MODERN SLAVERY

With the recent fast-tracking of the Modern Slavery Bill, the introduction of a modern slavery reporting regime for New Zealand has become much more likely. The Bill outlines a regime similar in many respects to that already in effect in Australia, although with significantly more penalties attached. Franchisors and franchisees may well be asked by the businesses they supply to demonstrate their commitment to anti-slavery practices.

Threshold and requirements

Despite indications in a 2024 Cabinet Paper that the revenue-tested reporting threshold would be NZ$20m in revenue per year, the Bill sets a threshold of NZ$100m, bringing New Zealand in line with Australia. The threshold will apply to companies (including overseas companies operating in New Zealand), sole traders, trusts, partnerships, societies, and central and local government.

Reporting entities will be required to prepare a “modern slavery statement” for every 12-month period they meet the reporting threshold. The statement must contain, among other details, a description of any modern slavery incident which has occurred, or of any known or anticipated risks of an incident occurring within the operations or supply chain of the entity.  Actions taken by the entity to mitigate such risks must also be addressed, with the annual statements published on the reporting entities’ websites, and publicly registered.

Penalties for non-compliance

Unlike the Australian regime, New Zealand’s Bill would introduce civil and criminal penalties for non-compliance. The Bill will make it an offence, punishable by a fine of up to NZ$200,000, to fail to meet reporting obligations. Directors may be found guilty of the same offence if they permit or knowingly fail to prevent an entity’s offending. Entities in breach may also face a penalty of up to NZ$600,000.

The Bill will amend the Public Finance Act 1989 to provide that the Crown must not directly pay money to a reporting entity penalised under the Bill. Additionally, a record of every conviction or penalty imposed will be entered into the new register.

What’s next?

While the details of the Bill may change, we expect some version of a modern slavery reporting regime to be in force before the election in November. As such, now is the time to get familiar with the proposed law.

The NZ$100m reporting threshold means that the reporting requirements will only apply to a select few entities. Despite this, we consider it best practice to take steps to address modern slavery risks. Entities that will be subject to the reporting requirements will require assurances that products and services are not connected with slavery or exploitation. 

Franchisors and franchisees that engage in business or trade with reporting entities will therefore need to demonstrate their commitment to anti-slavery practices.
There is also a heightened risk of damage to brand reputation by the introduction of domestic modern slavery laws.

The Wynn Williams team will keep a close eye on the progression of the Bill. If you have any queries about what the incoming law will mean for your business, or want to get ahead of the changes, please do not hesitate to contact us.  

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