Modern slavery obligations in Australia are not limited to manufacturers with offshore supply chains. Employers who rely on labour hire, contracting, subcontracting or staffing intermediaries have workforce supply chains too — and those supply chains carry risk that is increasingly subject to reporting obligations and procurement scrutiny.
This guide covers what the Modern Slavery Act 2018 requires, where workforce supply chains sit within those obligations, and the practical steps employers should take to manage risk in their labour supply arrangements.
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Key takeaways
- Entities with annual consolidated revenue of $100 million or more must submit a modern slavery statement to the Australian Border Force each financial year.
- Workforce supply chains — including labour hire, contracting and subcontracting arrangements — are explicitly within scope of modern slavery risk assessment.
- The statement must describe the risks identified and the actions taken — not just assert that risk does not exist.
What the Modern Slavery Act 2018 requires
The Modern Slavery Act 2018 (Cth) requires reporting entities — those with annual consolidated revenue of $100 million or more — to submit an annual modern slavery statement describing how the entity and its suppliers identify and address modern slavery risks. The statement must be approved by the principal governing body (typically the board) and submitted to the Australian Border Force’s Online Register.
The mandatory criteria that a compliant statement must address are:
- the entity’s structure, operations and supply chains
- the modern slavery risks in those operations and supply chains
- the actions taken to assess and address those risks
- how the entity assesses the effectiveness of those actions
- the process of consultation with subsidiaries and board-level approval
Entities below the $100 million threshold are not required to report but may do so voluntarily. The Home Affairs department has signalled intent to extend and strengthen the Act’s coverage over time — smaller entities with significant supply chain exposure should monitor legislative developments.
Why workforce supply chains are a material risk area
Modern slavery in Australian workforce supply chains is not primarily an offshore problem. The sectors most commonly identified with domestic modern slavery risk in employment include agriculture, horticulture, cleaning, hospitality, construction and labour hire — particularly where workers are from migrant or vulnerable communities, where pay and conditions are difficult to verify, and where multiple intermediaries sit between the host employer and the worker.
Labour hire creates a specific risk profile because the employing entity (the provider) is different from the entity that controls the day-to-day working conditions (the host employer). If a labour hire provider is not paying correct wages, not maintaining safe conditions, or is involved in worker exploitation, the host employer may have limited visibility — but may still have supply chain exposure under the Act, and certainly has reputational exposure if the arrangement becomes publicly known.
Risk indicators in labour supply arrangements
Modern slavery due diligence does not require employers to audit every worker’s personal situation. It does require them to assess whether the structure and conditions of their labour supply arrangements create environments where exploitation could occur undetected. Indicators worth examining include:
- Pricing: labour hire rates significantly below market are a red flag. Providers who cannot explain how they cover on-costs at their quoted rate may be cutting corners on wages, superannuation or worker entitlements.
- Licensing: unlicensed labour hire providers in states where licensing is required are operating outside the regulatory framework — which is itself a risk indicator. For context on licensing requirements, see labour hire licensing in Australia.
- Worker demographics: a workforce that is predominantly from a single migrant community, has limited English, and lives in employer-arranged accommodation warrants closer scrutiny of pay and conditions — not as an assumption of wrongdoing, but as a pattern associated with elevated risk.
- Subcontracting depth: where your primary labour hire provider uses second- or third-tier subcontractors, your visibility of working conditions diminishes. Ask where workers are actually employed and who is responsible for their wages and conditions.
- Documentation gaps: workers who cannot produce pay slips, who are paid in cash, or who are unclear about their own terms of engagement are indicators that the employment relationship is not being managed properly.
What a useful modern slavery statement looks like
The Australian Border Force has published guidance and an assessment tool for modern slavery statements, and it is explicit about what constitutes a weak statement: one that describes policies without describing actions, asserts that no risk exists without explaining how that was determined, or lists due diligence steps without confirming they were actually taken.
A statement that addresses workforce supply chains credibly will typically describe the labour hire and contracting arrangements in scope, explain how providers are assessed and monitored, identify the sectors or geographies where risk is higher, and describe what changed as a result of the assessment — not just what was assessed. Investors, procurement teams and joint venture partners are increasingly reviewing modern slavery statements as part of their own supply chain due diligence, and a statement that does not withstand scrutiny creates commercial as well as reputational risk.
Practical actions for employers
- Map your labour supply chain: identify all entities through which workers are engaged, including second-tier suppliers used by your primary providers.
- Assess each provider’s compliance posture: licensing, payroll compliance history, worker entitlement practices and any FWO or labour hire authority actions.
- Include modern slavery risk criteria in supplier selection and panel review processes — not as a tick-box, but as a substantive evaluation point.
- Build contractual obligations into labour hire agreements: require providers to confirm compliance with the Modern Slavery Act, relevant licensing, and applicable employment standards.
- Establish a worker feedback channel: a mechanism for workers to raise concerns confidentially — separate from the provider — is a practical control that also demonstrates good faith to regulators and investors.
Related reading
Also see: Vendor Management System (VMS) Explained: Features, Benefits + Selection Checklist.
Also see: Workforce ESG Reporting: Gender Pay Gap, Modern Slavery and Labour Supply Chains.
For a closely related guide, read Responsible Labour Hire Practices: Compliance, Ethics and Reputation Risk.
Related services
FAQ
Does the Modern Slavery Act apply to our labour hire providers directly?
If they meet the $100 million revenue threshold, yes — they have their own reporting obligations. But even where a provider is below the threshold, your organisation’s modern slavery statement must address risks in your supply chain, which includes how those providers manage their own workforce practices.
What happens if we don’t submit a statement?
Under the current Act, there are no direct financial penalties for non-compliance — but the Home Affairs Minister can publicly name non-compliant entities. Legislative reform to introduce penalties has been proposed and should be monitored. More immediately, non-compliance creates exposure in procurement, investor and partner relationships where modern slavery statements are increasingly expected.
We use a large, reputable labour hire provider. Is that enough?
Reputation is not a substitute for due diligence. A credible provider will be able to demonstrate their own modern slavery practices, licensing compliance and worker entitlement processes — and should welcome the question. If a provider cannot or will not provide that information, that is itself a risk indicator.
What is the submission deadline for modern slavery statements?
Statements must be submitted within six months of the end of the reporting entity’s financial year. For entities with a 30 June year end, the deadline is 31 December. Check the Australian Border Force’s Online Register for current submission requirements and guidance.
Next step
If you need workforce governance support that includes modern slavery and supply chain compliance, explore MSP and people solutions.
General information only: This article is for general informational purposes only and does not constitute legal advice. Legislation varies by state and territory — consult a qualified employment lawyer or Fair Work adviser for guidance specific to your situation.
