Modern slavery is a broad term which captures different forms of human exploitation, such as trafficking, slavery, debt-bondage, serfdom, sexual exploitation, removal of body parts, forced labour, and so on. While these are already recognised as crimes in New Zealand, there are currently no legal requirements around reporting or transparency in the private sphere.
This may soon change with the Modern Slavery Bill (Bill), which was introduced in February of this year, having now passed its First Reading. If the Bill as currently drafted goes onto become law, these are the key points businesses will need to know.
$100 million threshold
The first thing to note is that this Bill targets larger businesses that make (or that control another entity that makes) a consolidated revenue of more than $100 million in a 12-month period. As around 97% of New Zealand businesses are classified as small businesses, the Bill is unlikely to have widespread implications. However, the Bill applies to overseas entities that carry on business in New Zealand too, which may cast the net a bit wider.
Modern slavery statement
Businesses captured by the Bill would be required to prepare, submit and publish an annual “modern slavery statement”. Among other things, this would need to include the following details:
- The name and set up of the business, including its structure, operations, supply chains and other related entities;
- Whether any modern slavery incident has occurred within its operations or supply chains, or within any other entity it owns or controls, as well as a description of any incident;
- Any known or anticipated risks of modern slavery within its operations or supply chains, or within any other entity it owns or controls;
- What actions the entity (and any entity it owns or controls) has taken to assess, prevent, address, mitigate, and remediate both instances and risks of modern slavery;
- The effectiveness of any actions taken and what could be improved upon;
- Whether any complaints about modern slavery have been made to the entity, and the steps taken to investigate and remediate those complaints; and
- A description of any training the entity has provided to employees for identifying modern slavery.
As well as the requirement for each entity to publish modern slavery statements online for free, the Bill would create a consolidated register where all modern slavery statements would be freely available to view and download. Each entity would be required to submit a copy of their statement to a Registrar of modern slavery for publication on this register, no more than 6 months after the end of the reporting period to which it relates.
Potential offences, fines and pecuniary penalties
Businesses would be required to provide accurate and true information in modern slavery statements. Knowingly making a false or misleading statement, or knowingly providing false or misleading information, would amount to an offence that could result in a fine of up to $200,000.
Failure to either prepare, submit or publish a modern slavery statement could also either amount to an offence (where if convicted the entity could be liable to a fine of up to $200,000) or result in a penalty of up to $600,000.
Significantly, the Bill would also introduce liability for directors or other persons involved in the management of the reporting entity. If someone in this position gave authority, permission or consent to, or either knew or could reasonably be expected to have known about, but failed to take all reasonable steps to prevent or stop, the act or omission that gave rise to the offence, they would be guilty of the same offence as the reporting entity.
What does this all mean, and what should businesses do?
The Bill does not impose substantive requirements to prevent modern slavery. It appears designed to try and encourage the prevention of modern slavery by encouraging large businesses to be good corporate citizens, and by promoting better transparency in this space.
It is important to note that the Bill is still at a relatively early stage in the legislative process. Having passed its First Reading, it will now proceed to Select Committee consideration, where public submissions will be invited and the Bill may be amended. It would then need to pass a Second and Third Reading before receiving Royal Assent. As a result, the Bill’s final form, timing and even its potential passing into law remain uncertain.
While businesses do not need to take any immediate steps for compliance, this Bill is a timely reminder that modern slavery is a real issue present in businesses and supply chains all around the world, including in New Zealand.
For businesses wanting to get a head start on the potential changes in this space, it would be worthwhile reflecting on what would be required in a modern slavery statement, what this looks like for your business, and what processes or framework your business may need to implement should these changes go ahead.
If you have any questions about the Modern Slavery Bill and potential reporting requirements, please get in touch with the Employment Law Team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
