BACKGROUND
After a number of stalled efforts throughout the years (Bill C-423, Bill S-216), Parliament has passed a law aimed at preventing and reducing the risk of forced labour and child labour in supply chains.
Private Members’ Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, passed third reading in the House of Commons on Wednesday. The bill will have immediate implications for Canadian business and importers.
Once it is enacted, the Act will require many private sector entities and federal government institutions to report on steps taken to prevent and reduce the risk that forced labour or child labour is being used in their supply chains. This would require a report submitted on or before May 31 of each year to the Minister of Public Safety and Emergency Preparedness (the “Minister”). The bill will take effect on January 1, 2024 and the first reporting deadline will be May 31st, 2024.
The report must include information regarding:
- the entity’s structure and the goods that it produces or imports;
- the entity’s policies in relation to forced labour and child labour;
- the entity’s activities that carry a risk of forced labour or child labour being used and the steps taken to assess and manage that risk;
- any measures taken to remediate any forced labour or child labour; and
- the training provided to employees on forced labour and child labour.
This legislation differs from similar regulations in other jurisdictions, as it does not mandate any due diligence obligations on subject entities. However, the legislation does include a requirement that the report be made publicly available in a prominent place on the entity’s website.
REPORTING ENTITIES
Private sector entities required to report under this bill include any “entity”:
- producing, selling or distributing goods in Canada or elsewhere;
- importing into Canada goods produced outside Canada; or
- controlling an entity engaged in any activity described in paragraph (a) or (b), with control defined broadly as any direct or indirect control or common control “in any manner”.
An “entity” is defined as a corporation or a trust, partnership or other unincorporated organization that is listed on a stock exchange in Canada OR 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:
- it has at least C$20 million in assets,
- it has generated at least C$40 million in revenue, and
- it employs an average of at least 250 employees; or
- is otherwise prescribed by regulations, which have yet to be enacted.
Subject to further regulation or guidance that the government may issue once the Bill is passed, control of a Canadian “entity” that meets these thresholds could trigger a reporting obligation for non-residents. A corporate group that has multiple entities with a reporting obligation can file a single joint report on behalf of the group.
ADDITIONAL ELEMENTS
Bill S-211 also includes a number of other amendments to clarify and expand the scope of existing forced labour laws:
- The import ban under Canada’s Customs Tariff will be extended to goods that are “mined, manufactured or produced wholly or in part” with “child labour” in addition to goods produced with “forced labour” and “prison labour” which are already prohibited.
- The bill codifies a Canadian definition of both “child labour” and “forced labour”, adopting the definitions from Article 3 of the International Labour Organization (ILO) Worst Forms of Child Labour Convention, 1999 and Article 2 of the ILO Forced Labour Convention, 1930 respectively.
- It gives new enforcement powers to the Minister of Public Safety and Emergency Preparedness, including powers of search, inspection and seizure of documents and evidence.
- Bill S-211 also creates personal liability for directors and officers, among others, who direct, authorize, assent to, acquiesce in or participate in an offence under the proposed act.
Although the penalties under the Bill are not as strict as in other jurisdictions, they may still have a deterrent effect on entities that are subject to the law. All of the offences under the Bill are punishable on summary conviction and liable to a fine of up to $250,000.
WHAT’S NEXT
The bill falls to Minister of Public Safety and Emergency Preparedness Bill Blair to implement, and his office will be required to table a report on safety in supply chains each September.
The 2023 Budget also promised the federal government will “introduce legislation by 2024 to eradicate forced labour from Canadian supply chains to strengthen the import ban on goods produced using forced labour. The government will also work to ensure existing legislation fits within the government’s overall framework to safeguard our supply chains.”
Consultations on that legislation are expected to begin this spring.
For more information on Bill S-211 and how it may impact your business, contact us at info@mcmillanvantage.com.
