Modern slavery regulation on the way – Is your business ready?

The Modern Slavery Bill has recently passed its first reading in Parliament. The bill follows several failed legislative proposals and is a result of two National and Labour MPs teaming up in a rare display of bipartisanship. If the bill passes without changes, the legislation will require large organisations to address and report on modern slavery issues within their operations and supply chains.  

Why the need for regulation?

Modern slavery practices cast a long shadow, even in New Zealand. The 2023 Global Slavery Index estimated that 8,000 individuals were living in modern slavery in New Zealand on any given day in 2021. Further, World Vision estimated New Zealand imported $7.9 billion of “risky goods associated with child and forced labour” in 2022 (around 10% of New Zealand’s total imports).

While slavery and coercive practices are crimes in New Zealand, it is hard to identify without a comprehensive reporting regime that requires businesses to disclose modern slavery risks in their operations and supply chains. New Zealand is an international outlier compared to most of our trading partners – the United Kingdom brought in modern slavery legislation in 2015, Australia’s laws came into effect in 2019, and the European Union’s new Forced Labour Regulation will apply from December 2027.

Overview of the bill

The bill provides a broad definition of modern slavery, including practices already illegal under the Crimes Act (such as dealing in slaves, human trafficking, and debt-bondage) and forced or exploitative labour.

Unlike earlier legislative proposals, the bill does not require entities to carry out due diligence in their supply chains – despite one of the bill’s purposes being to encourage entities to undertake that due diligence. Instead, the bill will require “reporting entities” to make an annual modern slavery statement. A “reporting entity” is defined as any New Zealand entity or overseas company carrying on business in New Zealand that has a consolidated revenue of more than $100 million in a 12 month reporting period. In determining what its consolidated revenue is, an entity must consider its total revenue, or if that entity controls other entities, the total revenue of the entity and all the controlled entities together. Practically this means the reporting requirements of the bill are aimed at large corporates, and not small to medium sized businesses.

A reporting entity’s modern slavery statement must describe:

• the reporting entity’s structure, operations, and domestic and international supply chains (including any entities owned or controlled by the reporting entity);

• any modern slavery incident that has occurred within the reporting entity’s operations and supply chains (including those of any owned or controlled entities);

• any known or anticipated risks of modern slavery occurring within the reporting entity’s operations and supply chains (including those of any owned or controlled entities);

• the actions taken by the reporting entity (and any owned or controlled entities) to assess, prevent, mitigate, and remediate modern slavery incidents or risks (including any due diligence measures);

• the number of modern slavery-related complaints and the measures taken to investigate and remediate any modern slavery identified as a result of a complaint;

• how the reporting entity assesses the effectiveness of its actions assessing, preventing, mitigating, and remediating modern slavery and how its processes are being continually improved;

• any training that the reporting entity provides to its employees (including any owned or controlled entities) or employees of any other entity that is in its supply chain;

• any consultation it undertakes as part of training; and

• any other matter prescribed by regulation.

The modern slavery statement must be provided to a registrar appointed to maintain a public register. The reporting entity must also make its statement available online.

The bill also proposes to impose several conditions on the responsible Minister (although it is unclear at this stage which Minister will have responsibility for the new regime), including:

• monitoring compliance and publishing an annual report on progress towards combatting modern slavery (for example, the number of criminal investigations and prosecutions concluded that relate to modern slavery);

• issuing guidance on how the public can make referrals to government agencies relating to suspected modern slavery incidents;

• the authority to direct the Chief Human Rights Commissioner to designate modern slavery as a “priority area”; and

• reporting to Parliament every three years on whether:

o the needs of modern slavery victims are met;

o any amendments to legislation or government policy are necessary; and

o an independent “Anti-Slavery Commissioner” should be appointed.

Penalties

The proposed penalties are broadly in line with other pieces of compliance regulation imposed on organisations. A reporting entity that fails to make a statement or knowingly makes a false or misleading statement is liable to a fine of up to $200,000. The High Court may also impose civil penalties of up to $600,000 on any reporting entity that is not a government agency.

A director or other persons involved in the management of a reporting entity could face personal liability if an act or omission took place with their authority, or they knew (or could reasonably be expected to have known) that an offence was being committed and they failed to take reasonable steps to prevent or stop it.  

Importantly, the bill also amends the Public Finance Act 1989 so the Crown cannot pay a convicted entity (directly or indirectly). This means that businesses convicted under the bill would lose out on government procurement contracts.

What next

The bill received strong support in its first reading – it now moves to Select Committee for consideration and potential amendment. The public has until 28 May 2026 to make a submission on the bill.

The bill’s co-sponsors are hopeful that it will pass before the November election. However, as the Select Committee has until 31 August 2026 to report back, that timeframe may be difficult to achieve.

As currently drafted, the bill provides that it will come into force 6 months after it receives Royal Assent – meaning, if the bill is passed before the election, reporting entities may need to comply from mid-2027.

The proposed obligations imposed on reporting entities are significant – and it is important organisations likely to be considered reporting entities start planning for what changes they need to make to their operations. At a high-level, potential process changes could include:

• mapping supply chains and identifying high-risk suppliers;

• considering what commitments need to be included in new or existing contracts with suppliers (for example, modern slavery compliance warranties, sufficient audit rights, record retention and reporting obligations, and indemnities);

• establishing robust systems to investigate complaints, monitor suppliers on an ongoing basis, and create training for employees; and

• to the extent an entity is already required to report to United Kingdom or Australian regulators, considering how it can repurpose the processes used in those jurisdictions for New Zealand.

We will follow the progress of the bill through Parliament and will provide updates if it becomes law. Please get in touch with our team if you have questions or need advice on anything discussed in this article.