Combatting Modern Slavery in Supply Chains: An Overview of Canada’s Bill S-211

In May 2024, many companies doing business in Canada will be required to prepare and submit an annual declaration under Bill S-211 (the Act), titled An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.

This Act is a significant legislative effort by the Canadian Government to address the issue of forced labor and child labor in global supply chains and aims to make Canadian businesses accountable for their supply chain practices, specifically ensuring they do not contribute to human rights abuses.

In December 2023, the government released guidance on the Act in advance of its implementation date of January 1, 2024.

While the Act was first introduced in May 2023, many businesses may not be fully prepared for the May 2024 reporting deadline. A failure to report could result in a substantial penalty for the company, as well as key personnel.

Supply Chain Transparency

The primary objective of the bill is to establish a legal framework that compels companies operating in Canada to disclose information about their efforts to prevent forced labor and child labor in their supply chains, and follows the lead of similar legislation in California, the UK, and Australia. Interestingly, the Act will be taking substantive effect here in Canada just as the European Union is embroiled in controversy and stalemate about its own proposed legislation on this issue.

The Act will require businesses to issue annual reports detailing their due diligence measures, risk assessments, and actions taken to address any identified issues. Furthermore, the Act proposes amendments to the Customs Tariff to empower Canadian authorities to prohibit the importation of goods produced through forced labor or child labor.

Annual reports will be required to address the following issues:

• The steps the entity has taken during its previous financial year to prevent and reduce the risk that forced labour or child labour is used at any step of the production of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity;
• Its structure, activities and supply chains;
• Its policies and due diligence processes in relation to forced labour and child labour;
• The parts of its business and supply chains that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk;
• Any measures taken to remediate any forced labour or child labour;
• Any measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains;
• The training provided to employees on forced labour and child labour; and
• How the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.

Entities Impacted by the Act.

The new obligations will apply to “reporting entities” as defined in the Act. Reporting entitles will include government institutions and many  private sector companies doing business in Canada.

To qualify as an entity, a company must:

• Be listed on a Canadian stock exchange; or
• Have an office in Canada, do business or hold assets in Canada, and meet two of the following three criteria over the last two financial years:
  • Have at least $20 million in assets;
  • Generate at least $40 million in revenue;
  • Employ at least 250 employees.

To qualify as a reporting entity (and thereby be required to file annual reports under the Act), an entity must:

• produce, sell or distribute goods in Canada or elsewhere;
• import into Canada goods produced outside Canada; or
• control an entity engaged in any activity described above.

Guidance on Reporting Requirements

In December 2023, Public Safety Canada released a new website providing guidance on the Act’s reporting requirements for businesses. This guidance is designed to ensure consistency and accountability across industries, making it easier for businesses to understand and comply with the reporting obligations.

The website provides details around reporting mechanisms, specifying the information that companies must include in their annual reports on combating forced labor and child labor.

Notably, the website contains a questionnaire (which must be completed on an annual basis) containing mandatory and optional questions and that will provide a potential template for an entity’s annual report.

Penalties for Non-Compliance

The Act includes potentially significant penalties for non-compliance. For those companies that fail to produce an annual report—or knowingly obstruct or make false statements in a report—can be subject to fines up to $250,000. These fines can also be levied against company directors, officers or agents who participate in violating the Act.

Based on these significant fines and the volume of official information released in regard to the Act, it is safe to assume that the federal government will be treating its implementation quite seriously. It is advisable that companies carefully consider whether they are impacted by the Act and if so, begin preparations to complete their reporting obligations – which may require obtaining legal advice sooner rather than later.

For more information on the Act or your company’s potential reporting requirements please contact Matthew E. McCarthy of our employment group.