Modern Slavery Act Compliance For Small And Medium Businesses

When you’re running a small or medium business, you’re already juggling a lot - customers, cash flow, staff, suppliers, and growth plans. The requirements under Australia’s Modern Slavery Act can feel like “one more compliance thing” to add to the list.

But modern slavery compliance is not just a big-corporate issue. Even if your business isn’t legally required to report, you can still be asked about your supply chain by customers, investors, landlords, tender panels, and larger businesses you supply to.

The good news is that you don’t need to turn your business upside down to take meaningful steps. If you approach it like any other business risk - identify where issues could arise, document what you’re doing, and build it into your procurement processes - you can create a practical plan that fits your business size and budget.

Below, we’ll walk you through what the Modern Slavery Act regime covers in Australia, whether it applies to you, and what “good compliance” looks like for small and medium businesses.

What Is The Modern Slavery Act In Australia (And What Does It Actually Require)?

In Australia, “modern slavery” is an umbrella term for serious forms of exploitation - including forced labour, human trafficking, debt bondage, servitude, forced marriage, and child labour in certain circumstances.

The key law most businesses talk about is the Modern Slavery Act 2018 (Cth) (Commonwealth). This law focuses on transparency: large entities must publish an annual Modern Slavery Statement describing the modern slavery risks in their operations and supply chains, and what they’re doing to address those risks.

What Is A Modern Slavery Statement?

A Modern Slavery Statement is a public report (published on a government register) that typically covers:

• your business structure and operations
• your supply chain and where products/services come from
• the modern slavery risks you’ve identified (actual and potential)
• actions taken to assess and address those risks (including due diligence and remediation)
• how you assess whether your actions are working
• your internal governance for the statement (approval and sign-off)

Even if you’re not required to prepare a statement, understanding these categories is helpful - because many smaller businesses end up being asked to provide similar information as part of commercial negotiations.

Why This Matters For SMEs

For small and medium businesses, the biggest impact of Australia’s modern slavery reporting regime is often indirect. You may see it through:

• customer questionnaires from larger businesses (for example, “do you have a modern slavery policy?”)
• tender requirements (especially government and large enterprise procurement)
• contract clauses requiring you to warrant compliance and report incidents
• reputational risk if something goes wrong in your supply chain and your brand is connected to it

In other words, modern slavery compliance is increasingly part of “doing business” - not just “reporting if you’re big enough”.

Does The Modern Slavery Act Australia Apply To Your Business?

Under the Commonwealth legislation, reporting is generally mandatory for entities that are based in or carrying on business in Australia and have a consolidated annual revenue of at least $100 million (and meet other criteria). Many small and medium businesses won’t meet that threshold.

However, you may still need to take this seriously if you:

• supply goods or services to large companies (including listed companies)
• sell products that involve manufacturing, imports, or complex supply chains
• operate in industries with higher modern slavery risk (for example, cleaning, labour hire, construction, food production, textiles/apparel, electronics, logistics, security services)
• engage overseas suppliers or subcontractors
• are scaling quickly and want to be “procurement-ready” for bigger clients

Common Scenario: Your Bigger Customer Pushes The Obligations Down The Chain

Let’s say you’re a growing business with a great opportunity to supply a larger organisation. They may send you a supplier onboarding pack asking for:

• confirmation of your policies
• your supplier code of conduct
• your approach to audits and due diligence
• details of any modern slavery incidents (even historic)

This is one of the main reasons SMEs should set up a simple, documented approach early - it makes onboarding faster and helps you avoid losing deals due to “compliance gaps”.

State-Based Modern Slavery Rules (Why You Should Still Check)

Australia has also had developments at State and Territory level. For example, NSW has its own Modern Slavery Act, but it has not been fully commenced and its practical operation has been limited compared with the Commonwealth regime. Because the rules (and how they apply in practice) can shift over time - and can depend on your circumstances such as industry, turnover, contracts, and locations - it’s worth getting tailored guidance if you’re unsure.

