Canada’s Modern Slavery Act

Forced labour is still a reality in our world.  The International Labour Organization estimates that there are approximately 27.6 million victims of forced labour worldwide, including 17.3 million in the private economy.  Forced labour and child labour risks occur primarily through the global supply chains of business and as a result there is a risk that goods imported into and distributed in Canada may have been produced with forced labour or child labour.  To address this risk, on January 1, 2024 Canada’s new Fighting Against Forced Labour and Child Labour in Supply Chains Act, also known as the Modern Slavery Act (The Act), came into force.  The Act requires certain entities to report on their efforts to mitigate against the use of forced and child labour at any point in their supply chains.  All entities caught under the Act are required to file their first report on or before May 31, 2024 and every year thereafter.

Who does the Act apply to?  The Act applies to entities that produce, sell or distribute goods in Canada or elsewhere, import goods into Canada or control directly or indirectly another entity involved in any of these activities and also have either:

• A place of business in Canada, assets in Canada or do business in Canada and meet at least two of the following criteria in one of the past two fiscal years:
  • $20 million or more in assets
  • $40 million or more in revenue
  • 250 employees or more on average
• Are listed on a Canadian stock exchange.

Affected entities are required to complete a mandatory questionnaire, develop and annual supply chain risk report and submit both the Minister of Public Safety and Emergency Preparedness by May 31.  The Act also requires that the report be published on the entity’s website.  The report should address efforts to prevent or reduce the risk of forced and child labour in the supply chain and outline policies, employee training programs and other steps taken to reduce the risk of forced child labour.

Failure to comply with these obligations can result in significant fines and can expose directors and officers to potential criminal liability.  It is vital that organizations identify whether they are caught by the reporting requirements of the Act and if they are to ensure that they are compliant with the reporting requirements of the Act.