Modern Slavery Reform: Proposed Criminal Offence Raises the Stakes for Employers

| September 16, 2026

Legislative Reform: Heavy-Hitting Modern Slavery Laws

Readers may be aware that commercial entities with an annual consolidated revenue exceeding $100 million are currently required to report on their risks of modern slavery in their operations and supply chains. The Modern Slavery Act (Cth) 2018 (Act) outlines the reporting requirements for entities covered by the Act while also allowing for those entities that are not covered by the laws to volunteer to comply with the Act’s reporting requirements.  

In 2023 the operation of the Act was reviewed and a number of amendments flagged, including a reduction of the revenue to $50 million. This has not eventuated. However, one proposed amendment would see the introduction of a criminal offence.  

Proposed Changes to the Modern Slavery Act

In July 2026, the Australian Government announced comprehensive legislative reforms to the Modern Slavery Act 2018 (Cth) establishing a standalone corporate criminal offence that penalises commercial entities failing to prevent modern slavery within their operations and supply chains. 

Under proposed changes, commercial entities with an annual consolidated revenue exceeding $100 million will face legal accountability for failing to prevent severe exploitation across direct operations and extended supply networks. To reinforce compliance with existing Modern Slavery laws, the legislative reform package pairs these statutory criminal sanctions with civil financial penalties and expanded regulatory enforcement powers.  

Modern Slavery Risks Across High-Risk Sectors

Between 1 July 2024 and 30 June 2025, the Australian Federal Police (AFP) received 371 modern slavery reports, representing an average of 31 notifications per month (AIC Report 56, 2024-2025). The workforce-related matters comprised: 

• Forced Labour: 10.0% of identified offences (42 offences across 41 reports). 

• Domestic Servitude: 5.2% of identified offences (22 offences across 18 reports). 

• Domestic Work, Housekeeping, and Au Pair Services: 4.0% of reports (15 reports), where domestic servitude risks were concentrated. 

• Wholesale and Retail Trade: 2.2% of reports (8 reports). 

• Personal Services (Massages, Beauty Parlours): 2.2% of reports (8 reports). 

• Manufacturing and Construction: 0.3% of reports each (1 report each). 

• Deceptive Recruiting: 1.2% of identified offences (5 offences across 5 reports). 

The Reasonable Defence Test 

To balance robust corporate accountability with commercial and operational realities, the proposed statutory regime establishes an explicit defence under Australian law: 

• Defence Standard: A company will avoid criminal liability if it can affirmatively demonstrate that it implemented reasonable steps to prevent modern slavery across its operations and supply chains. 

• Regulatory Guidance: The Australian Government has committed to delivering practical guidance and education initiatives to assist commercial entities in defining, implementing, and documenting these reasonable preventative steps. 

Stakeholder Responses to the Proposed Reforms

The announcement of the 2026 legislative reform package generated varying responses from key industry, union, regulatory, and political stakeholders. 

The Australian Anti-Slavery Commissioner, Chris Evans, welcomed the criminal provisions, noting that the “introduction of criminal provisions sends the right signal to business that they should be treating modern slavery with the seriousness it deserves”. 

ACTU President Michele O’Neil also expressed strong support for standalone criminal penalties, stating: “holding big companies accountable for preventing modern slavery in their supply chains is good for workers and good for the many Australian businesses that do the right thing”. She also affirmed that “Workers and their unions also support a civil right for complaints against a company for failing to combat modern slavery in its supply chain”. 

Greens foreign affairs spokesperson David Shoebridge highlighted the reforms as a positive move away from voluntary compliance, while continuing to press for complete import prohibitions on slavery-made goods and direct financial commitments for victim remedy pathways. 

Conversely, Business Council of Australia (BCA) Chief Executive Bran Black expressed concern regarding administrative burdens, cautioning that criminal offences prioritise administrative paperwork over operational outcomes. The BCA recommended prioritising practical guidance, effectively implementing existing disclosure frameworks, and aligning obligations with international regulatory regimes. 

How Businesses Can Prepare

Because forced labour and deceptive recruiting frequently occur through third-party labour intermediaries, HR departments must tighten control over external workforce sourcing through targeted operational controls: 

• Labour Hire Provider Accreditation: Audit and register all third-party recruitment agencies, labour hire providers, and contractor networks. 

• Direct Oversight of Onboarding: Ensure internal HR staff directly manage or audit onboarding procedures for temporary, seasonal, or visa-dependent workers. 

• Monitoring Working Conditions: Establish real-time tracking of wage payments, working hours, and physical working environments across subcontracted operational sites. 

And because deception (38.1%) and coercion (31.4%) represent the primary entry mechanisms into modern slavery (AIC Report 56, 2024-2025), employers should also actively eliminate recruitment vulnerabilities by implementing three core safeguards: 

• Strict No-Fee Recruitment Policies: Enforce the employer-pays principle across domestic and international supply chains, ensuring no worker pays recruitment fees, migration costs, or placement charges. 

• Document Retention Safeguards: Mandate that no manager, supplier, or recruitment agent retains the original identity documents, passports, or visas of any worker. 

• Transparent Employment Contracts: Ensure employment contracts are provided in the worker’s primary language prior to deployment, clearly specifying remuneration, entitlements, and job responsibilities to eliminate deceptive recruiting risks. 

Looking Ahead 

The Australian Government will conduct public consultations with industry networks and key stakeholders to inform the design and implementation of the proposed legislative changes. Active participation in these consultations is strongly recommended for organisations operating in high-risk sectors. 

How IRiQ Law can help

With greater scrutiny of how businesses identify and manage modern slavery risks, having appropriate policies and procedures in place is an important part of demonstrating a proactive approach to compliance. 

IRiQ Law has a Modern Slavery Policy template available to help businesses establish clear expectations and processes for identifying, reporting and responding to modern slavery risks. 

A Modern Slavery Policy is also one of the essential workplace policies businesses should consider as part of their broader compliance framework. View our Essential Workplace Policies flyer to see the range of policy templates available. 

Contact our team if you need assistance reviewing, updating or implementing workplace policies for your business.