Introduction

Over 400 New South Wales (NSW) government entities, including government agencies, state owned corporations, and councils (collectively, Covered Entities) are required to conduct modern slavery due diligence and produce annual reports.¹ Covered Entities are also required to take “reasonable steps” to address the risks associated with procurement affected by modern slavery.²

In December 2023, the office of the NSW Anti-slavery Commissioner published a Guidance on Reasonable Steps (GRS) to assist Covered Entities understand:

• What constitutes “reasonable steps” in the context of managing modern slavery risks;
• What are appropriate modern slavery risk management frameworks and procedures; and
• What other useful resources for managing modern slavery risks, including categorising and rating those risks, are available.

The GRS took effect on and from 1 January 2024.

Key Concepts

Some of the key concepts, as defined in the GRS and used in this alert, are as follows:

• Modern slavery—this is a broad term used to describe situations where coercion, threats, or deception is used to exploit victims and restrict their freedom. It includes human trafficking, slavery, servitude, forced labour, debt bondage, forced marriage, and the worst forms of child labour. 
• Modern slavery risks—this means the potential for an organisation to cause, contribute to, or be directly linked to, modern slavery through its operations and supply chains.
• Product of modern slavery—this refers to a good or service produced (in whole or in part) through modern slavery. If modern slavery occurs at any point in the supply chain, then the downstream good or service will be a “product of modern slavery”.

Relevance of the GRS

The GRS provides a risk management framework in respect of modern slavery risks within operations and supply chains. It also includes detailed and practical steps which align with international standards, including:

• ISO 20400:2017—Sustainable Procurement—Guidance;
• ISO 31000:2018—Risk management—Guidelines; and
• BS 25700:2022—Organizational responses to modern slavery—Guidance. 

Strictly, the GRS is only binding and directly applicable to Covered Entities in NSW. However, the GRS should be considered by entities of any size that wish to implement best practice modern slavery risk management principles with respect to their operations, procurement activities, and (where relevant) reporting requirements under the Modern Slavery Act 2018 (Cth) (MSA). 

As previously reported by K&L Gates, the MSA is currently under review. One of the proposals arising from the review is to introduce express due diligence requirements for reporting entities. Relevantly, the GRS provides much needed guidance on managing modern slavery risks and conducting supplier modern slavery due diligence.

KEY GRS POSITIONS

Reasonable Steps

The GRS provides direction on what constitutes “reasonable steps” in the context of managing modern slavery risks, including the following: 

• Commit—meaningfully engage key stakeholders, identify salient modern slavery risks at the organisational level, adopt a formal modern slavery policy, and adopt a modern slavery risk management plan to operationalise commitments made in the modern slavery policy.
• Plan—identify and map supply chain risks for inherent modern slavery risks associated with the particular product category or categories procured (refer to the GRS Inherent Risk Identification Tool (IRIT)), and develop a risk-reducing sourcing strategy by conducting due diligence and engaging the market.
• Source—select appropriate suppliers by integrating modern slavery risks into prequalification arrangements and utilising supplier self-assessment questionnaires, and adopt a shared responsibility approach in contracting by including performance-based clauses that recognise the buyer and supplier’s shared responsibilities (refer to the GRS Model Contract Clauses).
• Manage—monitor and evaluate supplier performance by developing appropriate key performance indicators, and develop supplier capabilities through training, technology development, and improving supplier risk management performance.
• Remedy—provide or enable access to effective grievance mechanisms (which are legitimate, accessible, predictable, equitable, and transparent), take steps to remediate any harm, and use available leverage to remedy any deficient practices of suppliers.
• Report—establish a victim-centred reporting protocol, which considers appropriate confidentiality and allocation of resources to support victims, and require Covered Entities to report on their modern slavery management efforts.
• Improve—learn lessons from your organisation’s performance and others', train your workforce, and cooperate with the NSW Anti-slavery Commissioner. 

Modern Slavery Due Diligence Framework

Identifying and categorising modern slavery risks

The NSW Anti-slavery Commissioner has released the IRIT. The IRIT has certain characteristics and uses, including:

• Purpose—provides a quick and efficient way for Covered Entities to identify the ‘riskiness’ of buying a particular product in a specific category affected by modern slavery;
• Rating—rates products by reference to their inherent modern slavery risk exposure in the absence of risk controls or effective mitigation; and
• Scoring—attributes a score to products based on their categories, which (depending on the score) will attribute those products as having a minor, low, moderate, or high inherent modern slavery risk.

Modern slavery due diligence

The GRS classifies suppliers’ modern slavery due diligence requirements into four different levels:

• Minimal—requires only limited continuous engagement, monitoring, and data collection;
• Light—requires some engagement, collection of data, monitoring, and reporting;
• Standard—requires active engagement, ongoing monitoring, collaboration, and data collection; and
• Heightened—requires more extensive and intensive engagement, active monitoring of performance, and greater attention to governance of risks.

The GRS creates a matrix between the inherent modern slavery risk (by reference to the IRIT) and a supplier’s GRS capability level (by reference to the questionnaire in Appendix G) to determine what level of modern slavery due diligence is required. 

Note that starting from 1 July 2024, Covered Entities will be expected to file an online report about each contract the entity is a party to that:

• Commenced on or after 1 July 2024;
• Has a value of AU$150,000 (including GST) or more; and
• Requires ‘heightened’ modern slavery due diligence on the GRS due diligence level scale.

Model Clauses

The GRS provides Model Tender Clauses (see Appendix I) and Model Contract Clauses (see Appendix J) for procurement activities starting on 1 January 2024 (or where a prior contact is renegotiated), that are categorised based on whether a supplier’s due diligence requirements are either: (1) heightened; or (2) minimal, light, or standard. These are readily available to be inserted into a contract where appropriate. However, they may also require further drafting to best reflect the specific commercial arrangements between the parties.

 Footnotes

¹ Modern Slavery Act 2018 (NSW) (NSW MSA); Public Works and Procurement Act 1912 (NSW) (PWP Act); Local Government Act 1993 (NSW) (LGA).

² PWP Act s 176(1A); NSW MSA s 31(1); LGA s 438ZE.

We acknowledge the contributions to this publication from our seasonal clerk Abbey Cormican-Jones.

Nathan Bodlovich also contributed to this article.