Canada’s new modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”), came into effect on January 1, 2024. Designed to fight against modern slavery in supply chains, this Act requires reporting entities to submit to the government and publish public reports about the measures they have taken to address and prevent forced and child labour in their supply chains during their previous fiscal year. Initial reports are due to be filed by May 31, 2024, or earlier for certain federally incorporated entities that provide their annual financial statements to shareholders before May 31 of each year.
Purpose of the Act
The Act is intended to implement Canada’s international commitment to combat forced labour and child labour by imposing reporting obligations on (i) government institutions producing, purchasing, or distributing goods in Canada or elsewhere; and (ii) certain business entities producing goods in Canada or elsewhere or importing goods produced outside Canada.
Which Entities are Impacted by the Act?
The Act will apply to certain federal government institutions as well as to “entities.”
An “entity” includes a corporation, trust, partnership, or other unincorporated organization that:
- is listed on a stock exchange in Canada; OR
- has a place of business in Canada, does business in Canada, or has assets in Canada, and (based on its consolidated financial statements) meets at least two of the following three conditions for at least of one of its two most recent financial years:
- the entity has at least $20 million in assets;
- the entity has generated at least $40 million in revenue; and
- the entity employs an average of at least 250 employees.
Entities that are doing any of the following must file reports:
- producing, selling, or distributing goods in Canada or elsewhere;
- importing into Canada goods produced outside Canada; or
- controlling an entity engaged in any of the foregoing.
Reporting Requirements
On or before May 31 of each year, entities are required to report to the Minister of Public Safety and Emergency Preparedness on the steps taken during the previous financial year to prevent and reduce the risk that forced labour and child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity.
The report must include information about the entity’s:
- (a) structure, activities, and supply chains;
- (b) policies and due diligence processes in relation to forced labour and child labour;
- (c) the parts of its business and supply chains that carry a risk of forced labour or child labour being used and the steps the entity has taken to assess and manage that risk;
- (d) measures taken to remediate any forced labour or child labour;
- (e) measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains;
- (f) training provided to employees on forced labour and child labour; and
- (g) method of assessing its effectiveness in ensuring that forced labour and child labour are not being used in its activities and supply chains.
On December 20, 2023, the Government of Canada released a guidance document designed to assist entities in preparing and submitting their reports. In addition, the Government released a mandatory online questionnaire that must be completed in addition to the report. Links to the guidance and questionnaire are found here:
- https://www.publicsafety.gc.ca/cnt/cntrng-crm/frcd-lbr-cndn-spply-chns/index-en.aspx
- https://www.publicsafety.gc.ca/cnt/cntrng-crm/frcd-lbr-cndn-spply-chns/sbmt-rprt-en.aspx#a1
The report must be approved by the entity’s governing body. In the case of a corporation, this likely entails approval by the board of directors.
Public Disclosure
Entities must make their reports available to the public, including by publishing them in a prominent place on their websites.
A corporation incorporated under the Canada Business Corporations Act is also required to deliver its report to each shareholder, along with its annual financial statements.
Enforcement
An entity required to file the report that fails to comply is guilty of an offence punishable by summary conviction and may be subject to a fine of up to $250,000. Similarly, any person who knowingly makes a false or misleading statement or provides misinformation to the Minister is also guilty and may face the same consequences.
Directors, officers, and agents of the person or entity who directed, authorized, assented to, acquiesced in, or participated in the commission of an offence under the Act are also liable and can be found guilty of the offence and on conviction may be subject to the same penalties.
Conclusion
Companies need to be aware of the published guidance as they assess the application of these reporting requirements to their businesses and prepare to submit their initial report and questionnaire on or prior to May 1, 2024. If you have questions concerning the impact of this legislation on your organization or require assistance complying with your reporting requirements, please contact Keith Inman at [email protected] or by phone at 250-869-1195.