If you want help assessing where you stand and what’s proportionate for your business, a regulatory compliance lawyer can help you map out a practical compliance plan without overcomplicating it.

What Does “Good” Modern Slavery Compliance Look Like For Small And Medium Businesses?

If you’re an SME, compliance is usually about building a repeatable process - not writing a perfect policy document and forgetting about it.

Here’s what “good” looks like in practice:

1) You Know Your Highest-Risk Areas

Most SMEs don’t have the time (or leverage) to deeply audit every supplier. That’s okay. A practical approach is to start by identifying high-risk categories, such as:

• overseas manufacturing and sourcing
• labour-intensive services (cleaning, security, labour hire)
• subcontracting chains (where you don’t directly employ the workers)
• rapidly changing suppliers (price-driven sourcing changes can increase risk)

Once you know where the biggest risks might be, you can focus your effort where it matters.

2) You Have A Basic Due Diligence Process

Due diligence doesn’t need to be complicated to be useful. For many SMEs, a starting point might include:

• asking new suppliers where goods are made and who provides labour
• requesting certifications or ethical sourcing policies where appropriate
• checking for red flags (unusually low pricing, unclear subcontracting, refusal to answer basic questions)
• keeping a record of what you asked and what you were told

Tip: treat this like any other supplier onboarding process. If you already have quality checks, insurance checks, and safety checks, modern slavery can be an extra layer - not a whole new system.

3) Your Contracts Support Your Compliance (Not Undermine It)

A lot of modern slavery risk becomes a legal problem when contracts are vague. If you have clear procurement and supply terms, you can set expectations early and reduce your exposure.

Depending on your business, that could mean updating your Supply Agreement or supplier terms to include things like:

• supplier warranties about lawful labour practices
• obligations to notify you of suspected breaches
• a right to request information or conduct audits (even if you use it rarely)
• termination rights for serious breaches

The goal isn’t to “lawyer up” every supplier relationship. It’s to make sure your most important supplier arrangements reflect the standards your business is expected to uphold.

4) You Treat Labour Sourcing As A Compliance Priority

Modern slavery risk isn’t only about overseas manufacturing. It can arise locally too - especially where work is outsourced through layers of subcontracting.

If you engage contractors, labour hire, or subcontractors, consider whether your onboarding and documentation is strong enough. Having a clear Contractors Agreement helps set the expectations around lawful work practices, record-keeping, and responsibilities.

It also helps you avoid misunderstandings about who is responsible for employment obligations, which can intersect with broader exploitation risks.

5) You Have A Way For People To Speak Up

Many modern slavery issues come to light through complaints, whistleblowers, or worker reports. Even as an SME, you should think about how concerns could be raised safely and handled properly.

This might involve implementing a Whistleblower Policy (especially if you’re a company with growth plans or external stakeholders), or at least having an internal process for receiving and escalating concerns.

Step-By-Step: How To Build A Modern Slavery Compliance Plan Without Overwhelming Your Business

If you’re thinking, “Where do we even start?”, this is a simple roadmap that works well for small and medium businesses.

Step 1: Map Your Supply Chain (At Least One Level Down)

Start with a list of your key suppliers and service providers. Then note:

• what they supply
• where they operate (Australia only, or overseas)
• whether they subcontract work
• how critical they are to your business

You don’t need a perfect diagram. A spreadsheet is fine - as long as it’s maintained.

Step 2: Do A Practical Risk Assessment

For each supplier category, consider risk factors like:

• country risk (certain regions have higher prevalence of exploitation)
• industry risk (labour-intensive, low-margin sectors can be higher risk)
• business model risk (heavy subcontracting, informal labour, seasonal work)
• commodity/product risk (for example, raw materials with known supply chain concerns)

This gives you a “heat map” so you can prioritise what to address first.

