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The Modern Slavery Act 2018 only requires businesses with annual consolidated revenue of $100 million or more to publish a modern slavery statement — a threshold most small and medium retailers sit well under. If you run a small business in Australia, it’s tempting to conclude the Modern Slavery Act doesn’t apply to you at all. Increasingly, that’s not quite right.

What’s Changing in Australia’s Modern Slavery Laws in 2026?

On 16 July 2026, the Federal Government announced its intention to introduce a new “failure to prevent” criminal offence, aimed at companies above the $100 million threshold that don’t take reasonable steps to prevent modern slavery in their supply chains.

No legislation has been introduced yet, but the announcement signals where regulation is heading. The announcement did not propose changing the $100 million reporting threshold itself, so if your revenue sits below that figure, you’re not about to become a reporting entity overnight. That’s not the whole picture for smaller suppliers, though.

Why Modern Slavery Compliance Matters If You’re Not a Reporting Entity

Every large retailer that is required to report has to describe the actions it’s taking to identify and address modern slavery risks across its own supply chain — which includes the businesses that supply it. In practice, that means large reporting entities are increasingly pushing due diligence obligations down the chain through:

• Supplier questionnaires and audits, asking smaller suppliers to demonstrate their own labour practices and those of their subcontractors
• Modern slavery clauses in supply contracts, requiring warranties, cooperation with audits, and sometimes a right to terminate for non-compliance
• Preferred supplier requirements, where demonstrating modern slavery due diligence becomes a condition of retaining or winning contracts with larger customers

If your business supplies goods or services to a major retailer, a wholesaler, or a franchise group, there’s a reasonable chance you’re already being asked to complete one of these questionnaires — or will be soon, as reporting entities sharpen their practices ahead of any new offence taking effect.

What Do Modern Slavery Clauses in Supply Contracts Actually Require?

Modern slavery clauses have become standard in supply agreements with large customers, and they are rarely negotiable line by line.  The wording varies, but most combine several of the following obligations.

Warranties and representations that you do not use forced labour, child labour or debt bondage anywhere in your operations, and that you are not aware of modern slavery in your own supply chain.  These are often given on a continuing basis rather than once at signing.

Audit and inspection rights allowing the customer, or an auditor it appoints, to inspect your premises and records, and sometimes those of your subcontractors, usually on limited notice.

Information and cooperation obligations requiring you to complete questionnaires, provide supplier lists, and assist the customer in preparing its own modern slavery statement.

Flow-down requirements obliging you to impose equivalent terms on your own suppliers and subcontractors — so the clause you sign becomes a clause you then have to negotiate downstream.

Termination and indemnity rights permitting the customer to terminate for breach, sometimes immediately and without a cure period, and to recover losses arising from a modern slavery issue in your chain.

The practical risk for a smaller supplier is usually not the warranty itself but its breadth.  A warranty covering your entire supply chain, with no knowledge qualifier and no materiality threshold, asks you to guarantee conditions several tiers back that you have no realistic way to verify.  Supplier due diligence for modern slavery is worth doing on your own terms, before a large customer defines those terms for you.

What Should Small Suppliers Do About Modern Slavery Compliance?

• Understand your own supply chain, even a few tiers back. Where do your key inputs come from, and what visibility do you have over labour conditions there?
• Review your standard supply contracts for modern slavery warranties or audit rights you may have already agreed to, sometimes without much scrutiny at the time.
• Have a basic response ready for supplier questionnaires — even a simple, honest statement of your current practices and any gaps you’re addressing puts you in a stronger position than an unprepared or defensive response.
• Flag contractual risk before you sign, particularly indemnities or termination rights tied to modern slavery compliance in contracts with larger customers.

Is Modern Slavery Just a Big-Business Problem?

For now, the direct legal reporting obligation is. But commercial pressure travels down supply chains faster than legislation does, and a business that can answer a modern slavery questionnaire confidently — rather than being caught off guard by one — is in a stronger position to retain contracts with larger customers as this area continues to develop.

Frequently Asked Questions

Does the Modern Slavery Act apply to small businesses in Australia?

Not as a reporting obligation.  Only entities with annual consolidated revenue of $100 million or more must submit a modern slavery statement, so most small and medium businesses sit outside the Act’s reporting requirements.  Smaller suppliers are still affected indirectly, through the contractual and due diligence obligations their larger customers pass down.

Can a small business be required to sign a modern slavery clause?

Yes.  Nothing in the Act compels it, but a large customer can make modern slavery warranties, audit rights and reporting cooperation a condition of doing business.  Once signed, those obligations are enforceable as contract terms regardless of your revenue.

What if a supplier questionnaire uncovers a problem in my supply chain?

Disclosing a risk you have identified and are actively addressing is generally received better than appearing to have no visibility at all.  Concealment is the greater commercial and legal risk, particularly where you have already warranted your position in a contract.

Should a smaller business publish a voluntary modern slavery statement?

It can be worthwhile.  A short voluntary statement, or even a documented internal policy, gives you something concrete to point to when a customer asks — and can be a genuine differentiator in tenders where competitors have nothing prepared.

If you supply goods or services to larger retailers or corporate customers and want to understand what you’re being asked to sign up to, get in touch with Gladwin Legal to review your supply agreements.

This article is general information only and does not constitute legal advice.