The Ministry of Business, Innovation and Employment is seeking feedback on a proposed legislative response to modern slavery and worker exploitation, forced labour, people trafficking and slavery in New Zealand. The proposal comes following a petition signed by more than 37,000 New Zealanders and a letter signed by 110 local businesses calling for modern slavery legislation was delivered to Michael Wood, Minister for Workplace Relations and Safety, in June 2021. The Government has also received advice in shaping the proposal from the Modern Slavery Leadership Advisory Group (chaired by Rob Fyfe), which was convened by the Government as a result of its 2020 election promises.
As part of the growing focus on the Environmental, Social and Governance (ESG) approach, modern slavery and worker exploitation has received increased attention over the last few years. This has resulted in an international trend towards requiring labour standards to be met across supply chains and operations, with modern slavery legislation being enacted in various jurisdictions, including the United Kingdom and Australia.
We expect that it is inevitable that legislation responding to modern slavery will come into force one way or another in New Zealand: with the key question for New Zealand businesses being what the final form of the legislation will look like.
What does MBIE mean by ‘modern slavery’ and ‘worker exploitation’?
The consultation documents released by MBIE currently describe modern slavery as ‘severe exploitation that a person cannot leave due to threats, violence or deception’. Examples given include forced labour, debt bondage, forced marriage, slavery, and human trafficking.
Worker exploitation is described as being behaviour that causes, or increases the risk of, material harm to the economic, social, physical, or emotional wellbeing of a person. Essentially, it would include all ‘non-minor breaches’ of New Zealand employment standards.
What does the proposal look like?
The Government’s proposed legislative response aims to introduce new responsibilities in relation to the operations and supply chains of ‘New Zealand’ entities (that is, any entity ‘operating’ in New Zealand – the proposal provides little clarity on what it might take to be held to ‘operate’ in New Zealand). These responsibilities would apply to all entities, including companies, sole traders, partnerships, state sector organisations, local government, charitable entities, trusts, incorporated societies and Māori trusts and incorporations.
The higher the annual revenue of an entity, the more responsibilities it will have. As is currently proposed, a ‘small size entity’ has revenue of below NZ$20 million, a ‘medium size entity’ has revenue of more than NZ$20 million but less than NZ$50 million, and a ‘large size entity’ has revenue exceeding NZ$50 million. The definition of ‘revenue’ remains to be finalised, although the proposal contemplates an entity’s revenue being based on its consolidated annual revenue over its most recent financial year (which would take into account revenue of any subsidiaries, whether or not based in New Zealand, but not revenue of a parent entity).
At this stage:
- All entities would be required to:
- take ‘reasonable and proportionate action’ if they become aware of modern slavery in their international operations and supply chains or modern slavery or worker exploitation in;
- their domestic operations and supply chains; and undertake due diligence to prevent, mitigate and remedy modern slavery and worker exploitation by New Zealand entities where they are the parent or holding company or have significant contractual control over another New Zealand entity’s affairs.
- Medium and large entities would be required to disclose the steps they are taking to address modern slavery internationally and domestically and worker exploitation domestically.
- Large entities and those with control over New Zealand employers would be required to undertake due diligence to prevent, mitigate and remedy modern slavery internationally and domestically and worker exploitation domestically.
What can New Zealand businesses do to prepare?
Legislative change is inevitable – the only question for New Zealand businesses is how far the law in New Zealand will go.
Of course, managing the risk of modern slavery and worker exploitation in the supply chain shouldn’t require legislative intervention. Ignorance is no longer a defence (if it ever was): all businesses should be critically assessing their own supply chains to ensure that they can manage the risk of modern slavery. While no sectors are immune from this risk, it is particularly important in certain industries such as food production, and textile manufacturing, or industries relying on resource extraction. Consumers who become aware of lax practices in supply chain management are likely to vote with their wallets, as businesses face increased scrutiny from the public eye.
All businesses – whether or not they are likely to be subject to modern slavery legislation – should undertake an audit of their current practices and risk management measures, and in particular should assess:
- how far their due diligence processes go in terms of investigating the source of raw materials and/or the labour conditions involved in their supply chain;
- whether adequate contractual measures are in place (or can be put in place):
- to facilitate the provision of information from suppliers or subcontractors anywhere along the supply chain, so as to empower the business to maintain oversight over working practices employed;
- to undertake audits of suppliers through all levels of the supply chain and/or require independent third party certification of working practices; and
- to enable a quick termination and disengagement from a supplier if modern slavery or worker exploitation is identified in the supply chain.
Make a submission
At this pre-legislation consultation stage, the exact scope of what constitutes ‘reasonable and proportionate action’ or ‘non-minor breaches’ of New Zealand employment standards is not clear. It is also uncertain when an entity will be ‘operating in New Zealand’ or how ‘revenue’ will be defined. Making submissions provides opportunity for you to have your say and contribute to the overall shape of the legislative framework to ensure it is workable and achievable for businesses, while still working towards the elimination of modern slavery and worker exploitation in a manner consistent with Aotearoa’s role as a responsible global citizen.
Submissions on the proposals are due before 5pm on 7 June 2022 and can be made to [email protected] or International Labour Policy, Workplace Relations and Safety Policy, Ministry of Business, Innovation & Employment, PO Box 1473, Wellington 6140. Alternatively, a 20-minute survey, which also closes at 5pm on 7 June 2022, can be completed anonymously at https://www.research.net/r/slaveryandexploitation.
