Businesses will have new reporting obligations from 2024 under the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act. The Act requires certain businesses to report on their due diligence to prevent forced or child labour in their supply chains. It bans the import of products made with child labour under Canada’s Custom Tariff. Products made with forced labour were already banned.
About the Act
- Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act was passed on 11 May 2023. The Act is due to come into force on 1 January 2024, and relevant businesses will be required to report for the first time by 31 May 2024.
- The Act imposes legal obligations on businesses to report on steps taken during the previous financial year to prevent or reduce forced labour and child labour used in their supply chains.
- The Act also amends Canada’s Customs Tariff, to prohibit the importation of goods produced in whole or in part using child labour. This expands the existing import ban on goods produced using forced labour, which has been in place since 2019.
Businesses covered by the Act
- The Act applies to companies that are listed on a Canadian stock exchange or any business (or trust) which operates in Canada and which meets at least two of the following conditions in the past two financial years: (i) $20 million in assets, (ii) $40 million in revenue, or (iii) employs an average of at least 250 employees.
- The ban on goods made with forced or child labour under Canada’s Customs Tariff applies to all goods imported into Canada.
Liability and penalties
- The Act includes fines of up to $250,000 per offence for (i) knowingly making false or misleading statements or providing false or misleading information, or (ii) failing to publish a report or submit it to the Minister of Public Safety and Emergency Preparedness.
- Directors, officers and other relevant employees empowered to act on behalf of the business, who directed, authorised or participated in an offence, can be found personally liable and subject to fines of up to $250,000.
- The Minister can compel non-compliant businesses to take any steps deemed necessary to comply with the Act.
- The Minister will submit an annual report to the House of Parliament listing businesses that have submitted a report and outlining any actions taken for non-compliance.
New reporting requirements
- Under the Act, relevant businesses are required to publish an annual report, which should include at least the following information:
- business structure, activities and supply chains;
- business policies and due diligence processes in relation to forced and child labour;
- parts of their business and supply chains that carry a risk of forced or child labour and steps taken to assess and manage that risk;
- any measures taken to remediate forced or child labour;
- any measures taken to remediate the loss of income to the most vulnerable families that results from efforts to eliminate the use of forced or child labour in business activities and supply chains;
- training provided to employees regarding forced or child labour;
- methods for assessing their effectiveness in ensuring that forced or child labour are not being used in business activities and supply chains.
- Reports must be approved by the governing body of the business (e.g. by the board) and be made publicly available, including on the business website.
- Reports must be provided to the Minister by 31 May every year who, in turn, will publish these in an online register.
- Publicly listed companies are also required to submit these reports to shareholders and include them in their financial statements.