Step 3: Update Supplier Onboarding And Procurement

Next, build modern slavery questions into your standard onboarding flow, such as:

• asking suppliers to confirm they comply with relevant laws
• requesting their policies (if they have them)
• asking whether they use subcontractors and how they monitor them

This is often the most efficient move for SMEs - because it builds compliance into existing processes rather than creating extra work.

Step 4: Train The People Who Actually Buy Things

Modern slavery compliance fails when it’s “owned” by one person but procurement happens elsewhere.

Consider basic training for anyone who selects suppliers, negotiates pricing, or approves invoices. Keep it practical: what red flags to look for, what questions to ask, and when to escalate.

Step 5: Put Your Response Plan In Writing

If you discover a problem, the worst time to decide what to do is in the middle of a crisis.

A response plan should cover:

• who is responsible for escalation internally
• how you assess the credibility and severity of a report
• how you engage with the supplier and what you require them to do
• when you pause or terminate the supplier relationship
• how you consider worker safety and remediation

This doesn’t need to be long. It does need to be clear and workable.

Step 6: Document What You’re Doing (So You Can Prove It Later)

In modern slavery compliance, evidence matters. Keep records of:

• supplier questionnaires and responses
• contract clauses and updates
• any training conducted
• incidents reported and steps taken
• your periodic reviews

Even if you never need to publish a statement, you may need to show your due diligence to a client or tender panel.

What Policies And Legal Documents Should SMEs Consider?

There’s no one-size-fits-all set of documents for modern slavery compliance. The right approach depends on your size, industry, and supply chain complexity.

That said, these are commonly useful for small and medium businesses responding to Modern Slavery Act expectations in Australia:

• Supplier Code Of Conduct: sets minimum standards for suppliers (labour practices, subcontracting, reporting issues).
• Supplier Contracts: your purchasing terms should support your compliance position (warranties, notification duties, audit rights, termination rights). This is often handled through a tailored Supply Agreement.
• Contractor / Subcontractor Agreements: helps you control compliance expectations where labour is outsourced, including through a Contractors Agreement.
• Workplace Policies: if you have staff, clear reporting and conduct frameworks matter, and a structured Workplace Policy suite can support consistent handling of complaints and investigations.
• Whistleblower Framework: gives a safe pathway to report wrongdoing and helps demonstrate governance maturity, often supported by a Whistleblower Policy.

Many businesses also choose to do a broader compliance review at the same time, because modern slavery risk often overlaps with other legal risk areas (contracts, HR processes, procurement, privacy, and governance). A legal health check can be a useful way to identify gaps early and prioritise fixes based on risk.

Do You Need A Modern Slavery Statement If You’re Under The Threshold?

Not necessarily.

But some SMEs choose to prepare a voluntary statement or a shorter internal report because:

• it helps win larger clients and tenders
• it shows investors and partners that governance is taken seriously
• it creates a repeatable annual process as the business grows

If you take this approach, it’s important that what you publish matches what you can actually support in practice. Overstating your controls can create reputational and contractual problems later.

Key Takeaways

• The Australian modern slavery reporting regime is aimed at transparency, but SMEs often feel the impact through customer requirements, tenders, and supply chain contract clauses.
• Even if you don’t have to report, modern slavery risk can still affect your business through reputational harm, disrupted supply chains, and contractual warranties you may be asked to sign.
• A practical SME compliance plan starts with supply chain mapping, risk prioritisation, basic due diligence questions, and good record-keeping.
• Your supplier and labour arrangements should be backed by clear contracts (for example, supplier terms and contractor agreements) so your legal position matches your compliance commitments.
• Having a clear internal process for reporting and responding to concerns (including whistleblowing) is a key part of a credible compliance framework.
• If you’re unsure what’s proportionate for your business, getting tailored advice early can save time and reduce risk as you grow.

If you would like a consultation on modern slavery compliance and risk management for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.