The Commonwealth Attorney General’s Department has released its consultation paper for its proposed reforms to the Modern Slavery Act 2018 (Cth).1 These proposals include a strict or absolute liability criminal offence for entities with an annual consolidated revenue over $100 million who fail to prevent modern slavery in their supply chains.
A failure to prevent offence for modern slavery was first floated by the Australian Law Reform Commission in 2020, 2 but was rejected by Professor John McMillan AO in his review of the legislation in 2023.3 It is now clearly back on the table.
Executive Summary
- New criminal offence: Entities with annual consolidated revenue exceeding $100 million will face criminal liability for failing to prevent modern slavery in their supply chains. The offence is proposed as an absolute or strict liability offence, meaning no proof of knowledge or intent is required — only that modern slavery (being those offences that are currently criminalised in Divisions 270 and 271 of the Criminal Code Act 1995 (Cth) (Criminal Code)) occurred within the supply chain. It is proposed that there should be some nexus between the criminal conduct and the goods or services that form part of the corporation’s supply chain sourcing arrangements, as well as potentially a nexus between the corporation’s conduct and the underlying criminal conduct. Substantial penalties are proposed.
- Reasonable steps defence: A defence will be available where an entity can demonstrate, on the balance of probabilities, that it took reasonable steps to eliminate modern slavery from its supply chain, with Ministerial guidance to be issued on what those steps may involve.
- Deferred Prosecution Agreements (DPA): The Government is seeking feedback on a potential DPA scheme as an alternative to prosecution, which would be a first for Australia and raises questions around transparency and judicial oversight.
- Civil remedies: Feedback is being sought on whether additional civil remedies should be introduced for victims and survivors, alongside penalties for the proposed criminal offence.
- Delayed commencement: A 12–18 month transitional period is proposed to allow industry to prepare for the new regime.
Summary of Reforms
1. Criminal penalties for failure to eliminate modern slavery from supply chains
As previously foreshadowed by the Government, the consultation paper introduces a new criminal offence for entities with an annual consolidated revenue over $100 million and creates an offence for corporations who fail to prevent modern slavery from their supply chains. The offence would require proof beyond reasonable doubt that modern slavery did in fact occur, however would not be contingent on conviction of the individual or company who engaged in the underlying conduct. The consultation proposes that this would be an absolute or strict liability offence, meaning there would be no need to prove an entity’s knowledge or intent.
It highlights that the penalties a guilty entity will be liable for will be either:
- Up to 100,000 penalty units (currently, $36,400,000);
- Three times the value of the benefit obtained from the offending conduct; or
- Where the value of the benefit cannot be determined, 10% of the entity’s annual turnover for the relevant turnover period.
The criminal penalty will apply to the entity only, not to directors or other office holders. Further, the Government proposes that there would be a 12-18 month delayed commencement of the criminal penalty, in order to give industry an opportunity to prepare for the commencement of the new regime.
Interestingly, the consultation paper proposes the following requirements for the failure to prevent offence:
- First, there must be offending conduct by the principal, or possibly as “associate” of the principal, see Div 270 and 271 in the Criminal Code, being slavery, servitude, forced labour, forced marriage and/or deceptive recruiting, as those concepts are defined under the Criminal Code;
- Second, there must be a connection between the conduct and the corporation’s supply chain, and potentially also that the corporation’s activities had some way contributed to the harm;
- Third, ‘any threshold would need to establish a sufficient nexus between the corporation’s conduct and the underlying offending to ensure that criminal liability is imposed fairly and proportionately’;
- Fourth, while the paper refers to a “failure to prevent” offence, it also raises the issue that the fault element that must be satisfied under the Criminal Code could be strict liability, absolute liability or recklessness.
2. Defence for entities which ‘take reasonable steps’
The Commonwealth proposes that there would be a defence to the proposed criminal offence, that an entity ‘took reasonable steps’ to eliminate modern slavery from its supply chain. The consultation paper indicates that the entity would bear the legal burden of proof of proving this defence on the balance of probabilities, and that guidance would be issued by the Minister on what steps entities could take. However, the question of whether ‘reasonable steps’ had been taken would be a question to be determined by the courts on a case-by-case basis, having regard to the particular circumstances of the case.
3. Alternative enforcement through Deferred Prosecution Agreements
The Government is also seeking feedback on the possible introduction of a Deferred Prosecution Agreement (DPA) scheme, as an alternative to prosecution. In theory, a DPA would enable prosecutors to defer criminal proceedings against an entity subject to the entity complying with agreed conditions within a specified timeframe: that is, an agreement to hold such prosecution in abeyance while the terms of any agreement are implemented.
