Personal director liability for modern slavery arrives with no grace period

A bipartisan Bill with real teeth

New Zealand’s long-delayed move to legislate against modern slavery is now moving fast. On 1 September 2026 the Education and Workforce Select Committee recommended the Modern Slavery Bill be passed into law, sending it to its second reading. Sponsored jointly by National’s Greg Fleming and Labour’s Camilla Belich, the Bill has support from every party except ACT, and MPs want it on the books before the election on 7 November 2026.

The target is clear. The Bill applies to every company operating in New Zealand with annual revenue over $100 million, roughly 1,000 firms. Those in scope must map their supply chains, publish annual modern slavery statements covering their structure, operations, remedial actions and complaints, lodge them on a public register, and post them on their own websites.

This is a disclosure regime, not a mandatory due diligence one. But the penalties are not trivial. Non-compliance carries civil penalties of up to $600,000, criminal fines of up to $200,000 for false or misleading statements, and personal liability for directors and senior managers on material breaches. That last point turns ethical sourcing from a corporate social responsibility line item into a governance obligation boards cannot delegate away.

The no-transition problem

Here is the sharpest commercial risk. There would be no transition period. Companies would need to be ready to comply from royal assent. If the Bill passes before 7 November, firms that have not already mapped their supply chains or built reporting systems could be legally exposed on day one.

BusinessNZ’s submission pressed for a phased pathway starting with education and guidance before enforcement, plus mutual recognition of Australian and UK reports to cut duplication. That call has not been reflected in the current drafting. Of the 1,000 firms in scope, roughly 300 already run modern slavery due diligence under Australian or UK obligations. The other 700 are starting close to scratch.

What it costs, and who really pays

The only published cost estimate remains MBIE’s January 2023 Regulatory Impact Statement, which put first-year compliance costs across all entities at between $20 million and $60 million, and the average comprehensive statement at around $15,000 per firm for those not already doing due diligence. Those figures are three years old and the scope has since been refined, but they set the floor.

The more important cost is the one that falls on firms not even named in the Bill. Business groups have warned that large firms will push compliance demands down to smaller suppliers, producing “repeated information requests, disproportionate burdens and inconsistent and duplicative reporting expectations” on SMEs with no legal obligation but plenty of commercial pressure. Foodstuffs went further, arguing the Bill should go back to MBIE because it reached “into areas of limited visibility and control.” If you supply a firm above the threshold, this is your problem too.

The governance trap

The Institute of Directors flagged that the liability, public register and procurement settings together risk encouraging “defensive governance and compliance-focused behaviour”, boards ticking boxes rather than fixing supply chains. The NZ Bar Association argued that requiring firms to report on incidents and complaints creates a de facto due diligence obligation that goes beyond the Bill’s disclosure framing, a live drafting inconsistency. The NZ Law Society supported the intent but wanted clearer scope boundaries so firms can determine their obligations with reasonable certainty.

Why now, and what boards should do

New Zealand is a genuine outlier. Australia legislated in 2018, the UK in 2015, and investors managing more than $215 billion in funds had joined the push for a local regime. World Vision’s head of advocacy Rebekah Armstrong told RNZ the Bill “is a great start” and that “it is inevitable that New Zealand companies, operating in a global market, would have instances of modern slavery in their supply chains.”

The principle is hard to argue with, and the cross-party backing suggests it will pass. But the combination of a pre-election deadline, no transition, personal director liability and a public register means the clock is running now, not from royal assent. Boards in scope should be mapping their supply chains this quarter. The firms that wait for the law to be certain will be the ones explaining a blank register entry to a registrar with penalty powers.

Sources

• Select committee recommends Modern Slavery Bill be passed into law (2026-09-01)
• Watch: National and Labour MPs team up to get slavery bill heard after ACT objects (2026-02)
• Large New Zealand entities to face new laws on modern slavery (2026-02-03)
• There’s finally a bipartisan modern-day slavery bill. How will it work? (2026-02-02)
• Modern slavery law risks ‘significant cost burden’, companies argue (2026-06-16)
• Modern slavery bill a triumph of parliamentary cooperation (2026-05-01)
• Regulatory Impact Statement: Modern Slavery and Worker Exploitation Reform (2023-01-26)
• Modern Slavery Bill Submission by BusinessNZ (2026-05-11)
• IoD seeks clearer modern slavery obligations (2026-06-05)
• Modern Slavery Bill – New Zealand Law Society Submission (2026-05-27)
• Modern Slavery Bill – New Zealand Bar Association Submission (2026-05-28)