Human Resources Legislative Update
Fighting Against Forced Labour and Child Labour in Supply Chains Act Coming Into Force January 1, 2024
Date: December 18, 2023
Passed by the federal government in the spring of 2023, Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act) is coming into force on January 1, 2024. Organizations subject to the Act will be required to submit annual reports to the Minister of Public Safety and Emergency Preparedness (Minister) outlining the steps the organization has taken to prevent and reduce the risk that forced labour or child labour is used in its supply chains. The first reports are due on May 31, 2024.
Which Organizations Have Reporting Obligations?
The reporting requirements will apply to government institutions and certain organizations. There are two considerations which determine whether an organization will have reporting obligations. First, the organization must be an “entity” as defined in the Act. An entity is an organization that either:
- 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 conditions for at least one of its two most recent financial years:
- has at least $20 million in assets
- has generated at least $40 million in revenue
- employs an average of at least 250 employees
An entity may also be prescribed by regulation; however, no such regulations have been issued to date.
Second, if an organization is an entity as defined above, it will have reporting obligations if the entity does, or controls an entity that does, any of the following:
- produces, sells or distributes goods in Canada or elsewhere, or
- imports goods produced outside Canada into Canada
What are the Reporting Obligations?
Entities with reporting obligations are required to file a report by May 31 of each year to the Minister “on the steps the entity has taken during its 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.”
A report must include the following information about the entity:
- its structure, activities and supply chains
- its policies and its due diligence processes in relation to forced labour and child labour
- the parts of its business 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
- any measures taken to remediate any forced labour or child labour
- 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
- the training provided to employees on forced labour and child labour
- how the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains
Reports must be approved by an entity’s governing body, must be provided to the Minister and must be published in a prominent place on the entity’s website. An entity can either submit its own report or be a party to a joint report.
The Act gives the federal government broad enforcement powers. These powers include the ability for the Minister to designate individuals with the authority to enter and inspect places where they have reasonable grounds to do so. The Minister will have the authority to issue orders requiring an entity to take measures the Minister considers necessary to ensure compliance.
An entity’s failure to comply with the Act may lead to a summary conviction and a fine of up to $250,000. Additionally, any director, officer, agent or mandatary of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to the offence. These individuals would be guilty of the offence and are liable to the same punishments whether or not the entity itself has been prosecuted or convicted.
Editor’s Note: This post has been updated from its original version. See as well Forced Labour in Canadian Supply Chains, information published by Public Safety Canada (March 13, 2024).
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
