Australia to Criminalise Modern Slavery Failures for Firms Over A$100 Million

Australia's government has announced plans to introduce a new criminal offence for large companies that fail to prevent modern slavery in their supply chains, applying to businesses with annual consolidated revenue above A$100 million (US$70 million). Companies will be able to avoid liability if they can demonstrate they took reasonable steps to prevent modern slavery, but the reform also adds civil penalties and enforcement powers for non-compliance with existing obligations under the country's Modern Slavery Act. Details of the offence and enforcement mechanisms, including possible deferred prosecution agreements and victim remedies, will go through a public consultation before being finalised.

 

Why This Reform Is Landing Now

 

The timing is directly tied to external trade pressure rather than a purely domestic policy initiative. The reform follows a report from the US Trade Representative naming Australia among 54 economies that have failed to impose and effectively enforce a prohibition on importing goods made with forced labour, with the US threatening a 12.5 percent tariff on Australian imports as a consequence. That threat gives Australia a direct economic incentive to strengthen its forced labour enforcement beyond what domestic advocacy alone had achieved under the existing Modern Slavery Act, which has been criticised for lacking meaningful penalties.

Australia is not alone in facing this pressure. Canada was named in the same USTR report and has separately pledged to tighten its own forced labour legislation in response, suggesting the US report is functioning as a coordinated enforcement lever pushing multiple trading partners toward stricter supply chain accountability simultaneously, rather than Australia acting in isolation.

 

Read more: Canada Tables Legislation to Strengthen Forced Labour Import Prohibition

 

How the New Offence and Its Defence Actually Work

 

The core mechanism is a criminal offence applying specifically to failure to prevent modern slavery, with the A$100 million revenue threshold targeting large companies with the scale and resources to meaningfully oversee their supply chains, rather than smaller businesses with more limited visibility into multi-tier supplier networks. Critically, the offence includes a defence: a company can avoid criminal liability if it demonstrates it took reasonable steps to prevent modern slavery from occurring.

That structure shifts the practical burden from proving a company intended or knew about forced labour, which is difficult to establish, toward requiring companies to demonstrate active due diligence processes, meaning firms with genuine, documented supply chain oversight processes face a viable defence, while those with only superficial or box-ticking compliance measures face real exposure. Attorney-General Michelle Rowland explicitly framed this as levelling the playing field for businesses already doing the right thing, positioning the reform as a way to remove the competitive disadvantage that thorough, costly supply chain due diligence currently creates against companies that simply do not bother.

 

Explore OneStop ESG Marketplace: Regulation and Compliance

 

From Reporting Obligation to Enforceable Law

 

The existing Australian Modern Slavery Act has required large companies to report on modern slavery risks in their operations and supply chains since 2019, but it has been widely criticised for imposing no meaningful penalty for non-compliance or for reporting inadequately, functioning largely as a disclosure exercise rather than an enforcement regime. Adding both a criminal offence and civil penalties represents a substantive escalation from that reporting-only model toward one with genuine legal consequences, a shift that mirrors how due diligence regulation has evolved in the European Union and other jurisdictions moving from voluntary or disclosure-based approaches toward mandatory, penalty-backed obligations.

The government's stated plan to pair the new offence with practical guidance and education initiatives acknowledges that criminal liability alone is unlikely to improve outcomes if companies lack the tools to actually identify and remediate modern slavery risks buried deep in complex, multi-tier global supply chains, a persistent challenge even for well-resourced firms attempting genuine due diligence. Whether the upcoming consultation produces an offence with teeth robust enough to satisfy the US Trade Representative's concerns and avert the threatened tariff, and whether Australian companies respond by genuinely strengthening supply chain oversight rather than treating the reasonable-steps defence as a new compliance formality, will determine whether this reform meaningfully reduces forced labour exposure in Australian supply chains or simply raises the stakes of an existing reporting regime.