The enactment of the Fighting Against Forced Labour and Child Labour in Supply Chains Act[1] (the “Act") serves to reinforce our nation's dedication to combatting modern labour practices. This Act, scheduled to come into effect on January 1, 2024, imposes reporting obligations on governmental bodies and entities involved in the production, purchase, distribution, or importation of goods[2].
Application of Act:
The Act applies to government institutions and entities as per the Act's definitions.
Government institutions are identified in accordance with section 3 of the Access to Information Act[3], encompassing (a) departments, ministries of state, bodies or offices listed in Schedule I of the Access to Information Act, as well as (b) parent Crown corporations and any wholly-owned subsidiaries.[4]
Entities subject to the Act are defined as corporations, trusts, partnerships, or other unincorporated organizations meeting specific criteria detailed within the Act[5]. These include:
(a) listing on a Canadian stock exchange
(b) 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:
(i) it has at least $20 million in assets,
(i) it has generated at least $40 million in revenue, and
(ii) it employs an average of at least 250 employees; or
(c) is prescribed by regulations.
Obligations for Annual Reports:
Entities and government institutions falling under the Act must submit annual reports to the Minister by May 31 each year.[6] These reports detail steps taken during the preceding financial year to prevent and mitigate the risk of forced labour or child labour. For government institutions, the report must address the steps taken during the production, purchase, and distribution of goods. For entities, the report must address the steps taken during the production or importation of goods.
The report must also include specific content about the government institution’s or entity’s:
- structure, activities and supply chains;
- policies and due diligence processes in relation to forced labour and child labour;
- the parts of its activities 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; and
- how the government institution assesses its effectiveness in ensuring that forced labour and child labour are not being used in its activities and supply chains.[7]
Corporate Governance and Public Disclosure:
Entities must have their reports approved by their governing bodies, typically the board of directors in the case of corporations. Both entities and government institutions must make their reports public by publishing them prominently on their websites[8]. Corporations incorporated under the Canada Business Corporations Act, or any other relevant legislation must provide these reports, along with annual financial statements, to shareholders.[9]
Enforcement:
The Minister may designate individuals or groups to administer and enforce the Act effectively. The Act grants designated individuals significant investigative authority and empowers the Minister to enforce compliance measures[10]. Those who fail to comply with the Act's provisions will be guilty of an offence punishable on summary conviction and they will be liable to pay a fine of not more than $250,000.[11] Entities providing false or misleading information are also subject to penalties.
Furthermore, in the event of an offence committed by a person or entity under this legislation, any director, officer or agent or entity who directed, authorized, assented to, acquiesced in, or participated in the offence will be deemed complicit and held accountable for the offence.[12] An offence committed under this Act by an employee, agent, or delegate of the accused, whether identified, prosecuted, or not, is considered sufficient proof of the offence unless the accused can demonstrate that they have exercised due diligence to prevent its occurrence.[13]
Conclusion:
In sum, the Act imposes obligations on government bodies and entities, emphasizing Canada's commitment to combatting forced labour and child labour. Affected persons would do well to take heed.
[1]Fighting Against Forced Labour and Child Labour in Supply Chains Act S.C. 2023, c. 9 [Act]
[3] Access to Information Act (R.S.C., 1985, c. A-1) s. 3
[4] Act, supra note 1, at s. 2
[6] Act, supra note 1 at ss 6 and 11
[7] Act, supra note 1, at s. 22(1)
[8] Act, supra note 1, at s. 22(2)
[9] Act, supra note 1, at s. 13(2)
[10] Act, supra note 1, at s. 14
[11] Act, supra note 1, at s. 19(1)
[12] Act, supra note 1, at s. 20
[13] Act, supra note 1, at s. 21
The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.