New labour reporting requirement under recent Canadian law
Andy Balaura
by Andy Balaura
Canada’s recent legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) requires any affected business in Canada to report annually, starting 31 May 2024, the specific details and steps taken in its previous financial year to help prevent and reduce forced labour and child labour.
Enacted by the Canadian federal government on 01January 2024, the Act was created as a step towards eradicating exploitative labour practices from Canadian supply chains. The Act sets out comprehensive mandatory reporting obligations aimed at Canadian businesses, compelling them to actively combat the scourge of forced labour and child labour.
Who is affected?
The Act casts a wide net, encompassing entities ranging from corporations, trusts, partnerships, and other unincorporated organisations meeting specific criteria. In addition to companies listed on the Canadian stock exchange, the Act applies to organisations that have a presence in Canada, conducting business or possessing assets, provided they meet specified thresholds. In particular, they must meet at least two of the following criteria for at least one of their two most recent financial years in order to be considered an entity for reporting purposes:
CAD 20 million or more in assets
CAD 40 million or more in revenue
An average of 250 or more employees
Additionally, the Act extends to government entities engaged in the production, distribution, or importation of goods in Canada, as well as those controlling such entities.
Reporting requirements
Entities subject to the Act must furnish annual reports to the Minister of Public Safety on or before 31 May of each year, outlining their endeavours to curb forced labour and child labour across their operations and supply chains. The deadline for the first such report was 31 May 2024.
An annual report must include the following information:
Organisational structures: A detailed overview of the entity's structure, including subsidiaries, affiliates, and supply chain relationships.
Policies and due diligence processes: A description of the policies and processes in place to identify, prevent, and address forced labour and child labour within the organisation and its supply chains.
Risk assessments: Identification of specific parts of the business and supply chains that present risks of forced labour or child labour, along with measures taken to assess and manage these risks.
Remediation measures: Details of any remedial actions taken to address instances of forced labour or child labour, including efforts to remedy the loss of income to affected families.
Employee training: Description of training programs provided to employees regarding forced labour and child labour issues.
Effectiveness assessments: Explanation of how the entity evaluates the effectiveness of its measures to ensure forced labour and child labour are not present in its business and supply chains.
Entities have the option to submit joint reports covering their own actions and those of any entities they control, such as subsidiaries or entities within the same corporate group. Joint reports must clearly identify the legal name of each entity covered. These reports should only be submitted if the information provided applies generally to all entities covered, with specific details where possible. Approval for single-entity reports must come from the entity's governing body (defined as the body or group of members of the entity with primary responsibility for the governance of the entity), while joint reports require approval by the governing body of each included entity or by the controlling entity's governing body.
After attesting the report, entities must complete an online questionnaire addressing the Act’s requirements. Moreover, reports must be published prominently on the entity's website and will also be made publicly available by Public Safety Canada through a searchable online catalogue on its website.
Preparation and compliance
Entities falling within the Act's purview must proactively prepare for the filing of their annual reports. This entails establishing robust internal reporting mechanisms and conducting comprehensive assessments of supply chains to identify and mitigate potential risks. Furthermore, proactive measures such as policy development, contractual stipulations, regular audits, and thorough due diligence on suppliers are recommended to ensure ongoing compliance and risk mitigation.
Penalties for non-compliance
Non-compliance with the Act carries significant penalties, with fines potentially reaching up to CAD 250,000. Moreover, the Act imposes personal liability on directors, officers, or agents involved in any offenses, underscoring the imperative of thorough due diligence and adherence to regulatory requirements.
If you require clarity on whether your organisation falls under the Act's reporting requirements, or for assistance in navigating obligations under the Act and preparing reports, please contact a member of our employment and labour team.
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Andy Balaura heads Pallett Valo’s Employment & Labour Practice Group. He acts for corporate clients in a broad range of human resource issues. Andy uses a proactive and business-minded approach in assisting clients to resolve workplace disputes in an efficient manner.Contact Andy.
