First Report Under Canada’s Anti-Forced Labour and Child Labour Legislation Required by May 31, 2024

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) – colloquially known as Canada’s Modern Slavery Act – came into force on January 1, 2024. The Act creates annual reporting obligations for certain government institutions and private sector entities regarding the steps that they have taken in the previous fiscal year to prevent and reduce the risk of the use of forced labour or child labour by the organization itself or in its supply chains. The first report under the legislation is due on or before May 31, 2024.

Government Institutions

Reporting obligations apply to any government institution producing, purchasing, or distributing goods in Canada or elsewhere. A “government institution” means: 

1. Any department or ministry of state of the Government of Canada, or any body or office, listed in Schedule I of the Access to Information Act, and
2. Any parent Crown corporation, and any wholly-owned subsidiary of such a corporation, within the meaning of section 83 of the Financial Administration Act.

Private Sector Entities

In the private sector, an “entity” is defined as a corporation or a trust, partnership, or other unincorporated organization that:

1. Is listed on a stock exchange in Canada;
2. Has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
   • It has at least $20 million in assets;
   • It has generated at least $40 million in revenue; and
   • It employs an average of at least 250 employees; or
3. Is prescribed by regulation (which have yet to be enacted).

Reporting obligations apply to any entity: 

1. Producing, selling or distributing goods in Canada or elsewhere;
2. Importing into Canada goods produced outside Canada; or
3. Controlling an entity engaged in any activity described directly above in (1) or (2).  

It is important to note that the scope of private sector entities subject to the above reporting obligations is broad and includes, for example, parent companies or other entities up the corporate chain. Accordingly, an entity that meets the definition under the statute and that controls a subsidiary engaged in activity that would trigger reporting obligations must also file a report, or a joint report with the subsidiary.

Reporting Obligations

The Act requires government institutions and entities with reporting obligations to report to the Minister of Public Safety and Emergency Preparedness (the “Minister”) on or before May 31^st of each year in respect of the previous financial year. As noted previously, entities may file joint reports in appropriate circumstances (e.g., parent companies and their subsidiaries, multiple entities belonging to the same corporate group).

A government institution must report on the steps it took in the previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods produced, purchased or distributed by the government institution.  

An entity must report on the steps it took in the previous financial year to prevent and reduce the risk that forced labour or 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 of a government institution or entity must also include the following information:

1. Its structure, activities, and supply chains;
2. Its policies and due diligence processes in relation to forced labour and child labour;
3. The parts of its activities (for government institutions) or business (for entities) and supply chains that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk;
4. Any measures taken to remediate any forced labour or child labour;
5. Any 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;
6. The training provided to employees on forced labour and child labour; and
7. How it assesses its effectiveness in ensuring that forced labour and child labour are not being used in its activities (for government institutions) or business (for entities) and supply chains.

The Act requires approval of the report by the governing body with the legal authority to bind the entity covered in the report (e.g., board of directors). With respect to a joint report specifically, the Act requires approval of the report by the governing body of each entity included in the report or by the governing body, if any, that controls each entity included in the report. In all cases, the approval must be accompanied by a signed attestation.

The process to submit the report online will also require the completion of an online questionnaire that addresses each of the requirements under the Act. After submitting the report to the Minister, the government institution or entity will be required to make the report available to the public, including by publishing the report in a prominent place on its website. The report will also be made available to the public through an electronic registry on Public Safety Canada’s website. Finally, an entity incorporated under the Canada Business Corporations Act or another Act of Parliament will be required to provide the report to every shareholder, along with its annual financial statements. 

Administration and Enforcement

The Act provides the Minister with administration and enforcement powers, including of entry and inspection, regarding a reporting entity’s obligations under the Act. The Minister may designate a person or classes of persons for administration and enforcement purposes. The Minister may also order an entity to take corrective measures if it is not in compliance with the requirements regarding reporting to the Minister and making the report accessible as required by the Act.

A person or entity is guilty of an offence punishable on summary conviction and liable to a fine of up to $250,000 if the person or entity:

1. Fails to comply with the Act in respect of reporting obligations, the requirements to make the report accessible, or providing assistance and documentation to a designated person;
2. Fails to comply with a Minister’s order in respect of corrective measures;
3. Obstructs or hinders a designated person; or
4. Knowingly makes a false or misleading statement or knowingly provides false or misleading information to the Minister or a designated person.

Notably, if a person or entity commits an offence under the Act, then a director, officer, agent, or mandatary of the person or entity who directed, authorized, assented to, acquiesced in, or participated in the commission of the offence is a party to and guilty of the offence, and is liable on conviction to the punishment for the offence. This is so whether or not the person or entity has been prosecuted or convicted.  

Furthermore, the Act establishes a presumption that employees, agents, and mandataries of the entity are presumed to act on behalf of the entity. As a result, establishing that an offence was committed by an employee, agent, or mandatary of the accused is sufficient proof of the offence, whether or not the employee, agent, or mandatary is identified or has been prosecuted for the offence, unless the accused can establish that they exercised due diligence to prevent the commission of the offence. 

In Our View

Employers who are required to report under the legislation should familiarize themselves with the reporting requirements and gather the information necessary to prepare and file a report by the May 31, 2024 deadline. Employers may also wish to review the Government of Canada’s guidance regarding the legislation, which includes, amongst other things, detailed information about reporting obligations and how to properly prepare a report.

For more information, please contact Lauren Jamieson at (613) 404-5058 or Marie Bordeleau at (613) 404-5875.