What Organizations Need to Know About Canada’s New Anti-Forced Labour Supply Chain Law

The Canadian government’s new law addressing modern slavery in supply chains came into force on January 1, 2024. The “Fighting Against Forced Labour and Child Labour in Supply Chains Act” (the “Act”) requires eligible entities and government institutions to prepare reports detailing their efforts to prevent forced or child labour in their supply chains. 

Entities covered by the Act can include:

• Canadian public companies;
• Canadian private businesses; 
• Entities that import goods into Canada; 
• Any governmental department; and 
• Crown corporations and their subsidiaries. 

For the purposes of the Act, the following types of entities must comply with the Act’s guidelines:

1. Organizations listed on a Canadian stock exchange; 
2. Has a place of business in Canada, does business in Canada, has assets in Canada, and has met two of the following conditions in at least one of the last two fiscal years:
   •  $20,000,000 or more in assets 
   • $40,000,000 or more in revenue; and
   • 250 or more employees. 
3. Is prescribed by any additional regulations (the government has not enacted any at this point)

The Act requires that on or before May 31 of each year, government institutions and entities 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 of using forced or child labour. 

The report must also include information about the government institution’s or entity’s:

1. structure, activities and supply chains; 
2. policies and due diligence processes concerning forced and child labour; 
3. activities and supply chains that carry a risk of forced or child labour being used and the steps it has taken to manage that risk;
4. measures taken to remediate forced or child labour; 
5. any measures taken to remediate the loss of income incurred by the most vulnerable families that result from any measure taken to eliminate the use of forced or child labour from its activities and supply chains; 
6. training provided to employees on forced and child labour; and 
7. its process for assessing its effectiveness in ensuring that the organization does not use forced and child labour in its activities and supply chains.

The Minister must maintain an electronic registry of all submitted reports, which will be available to the public on the Department of Public Safety and Emergency Preparedness website. The Minister also has the discretion to impose specifications on the form and manner in which organizations provide reports. 

Reporting entities that fail to comply with the Act are guilty of an offence punishable on summary conviction and liable to a fine of not more than $250,000, as are persons who knowingly make a false or misleading statement or knowingly provide false or misleading information to the Minister or persons designated by the Minister. Directors, officers, and agents of entities who directed, authorized, assented to, acquiesced in or participated in the commission of an offence under the Act can also be found guilty of the offence and liable on conviction to the same penalties.

Although organizations with material supply chain risk may already engage in diligence and reporting exercises, the Act will likely capture many entities that have not previously considered potential modern slavery issues. With reports under the Act due on or before May 31, 2024, organizational compliance with the Act should be of the utmost importance. Businesses should develop comprehensive programs relating to forced and child labour in their supply chains and should consider known risk factors related to forced and child labour, such as suppliers located in countries with weak rule of law, corruption, and known human rights violations. Organizations should also consider if their suppliers employ vulnerable workers such as migrant workers.