia’s handling of goods made with forced labour. The US Trade Representative has been investigating a number of countries on this basis, with the European Union and Indonesia cited as having taken comparatively stronger action.
The proposed reforms follow a global trend toward mandatory human rights due diligence obligations. The European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) imposes due diligence requirements on large companies operating in the EU, including in relation to forced labour across global supply chains. The UK’s Modern Slavery Act 2015, the world’s first standalone modern slavery legislation, similarly requires large companies to publish annual transparency statements. Australia’s reforms, when legislated, would extend that transparency regime into active criminal liability which is further than what other jurisdictions propose.
An estimated 50 million people around the world are living in modern slavery today. Australia is estimated to have more than 41,000 people trapped in modern slavery, spanning forced labour, debt bondage and other exploitative practices. Modern slavery is already a crime under the Criminal Code Act 1995, but the proposed offence would place a direct obligation on companies to prevent it from occurring in their supply chains, rather than simply report on the risks.
What Could “Reasonable Steps” Means
The entire criminal defence hinges on the phrase: “reasonable steps.” A company that can demonstrate it took reasonable steps to prevent modern slavery would have a defence to the proposed offence. A company that cannot demonstrate this would not.
The content of “reasonable steps” has not yet been defined in legislation and will be subject to consultation. However, comparable frameworks in Australian law provide some indication of what regulators and courts are likely to consider. The “failure to prevent” model being adopted mirrors existing Australian legal obligations on companies to prevent sexual harassment and foreign bribery, both of which have established bodies of guidance on what constitutes adequate preventive measures.
Drawing on those frameworks and on the existing guidance under the Modern Slavery Act 2018, “reasonable steps” is likely to encompass several elements. The first is governance and policy which is having a board-approved modern slavery policy with clear accountability at the senior leadership level, supported by documented procedures for identifying, assessing and responding to modern slavery risks.
The second is risk assessment which is a structured assessment of modern slavery risks across operations and supply chains, with particular attention to higher-risk geographies, sectors and procurement categories. A risk assessment that covers only tier one suppliers is likely to be insufficient, given that modern slavery risks often concentrate further down the supply chain where oversight is more limited.
The third is due diligence i.e. undertaking proportionate due diligence on suppliers and business partners, commensurate with the level of assessed risk. This may include supplier questionnaires, third-party audits, site visits, worker interviews and engagement with civil society organisations operating in relevant geographies.
The fourth is remediation which is having documented processes for responding to identified instances or credible allegations of modern slavery, including remediation for affected workers and engagement with relevant authorities.
The fifth is training and communication which is ensuring that relevant staff, procurement teams and business partners understand the company’s modern slavery obligations and the standards expected of suppliers.
The sixth is monitoring and review. The act of regularly reviewing the effectiveness of the above measures and updating them in response to changes in the business, its supply chains or the risk environment.
Importantly, documentation of each of these steps will matter as much as the steps themselves. In any enforcement proceeding, the question will not only be what a company did, but what it can demonstrate it did. Companies that have genuine processes in place but have not documented them thoroughly may find themselves in a difficult position.
How This Compares to Current Obligations
The existing Modern Slavery Act 2018 requires entities with annual consolidated revenue of A$100 million or more to publish an annual Modern Slavery Statement addressing seven mandatory criteria. Those criteria include the entity’s structure, operations and supply chains; the modern slavery risks in those operations and supply chains; the actions taken to assess and address those risks; and how the entity assesses the effectiveness of those actions.
Critically, the existing Act has no civil penalty for non-compliance and no criminal liability. An entity that fails to report, or reports inadequately, currently faces no financial consequence. The proposed reforms would change both of those aspects simultaneously, introducing civil penalties for reporting failures and criminal liability for substantive failures to prevent modern slavery.
This represents, as the Fair Supply analysis published on 17 July 2026 noted, “the most significant shift to the Modern Slavery Act since it was first enacted — demonstrating a shift from a transparency regime toward one built on action and accountability.”
Our View
The introduction of a criminal offence for failure to prevent modern slavery is likely to shock and concern many Australian companies. This is not a topic that most boards or executive teams would have expected to find themselves potentially criminally implicated in. The proposed offence elevates modern slavery from a procurement and sustainability reporting team matter to a legal and governance one, and that shift in classification will require a corresponding shift in how companies approach it.
Modern slavery due diligence in practice varies considerably across Australian companies. There are established tools and methodologies for looking further down the supply chain, beyond tier one suppliers into the upstream relationships where modern slavery risks are often more acute. The depth and complexity of that analysis deters many companies, and a common starting point is to focus on the most immediate and visible parts of the supply chain first. That is sensible as an entry point. The challenge is that risk often sits just outside of immediate sight, in the lower tiers of a supply chain where oversight is limited and leverage over suppliers is reduced. The proposed criminal offence, and its “reasonable steps” defence, will likely require companies to look further than many currently do.
On the question of what “reasonable steps” will ultimately mean, the upcoming consultation process will be important to follow closely. Companies that participate in that consultation have an opportunity to shape a framework that is workable and proportionate. In the meantime, the most practical step available is to review the current state of modern slavery governance, due diligence and documentation against the elements described above, not to achieve perfection, but to understand where the gaps are before the legislative framework is finalised.
Sources
- Attorney-General’s Department, Albanese Government Combatting Modern Slavery, 16 July 2026, ministers.ag.gov.au
- Baker McKenzie, Australia: New Modern Slavery Offence Proposed, July 2026, bakermckenzie.com
- Corrs Chambers Westgarth, Failure to Prevent Modern Slavery in Supply Chains: Australia’s Next Corporate Criminal Offence, July 2026, corrs.com.au
- Clayton Utz, New Criminal Offence for Failure to Prevent Modern Slavery on the Way, July 2026, claytonutz.com
- King and Wood Mallesons, Modern Slavery: Proposed Criminal Offence for Failure to Prevent and Civil Penalties for Non-Compliant Reporting, July 2026, mallesons.com
- Fair Supply, Australia’s Modern Slavery Act Is Getting Teeth: What the Failure-to-Prevent Offence Means for Business, 17 July 2026, fairsupply.com
- Walk Free, Australia Announces Stronger Penalties for Businesses That Fail to Prevent Modern Slavery, July 2026, walkfree.org
- UNSW Newsroom, Australian Companies to Face Fines and Criminal Action if They Fail to Prevent Modern Slavery, July 2026, unsw.edu.au
- Modern Slavery Act 2018 (Cth), Australian Government
- Criminal Code Act 1995 (Cth), Australian Government
Anabranch ESG Advisory provides independent advice on ESG strategy, climate disclosure, and sustainability reporting. The information in this article is general in nature and does not constitute legal or financial advice.
