Highlights: New federal act in force as of Jan. 1, 2024

Exclusive to Canadian HR Reporter from Rudner Law.

With the new year upon us, we have new laws coming into force.

This blog post will cover some of the key points relating to Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act, which was passed by the federal government earlier in 2023.

The Act came into force as of Jan. 1, 2024, and employers must be prepared to comply with the Act.

So who does the Act apply to?

The Act applies to both government institutions (such as the Department of Finance, Department of Justice and Canadian Forces) as well as certain private sector organizations. Whether a private sector organization will be subject to specified requirements pursuant to the Act will depend on:

1.  whether the organization is an “entity” as defined in the Act, and
2. if the organization is an entity, whether the entity does the following, or controls an entity that

a) produces, sells or distributes goods in Canada or elsewhere, or
b) imports goods produced outside Canada into Canada.

The Act defines “entity” as an organization that:

1. is listed on a stock exchange in Canada, or
2. has a place of business in Canada, does business in Canada, or has assets in Canada and, 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:

i) has at least $20 million in assets
ii) has generated at least $40 million in revenue
iii) employs an average of at least 250 employees.

Examples of organizations that would meet the definition of “entity” under the Act include Algoma Steel Group Inc., the Bank of Nova Scotia and Manulife Financial Corporation.

While an entity may also be prescribed by regulation, there are currently no regulations issued.

And what does the Act require of employers?

Any organization that is subject to the Act will be required to submit annual reports to the Minister of Public Safety and Emergency Preparedness. The annual reports must set out “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.”

Employers are required to submit the first reports on May 31, 2024.

Each report must contain the following information about the applicable entity:

1. its structure, activities and supply chains
2. its policies and its due diligence processes in relation to forced labour and child labour
3. 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
4. any measures taken to remediate any forced labour or child labour
5. 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
6. the training provided to employees on forced labour and child labour
7. how the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.

An entity can either submit its own report or be a party to a joint report.

The report must be approved by an entity’s governing body (for a single entity), or, in the case of a joint report, by the governing body of each entity included in the report, or by the governing body of the entity, if any, that controls each entity included in the report. The report must also be provided to the Minister and must be published in a prominent place on the entity’s website.

Finally, you may be wondering, what are the penalties for failing to comply with the Act?

The Act provides the federal government with fairly broad enforcement powers, such as the ability for the Minister to designate individuals with the authority to enter and inspect places where they have reasonable grounds to do so. The Minister will have the authority to issue orders requiring an entity to take measures the Minister considers necessary to ensure compliance.

An entity’s failure to comply with the Act (such as by: failing to prepare a report or make a report publicly available, failing to assist in an investigation, obstructing an investigation or failing to comply with a corrective order) may lead to a summary conviction and a fine of up to $250,000.

Moreover, any director, officer, agent or mandatary of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to the offence, and liable on conviction to the punishment provided for the offence, whether the person or entity itself has been prosecuted or convicted.

Key takeaways for HR

Employers would be wise to seek prompt legal advice, if they have not already done so, to determine 1) whether they would be subject to the Act, and 2) if so, how they can ensure compliance with the Act.

Failure to do so can prove to be quite costly, including substantial monetary penalties as well as potential damage to reputation.

Nadia Zaman is a senior associate at Rudner Law in Toronto. She can be reached at (416) 864-8500 or [email protected].