New Forced and Child Labour Annual Reporting Requirements for Government Institutions and Certain Publicly Listed and Private Entities

To see the most recent guidelines released on December 20th, 2023, click here.

On May 11, 2023, Bill S-211 (the Bill)[1] received royal assent which enacted what is being cited as the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act) and which will come into force on January 1, 2024 with May 31, 2024 being the first applicable reporting deadline under the Act.  

The purpose of this Act is to implement Canada’s international commitment to contribute to the fight against forced labour[2] and child labour[3] by putting Canada on par with other countries that have similar legislation. The Act imposes a reporting obligation on certain government institutions[4] and private-sector entities[5] that are producing, selling or distributing goods in Canada and elsewhere as well as entities importing goods produced outside Canada, or controlling an entity engaged in any of those activities.[6]

The Act will require these government institutions and entities to examine their operations and report to the Minister[7] on an annual basis on or before May 31 of each year any measures they have taken to prevent and reduce the risk that forced or child labour is used by them or in their supply chains. The Act further requires that any entity that is incorporated under the Canada Business Corporations Act or any other Act of Parliament must provide the report to each shareholder, along with its annual financial statements.

Under the Act, the Minister will have broad power to enforce significant consequences for non-compliance and committal of offences, including:

• Requiring an entity to take any measures that it considers necessary to ensure compliance with certain provisions;[8]
• Exercising its powers of search, inspection and seizure of evidence and documents;[9]
• Placing liability on directors, officers and others for committing certain offences under the Act;[10] and
• Enforcing compliance with the Act, which could ultimately result in a summary offence conviction and a fine of up to $250,000.[11]

The Act also includes certain consequential amendments to the Customs Tariff (the Tariff)[12] to include the prohibition on the import of certain items that are manufactured or produced wholly or in part by child labour.

Annual Report

The form of the required annual report is currently unclear. The Act states that "[t]he Minister may specify, in writing, the form and manner in which a report is to be provided".[13] The Minister must release the required form of reporting to the public, and while no release date has been announced, we expect the form and manner to be confirmed in the coming months.

Government institutions and entities are required to submit their annual reports to the Minister and publish them in a prominent place on their respective websites.[14] In addition, as noted above, companies must also provide the annual report to their shareholders with their annual financial statements.[15]

Disclosure Requirements

Government institutions and entities will have similar disclosure requirements, however, an entity will have slightly more flexible requirements due to variance in corporate structures (for instance, the Act permits entities to submit single or joint reports, depending upon corporate control).[16] Additionally, an entity's annual report must be approved by its governing body (i.e. its board of directors or similar).[17]

The Act sets out that every subject government institution and entity must prepare an annual report and submit it to the Minister on or before May 31 of each year. The annual report must include the steps that the subject organization 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 with which it deals.[18]

The Act includes a list of specific information that is required to be included in the annual report. Subject government institutions and entities will be required to disclose:

• their structure, activities and supply chains;
• their policies and due diligence processes in relation to forced labour and child labour;
• the parts of their activities/business and supply chains that carry a risk of forced labour or child labour being used and the steps they have 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 their activities and supply chains;
• the training provided to employees on forced labour and child labour; and
• how they assess their effectiveness in ensuring that forced labour and child labour are not being used in their activities/business and supply chains.[19]

Further Information

We will provide further information as more details pertaining to this new legislation, including the form of the annual report, are available. If you would like any additional information and/or if we can assist you in preparing and reviewing your future annual reporting requirements on this topic, please contact any member of our Business Law Group.

 

[1] Click here for the full text of the Bill.
[2] Forced labour means "labour or service provided or offered to be provided by a person under circumstances that (a) could reasonably be expected to cause the person to believe their safety or the safety of a person known to them would be threatened if they failed to provide or offer to provide the labour or service; or (b) constitute forced or compulsory labour as defined in article 2 of the Forced Labour Convention, 1930, adopted in Geneva on June 28, 1930".
[3] Child labour means "labour or services provided or offered to be provided by persons under the age of 18 years and that (a) are provided or offered to be provided in Canada under circumstances that are contrary to the laws applicable in Canada; (b) are provided or offered to be provided under circumstances that are mentally, physically, socially or morally dangerous to them; (c) interfere with their schooling by depriving them of the opportunity to attend school, obliging them to leave school prematurely or requiring them to attempt to combine school attendance with excessively long and heavy work; or (d) constitute the worst forms of child labour as defined in article 3 of the Worst Forms of Child Labour".
[4] Government institution as defined in the Access to Information Act, means "(a) any department or ministry of state of the Government of Canada, or any body or office, listed in Schedule I, and (b) any parent Crown corporation, and any wholly-owned subsidiary of such a corporation, within the meaning of section 83 of the Financial Administration Act."
[5] Entity means "a corporation or a trust, partnership or other unincorporated organization that (a) is listed on a stock exchange in Canada; (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, (ii) it has generated at least $40 million in revenue, and (iii) it employs an average of at least 250 employees; or (c) is prescribed by regulations".
[6] Act, ss 5, 9.
[7] Minister refers to the Minister of Public Safety and Emergency Preparedness.
[8] Act, s 18.
[9] Act s 15.
[10] Act, ss 20, 21.
[11] Act, s 19.
[12] Click here for the full text of the Customs Tariff (SC 1997, c. 36).
[13] Act, ss 6(3), 11(6).
[14] Act, ss 8, 13.
[15] Act, s 13(2).
[16] Act, s 11(2).
[17] Act, s 11(4).
[18] Act, ss 6(1), 11(1).
[19] Act, ss 6(2), 11(3).