Australia announces stronger penalties for businesses that fail to prevent modern slavery

The Australian government has announced plans to strengthen its Modern Slavery Act with criminal liability for companies which fail to effectively prevent exploitation in their supply chains.

Under the proposed reforms, companies with annual revenue over A$100 million would be required to take reasonable steps to identify, prevent, and address modern slavery risks. Businesses that fail to do so could face criminal charges.

Walk Free’s Founding Director, Grace Forrest, said “This is a sign of genuine momentum, showing Australia is finally catching up with its global trading partners.”

“Introducing criminal liability into the Modern Slavery Act confirms the government is serious about holding businesses to account for failing to prevent exploitation in their supply chains.”

We estimate 41,000 people are living in modern slavery in Australia.

The announcement marks a significant shift in Australia’s approach to tackling modern slavery.

Since 2018, the Modern Slavery Act has required large companies to report on the risks of exploitation in their supply chains, but has not imposed penalties for failing to do so.

Experts have long called for due diligence obligations. A government-commissioned, independent review of the Modern Slavery Act in 2023 recommended the inclusion of a due diligence system to ensure businesses take effective action to tackle exploitation.  

Australia’s Modern Slavery Act was world leading when first introduced, but international responses to combat forced labour in supply chains have evolved significantly.

Globally, governments are recognising disclosure requirements are not enough to stop abuse.

Due diligence laws in Europe and emerging reforms across Asia reflect a growing expectation that businesses must actively identify and address human rights risks, not simply report on them.

The announcement comes just before the deadline passes for Australia to show it has taken action to prohibit the import of goods made with forced labour under the US Government’s Section 301 investigations.

This reform may reduce the proposed tariff on Australian exports to the US from 12.5 to 10 per cent.

While formal consultations are planned, the government has committed to introducing a new criminal offence where large companies are required to prevent modern slavery in their supply chains.

The offence is expected to apply to companies, not directors. A defence will exist if companies can show they took reasonable steps to prevent modern slavery.

Other measures will also be considered, such as deferred prosecution arrangements and provisions to enhance survivors’ access to remedy.

The reform package will also include civil penalties for inadequate reporting, and further guidance for companies.

Due diligence obligations only work if there are real consequences for ignoring them. The reform needs to be workable, enforceable, and matched with sufficient resourcing to be impactful.

A criminal offence sounds stronger than a civil penalty, but practically it could reduce survivors’ ability to access justice and seek remedy directly from companies. Anyone can file a civil suit, but criminal charges have to be brought by the State.

Criminal charges also come with a much higher standard of proof to show an offence took place, limiting chances of successful convictions.

Procedural mechanisms such as deferred prosecution arrangements could also have unintended consequences and weaken accountability if not carefully designed.

“If the bar for convictions is too high or deferred prosecutions are too easily permitted, too many survivors will be left without recourse,” said Grace Forrest.“If the bar for convictions is too high or deferred prosecutions are too easily permitted, too many survivors will be left without recourse,” said Grace Forrest.

The proposed reforms represent the most significant development in Australian modern slavery policy since the Modern Slavery Act was introduced.

The challenge will be ensuring the new framework delivers what reporting alone cannot: meaningful prevention, corporate accountability, and real protection for people vulnerable to exploitation.