Fighting Against Forced Labour & Child Labour in Supply Chains Act: Strengthening Canada's Commitment to Combat Exploitation

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act) is a significant legislative milestone in Canada's commitment to combat forced labour and child labour. Passed as Bill S-211 on May 3, 2023, this Act aims to implement reporting obligations and promote transparency in supply chains. In this blog post, we will delve into the purpose of the Act, its coverage, reporting requirements, enforcement provisions, and the essential steps companies should take to ensure compliance.

Purpose of the Fighting Against Forced Labour and Child Labour in Supply Chains Act in Canada

The Act aligns with Canada's international commitment to fighting against forced labour and child labour. It imposes reporting obligations on government institutions, as well as private-sector entities involved in the production, sale, distribution, or importation of goods. By enacting this legislation, Canada aims to strengthen efforts to eradicate exploitative practices and uphold human rights.

Coverage: Entities Subject to Reporting Obligations under the Act

The Act applies to a wide range of entities, including government institutions, private-sector companies, and organizations engaged in the production or importation of goods. Private-sector entities encompass those involved in producing, selling, or distributing goods in Canada or elsewhere, importing goods produced outside Canada, or exercising control over entities engaged in such activities. To be considered an entity under the Act, specific criteria related to financial performance and operations must be met.

An entity, as defined under the Act, encompasses various types of organizations, including corporations, trusts, partnerships, or other unincorporated entities. The Act provides specific criteria for determining whether an organization qualifies as an entity:

• Stock Exchange Listing: The organization must be listed on a stock exchange in Canada.
• Presence in Canada: The organization should have a place of business in Canada, conduct business activities in Canada, or possess assets in Canada.
• Financial Performance: Based on its consolidated financial statements, the organization must meet at least two of the following conditions for at least one of its two most recent financial years:

1. Assets: The organization should have assets valued at a minimum of CA$20 million.
2. Revenue: The organization should have generated revenue of at least CA$40 million.
3. Employees: The organization should have an average employment count of at least 250 individuals.

• Regulatory Prescription: Additionally, an organization may be considered an entity if it is prescribed by yet-to-be-enacted regulations (a Reporting Entity).

These criteria serve as the basis for determining whether an organization falls within the definition of an entity under the Act. Compliance with these criteria is crucial for fulfilling reporting obligations and responsibilities outlined in the legislation.

Reporting Obligations: Key Elements to Include in Annual Reports

Under the Act, government institutions and entities subject to reporting obligations must submit annual reports to the Minister of Public Safety and Emergency Preparedness by May 31 of each year. These reports should outline the steps taken during the previous financial year to prevent and reduce the risk of forced labour and child labour. The essential elements to include in the reports are:

• Structure, Activities, and Supply Chains: Provide an overview of the entity's structure, activities, and supply chains, highlighting potential risk areas and operations.
• Policies and Due Diligence Processes: Detail the entity's policies and due diligence processes concerning forced labour and child labour, emphasizing the measures in place to mitigate risks and ensure compliance.
• Risk Assessment and Management: Identify activities and supply chains with a potential risk of forced or child labour, and describe the steps taken to assess and effectively manage those risks.
• Actions Taken: Provide an overview of the actions taken by the entity to address child labour and forced labour, demonstrating a commitment to eradicating these practices.
• Supporting Vulnerable Families: Describe any measures taken to compensate for the income loss experienced by the most vulnerable families as a result of efforts to eliminate child labour and forced labour.
• Employee Training: Detail the training provided to employees regarding forced labour and child labour, ensuring awareness and understanding throughout the organization.
• Evaluation Process: Explain the entity's process for evaluating the effectiveness of measures in preventing the use of forced labour and child labour in its operations and supply chains.

Enforcement Provisions Under the Fighting Against Forced Labour and Child Labour in Supply Chains Act in Canada

The Act includes enforcement provisions to ensure compliance. Designated persons authorized by the Minister have significant investigative powers, and the Minister can require entities to take necessary measures for compliance. Failure to submit or make public a satisfactory annual report, obstruction of a designated official, or non-compliance with a Minister's order is considered a summary offence. Entities and individuals found guilty may face fines of up to C$250,000, while directors or officers involved may be held personally liable.

Steps to Comply with Canada Forced & Child Labour in Supply Chain Act

To comply with the Act, companies should take proactive measures to address forced labour and child labour within their supply chains. Some essential steps include:

1. Risk Assessment: Conduct a comprehensive risk assessment of the supply chain to identify areas where forced labour and child labour may be present, considering sectors, industries, product types, and countries involved.
2. Rule Evaluation and Implementation: Evaluate, revise, or establish rules and procedures to address forced labour and child labour, ensuring alignment with legal requirements and international standards.
3. Training and Education: Develop training and educational programs to raise awareness and understanding among employees regarding forced labour and child labour issues, fostering a culture of responsible business practices.

Conclusion The Fighting Against Forced Labour and Child Labour in Supply Chains Act represents Canada's dedication to combatting forced labour and child labour globally. By imposing reporting obligations, the Act promotes transparency, accountability, and responsible business practices. Entities must prepare for the upcoming reporting deadlines and take concrete steps to prevent and reduce the risk of forced labour and child labour within their supply chains. Through collective efforts, we can foster ethical supply chains and protect the rights and well-being of vulnerable individuals worldwide.