13.05.2022

New proposals on modern slavery place higher responsibilities on NZ organisations

Over recent years, modern slavery has become a more prominent issue in New Zealand.

The Ministry of Business, Innovation and Employment (MBIE) has cited that since 2009, 51 victims of people trafficking have been identified and it is estimated 3000 individuals are subject to some form of modern slavery. The seriousness of this problem has prompted the government to release proposals for legislative response to modern slavery and worker exploitation in New Zealand.

New Zealand has committed to the prevention of modern slavery through its ratification of international treaties such as the International Labour Organization (ILO)’s Forced Labour Convention and the UN Slavery Convention.

In March 2021 a Plan of Action against Forced Labour, People Trafficking and Slavery was introduced in New Zealand. The Plan of Action identifies an all-of-government approach to combatting modern slavery. It sets out 28 actions government agencies aim to achieve through 2020-2025.

As part of the Plan of Action, in April 2022, Minister of Workplace Relations and Safety, Hon Michael Wood, released proposals for legislative response and opened it for public consultation. If these proposals are adopted, organisations will need to act if they become aware of modern slavery or worker exploitation and there will be due diligence requirements imposed on larger entities.

The proposal aims to “achieve freedom, fairness and dignity in the operations and supply chains of entities in New Zealand”.

Proposal

The proposal introduces a graduated system of obligations, with medium and large organisations having greater responsibilities than smaller entities. An entity’s size is determined based on annual revenue; $20 million revenue per year or less is deemed a small entity, a medium entity makes between $20-$50 million and a large entity makes more than $50 million revenue per year.

Some obligations, however, will apply to all organisations regardless of size. One such obligation is the requirement to take reasonable and proportionate action when an organisation becomes aware of modern slavery in its domestic or international operations/supply chains, or worker exploitation in its domestic operations/supply chains. Due diligence is also required to prevent, mitigate, and remedy any modern slavery or worker exploitation carried out by New Zealand entities that are the parent or holding company, or exercise significant contractual control over another entity.

In addition to the above, medium and large organisations will be required to disclose the steps they are taking to address modern slavery and worker exploitation. The top tier of responsibility will be placed on large organisations, who will also be required to conduct due diligence to prevent, mitigate and remedy modern slavery in both international and domestic operations/supply chains, as well as worker exploitation in domestic operations/supply chains.

Modern slavery and worker exploitation defined

Modern slavery and worker exploitation are dealt with differently under the proposal. Modern slavery captures “the legal concepts of forced labour, debt bondage, forced marriage, slavery and slavery like practices and human trafficking” and worker exploitation would capture “non-minor breaches of New Zealand employment standards”.

It is proposed that organisations would not need to take action where they are aware of worker exploitation in their international operations and supply chains, as worker exploitation is a concept linked to domestic operations and supply chains only. The distinction is due to the difficulties in applying New Zealand employment standards to other countries. By comparison, modern slavery is easier to apply to other countries as it is internationally accepted as a breach of human rights.

Taking Action

All organisations are required to take some form of action if they become aware of worker exploitation (only domestically) or modern slavery in their supply chains or operations. However, what will taking action look like? The proposals give suggestions of what this action might look like, including reporting to authorities or changing suppliers.

However, we note that the proposals outline that action will only be required where it is reasonable and proportionate in the circumstances of the organisation. What is reasonable and proportionate is not a straightforward question and there will be many factors considered including:

  • Size and resources of the entity;
  • Control the entity has over suppliers;
  • Potential harm if no action is taken; and
  • What is good practice in that sector.

The Ministry of Business, Innovation and Employment is specifically seeking feedback on the issue of what actions should be considered reasonable and proportionate.  

Due Diligence

The proposal also gives a range of examples of how an organisation might conduct due diligence:

  • Audits of suppliers to assess compliance with human rights;
  • Establishing reporting mechanisms in supply chains/operations;
  • Prior assessment of potential supply chains; and
  • Ensuring suppliers and workers in the supply chains are educated about their obligations and rights.

These proposals are currently open for public consultation. Although these proposals will impose greater administrative requirements on New Zealand organisations, it marks a positive step in New Zealand’s efforts to combat modern slavery and worker exploitation. The future developments in this area of New Zealand’s business and employment sectors will be exciting to watch out for.

If you have any questions about the recent modern slavery proposals and their effect on your organisation or business, please get in touch with our Business Advice 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.

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Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

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