Modern slavery legislation is back on the agenda after several years of uncertainty, with National and Labour joining forces to advance a cross-party member’s bill.
The proposed bill adopts a disclosure-based model rather than the more onerous positive due diligence duties initially canvassed in 2022, but nevertheless represents a significant regulatory burden for entities caught by the new regime.
The bill will apply to all companies operating in New Zealand with annual revenue over NZ$100 million and require annual reporting on modern slavery risks within the entity’s supply chain and how they are being managed. Significantly, the announcement of the proposals noted that the bill will enable potential personal liability for directors and senior managers, as well as civil penalties and fines for breaches by the reporting entity.
Interestingly, the bill marks the first use of a new Standing Orders pathway that skips the usual random ballot process for Members' Bills (the biscuit tin). The co-sponsors of the bill, National’s Greg Fleming and Labour’s Camilla Belich, will introduce the bill using Standing Order 288 which allows automatic introduction where at least 61 MPs (excluding ministers or under-secretaries) signal support.
Summary of the proposals
While the details of the bill have not been published in full, based on the sponsors’ announcement the key obligations under the bill focus on mandatory reporting aimed at transparency and accountability across supply chains. Entities in New Zealand with an annual revenue over NZ$100 million will need to:
- identify modern slavery risks, by mapping supply chains;
- disclose findings in annual modern slavery statements; and
- lodge those statements on a public register.
As noted above, the proposed disclosure model is less burdensome than the obligations initially considered by the previous Government in 2022 (see our article here), which had proposed mandatory due diligence obligations to actively search for and prevent modern slavery. The proposed bill instead focuses more simply on public transparency and accountability through disclosure. The proposed financial threshold for reporting entities (annual revenue of NZ$100 million) is also significantly higher than the various tiered thresholds considered under the previous proposals.
In terms of regulatory oversight and enforcement, the announcement confirms that the Human Rights Commission would have a formal role in regulating the regime and notes the possibility of an anti-slavery commissioner (contemplated as part of future reviews). Companies that fail to report, or that make false or misleading statements, would face criminal fines up to NZ$200,000 or civil penalties of up to NZ$600,000.
Significantly, the sponsors’ announcement refers to the introduction of potential personal liability for directors and senior managers. This will likely be a point of focus in submissions and appears contrary to the trend of other recent reforms (e.g. changes to consumer credit and climate reporting frameworks) where personal liability provisions have been wound back.
Timing and next steps
The sponsors will introduce the bill on 10 February, with a view to its enactment later this year (and before the November election). They have signalled there will be no transition period. Companies above the NZ$100 million revenue threshold should therefore assume an accelerated commencement and should start to prepare early. In particular:
- boards should assign clear governance ownership for modern slavery risk, approve reporting plans, and ensure management is equipped to deliver the required disclosures.
- businesses already reporting under Australian or UK regimes should consider how to use existing statements and methodologies prepared under those regimes, and how they can be adapted for the New Zealand context to minimise duplication.
- procurement and risk teams should accelerate supply-chain mapping across suppliers, prioritising sectors and geographies with known exposure to modern slavery.
Engagement in the consultation will also be crucial. We expect that many businesses above the proposed NZ$100 million revenue threshold will wish to participate in the select committee process in due course, particularly on contentious aspects such as personal liability and the possible enforcement consequences.
If you would like further details on the proposed changes, or assistance in making submissions, please get in touch with the authors or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
