The new Fighting Against Forced Labour and Child Labour in Supply Chains Act was enacted in January 2024. The Act requires certain entities to submit a report by May 31, 2024. Here are the highlights.
Application of the New Law for Large Businesses
The Act applies to corporations, partnerships, trusts and other organizations listed on a Canadian stock exchange and to companies that have a place of business in Canada, do business in Canada or own assets in Canada and that, based on their consolidated financial statements, meet at least two of the following conditions, for at least one of their two most recent financial years:
i. have at least $20 million in assets;
ii. have generated at least $40 million in revenue;
iii. employ an average of at least 250 employees.
If an entity (a) produces, purchases or distributes goods in Canada or elsewhere; (b) imports into Canada goods produced outside Canada; or (c) controls an entity engaged in any activity described in paragraph (a) or (b), the prescribed entity is subject to statutory reporting obligations to the government.
Reporting Requirements
The concerned entity must submit to the Minister of Public Security and Emergency Preparedness, before May 31 of each year, a report detailing the measures taken during its previous fiscal year to prevent and mitigate the risk of forced or child labour at any stage of the production of its goods in Canada, or elsewhere, or their importation into Canada.
The report must include information about:
- Company structure, business activities and supply chains;
- The company’s due diligence policies and processes relating to forced labour and child labour;
- The parts of the company’s business and supply chains presenting a risk of forced or child labour and the measures taken to assess and manage this risk;
- Measures taken to remedy any use of forced or child labour;
- Measures taken to remedy the loss of income of the most vulnerable families affected by measures to eliminate the use of forced labour;
- Employee training on these issues;
- Assessment of the effectiveness of efforts to avoid forced or child labour.
The Act requires that the report be approved and certified by the governing body of the prescribed entity.
Once the report has been submitted, a questionnaire with questions on the Act’s various requirements must be completed and uploaded onto the federal government’s platform.
The report must also be published on the prescribed entity’s website. If the entity is incorporated under the Canada Business Corporations Act or another federal statute, it must provide the report to shareholders, along with the annual financial statements.
The government has recently published guidelines to help entities subject to the Act prepare their reports.
It should be noted that the Act’s requirements are similar to those of different jurisdictions, including the UK’s Modern Slavery Act 2015 and Australia’s Modern Slavery Act 2018. Submitting a joint report for Canada, the UK, and Australia is permitted, but care must be taken to ensure that the indicated information applies to all three entities.
Penalties for Non-Compliance
Failure to submit a report or to make it available on its website, as well as any other false or misleading statement in a report, can result in a fine of up to $250,000. Directors, officers, or agents who ordered, authorized, assented to or participated in an offence may also be convicted.
Our team can assist you in determining whether the Act applies to you or in complying with your reporting obligations.
