Following advocacy by an expert group, modern slavery may well be back on the Parliamentary agenda in 2025. While the implementation of a modern slavery regime was previously deprioritised by the Coalition Government, it has now been revived via a Members' Bill by National MP Greg Fleming. The Modern Slavery Reporting Bill (Bill), which is based on a bill drafted by a group of leading human rights advocates in 2024, may form the basis for New Zealand's future legislative framework for modern slavery.
While Members' Bills are subject to a 'ballot' process, meaning that they must wait to be drawn from a ballot before being introduced to Parliament, there is an exception to this if a Bill receives support from a 61-MP majority. If that occurs, the Bill will be introduced to the House on the next sitting day without needing to be pulled from the ballot.
This article summarises the changes proposed by the Bill, how these differ from previous Government proposals, and how these changes may influence the obligations of New Zealand entities.
What is modern slavery?
Modern slavery is an overarching term used to describe the most egregious forms of exploitation, including slavery, debt bondage, serfdom, forced labour, sexual exploitation, trafficking and child labour. New Zealand citizens and businesses may inadvertently support forms of modern slavery through supply chains and purchasing practices, due to participation in a strongly interconnected and intricate global economy.
What does the Bill propose?
The Bill is, first and foremost, focused on disclosure of certain matters relating to modern slavery rather than the imposition of substantive requirements (some of which are already covered in other legislation, such as the Crimes Act 1961). The Bill requires 'reporting entities' to prepare and publish an annual 'modern slavery statement' covering a range of matters in relation to modern slavery, as described further below.
Who would the Bill apply to?
The Bill's definition of 'reporting entity' is wide and would capture most public and private sector entities with more than $50 million in consolidated revenue operating in New Zealand. This includes both New Zealand and overseas companies carrying on business in New Zealand, and entities with direct or indirect control of a New Zealand entity or overseas company carrying on business in New Zealand. This extraterritorial effect is consistent with modern slavery regimes in other jurisdictions such as Australia.
We note that the Bill proposes a higher revenue threshold for which businesses will subject to reporting requirements compared to previous proposals under the Labour Government for a $20 million revenue threshold (see our previous Insight here). However, the proposed $50 million revenue threshold remains significantly lower than the Australian threshold of AUD$100 million (noting that a 2023 review of the Australian legislation recommended lowering the reporting threshold to AUD$50 million, but that the Australian Government indicated in response that it would not be reducing the reporting threshold at this stage). A key consideration for stakeholders is whether the Bill's proposed $50 million threshold strikes the right balance between encouraging well-resourced entities to influence their supply chains while not imposing overburdensome obligations on smaller businesses.
What would reporting entities need to disclose?
In line with previous proposals, a key feature of the Bill is the imposition of mandatory reporting requirements, requiring reporting entities to report modern slavery risks in their operations and supply chains (both international and domestic). Reporting entities must prepare and publish annual modern slavery statements on their websites and submit them to a publicly searchable register established by the Bill.
The compulsory reporting criteria in the Bill would require reporting entities to describe, in relation to themselves and any entities they own or control:
- their structure, operations and supply chains;
- any modern slavery incidents and known or anticipated risks of modern slavery occurring within their operations and supply chains;
- actions taken to assess, prevent, address, mitigate, and remediate modern slavery and risks of modern slavery occurring, including due diligence and remediation processes;
- details of the number of modern slavery complaints made and how these were investigated and remediated;
- how the effectiveness of actions taken in relation to modern slavery is assessed, and how any related processes or policies are being continually improved; and
- any training that the reporting entity provides to employees in relation to identifying modern slavery and if any employees were consulted with.
What are the proposed penalties for non-compliance?
The Bill sets out financial penalty provisions for offences relating to non-compliance with reporting requirements and the provision of false or misleading information of up to $200,000 (or up to $600,000 where pecuniary penalties are ordered by the High Court). It also provides for director or management liability where they are involved in offences or failed to take reasonable steps to prevent the offence being committed.
The Bill also purports to amend the Public Finance Act 1989 to prevent public money being paid to reporting entities that have contravened requirements in the Bill, and proposes to establish a ministerial advisory committee, to provide the Minister with independent expert advice on modern slavery, the Minister’s functions under the Bill, and any other matters specified by the Minister.
What should businesses do to prepare?
The details as to if and to what extent the Bill's provisions will be adopted are still to be ironed out by Parliament. However, New Zealand businesses can prepare for the possibility that the legislation will be introduced by considering how modern slavery can be identified and prevented in their operations and supply chain. For example, this could include:
- establishing where in your governance structure modern slavery risk is best monitored and assessed;
- mapping your supply chain to identify suppliers that are at greater risk of relying on modern slavery practices to bring a product or service to market, and considering implementing processes and policies to address this risk;
- setting up a whistleblower process to allow staff, customers, other suppliers and stakeholders to notify modern slavery incidents and make modern slavery complaints; and
- providing training opportunities on modern slavery risk and mitigation.
Of course, many New Zealand organisations already provide some public reporting on modern slavery, for example in the context of Integrated Reporting and/or because they are captured by Australian requirements. Accordingly, our view is that the interoperability of any regime with existing international and domestic reporting obligations and frameworks is a critical consideration for any regime ultimately introduced. In addition, lessons can be learnt from the climate-related disclosures regime as to how to 'right size' the settings for different types of organisations with varying degrees of resourcing and modern slavery risk. Organisations should accordingly take any opportunities to engage with the Government on any reform that ultimately emerges.
Please get in touch with your usual Russell McVeagh contact if you would like to discuss the implications of the Bill further.