Such a scheme has never been adopted in Australia, though they do exist in the United Kingdom, United States, and Canada for relevant corporate crimes. However, there may be complexities implementing a scheme like this in Australia, given the separation of police and prosecutorial functions and the clear delineation of judicial powers under The Constitution and the High Court of Australia making it clear that criminal prosecutors cannot enter into an agreement to “effectively settle” a criminal case.. These limitations on a DPA scheme have been the subject of numerous consultation papers and parliamentary reports in the context of foreign bribery. The significant structural challenges apply equally to the proposed modern slavery DPA scheme.
4. Civil remedies for victims and survivors
Finally, the paper invites feedback on existing avenues for victims and survivors to seek civil remedies in connection with the proposed failure to prevent offence and asks for feedback on whether additional civil remedies should be introduced. The introduction of new civil remedies would require careful consideration of what gaps in the criminal law the civil penalty would address, the basis for liability and compensation orders (that exist under current State-based laws), who would have standing, available remedies, procedural considerations, as well as its interaction with existing legal frameworks. The consultation paper notes that there is no equivalent civil remedy for other Commonwealth criminal offences.
What is yet to be seen?
There are some interesting questions remaining about these reforms, such as:
- How the ‘nexus’ between a company’s conduct and any modern slavery in their supply chain will operate, and whether the link with the conduct will be direct or indirect and the role of any agent or “associate”;
- How the government will become aware of, and know to investigate, modern slavery, especially in circumstances where the conduct occurs overseas, absent self-reporting or disclosure by a whistleblower;
- What the guidance on what ‘reasonable steps’ will look like;
- How the DPAs would work as a matter of law and in practice; and
- If passed, when the new provisions would commence.
Notably, a DPA scheme was previously contemplated in Australia, and was criticised by the Australian Law Reform Commissions ‘Corporate Criminal Responsibility’ Report (ALRC Report, 2020)4 for its lack of transparency. The ALRC Report found that DPAs make no provision for the public oversight of agreements reached between the prosecutor and a corporation. It recommended that there should be judicial oversight of DPAs and publication of the reasons for any approval of a DPA in open court. This assumes that the judicial separation of powers issue and prosecutors “settling” criminal cases, can be addressed.
The consultation paper makes reference to the possibility that a retired judge may be responsible for administering and approving DPAs. It will be interesting to see how the Commonwealth reconciles this commentary in the context of the new Modern Slavery regime.
We consider that the above will be points of contention in many of the submissions to be made to the Department.
Parallels with Foreign Bribery Regime
The issue of a failure to prevent offence and a DPA was considered in the context of foreign bribery for almost a decade. Despite both sides of politics initially supporting the concepts, the current Government elected to create a strict liability failure to prevent foreign bribery offence without any DPA scheme. While the AFP and the Commonwealth prosecutor have published guidelines to encourage companies to voluntarily disclose potential criminal conduct, our understanding is that very few cases have been disclosed and even fewer investigations have resulted in any prosecution. How these potential offences may be enforced in the future remains to be seen.
It must be remembered that while the consultation paper states that while a company will be primarily liable, under standard principles of accessorial liability under the Criminal Code, any person potentially involved in the conduct giving rise to the offence or who where they aid, abet, counsel or procure the offending conduct, may face individual criminal liability.
Implications for Corporate Governance
The proposal to include a reasonable steps defence that imposes a legal (as distinct from evidential) burden of proof on the entity is unusual, although it does occur in some other limited settings. From a governance perspective, this means that the entity must be in a position to meet the higher burden in structuring and documenting its modern slavery assessments and procedures..
Next Steps
Public consultation on the paper closes on 25 September 2025. The Government explicitly outlines that they would like to hear from, reporting entities, including entities who voluntarily report, peak industry bodies, legal organisations and practitioners, academics, business and human rights experts, criminal law experts, civil society organisations, individuals with lived experience of modern slavery, advocacy groups, and unions.
During the time prior to the passing and the commencement of these proposed reforms, companies should turn their minds to the adequacy of their current modern slavery compliance processes and due diligence across their supply chain.
Companies creeping toward the $100 million revenue threshold should be mindful of the proposed reforms, and consider that once this threshold is crossed, they will be required to lodge modern slavery statements, as well as facing the risk of potential criminal liability for any modern slavery in their supply chains which they fail, on reasonable grounds, to prevent.
If you have any questions about how these proposed amendments may affect your business, please do not hesitate to get in contact with our team.
[1]https://consultations.ag.gov.au/crime/modern-slavery/user_uploads/consultation-paper.pdf
[2]Corporate Criminal Responsibility Final Report [10.9]
[3] Report of the statutory review of the Modern Slavery Act 2018 (Cth) The first three years, 79.
[4] https://www.alrc.gov.au/wp-content/uploads/2020/05/ALRC-CCR-Final-Report-websml.pdf