The 'Fighting Against Forced Labour and Child Labour in Supply Chains Act', referred to as the 'Modern Slavery' Act in this article, will be enacted in Canada in January 2024. The deadline for the initial report is set for the end of May 2024 at the latest (read more on this below). In this article, we address the most common questions posed by our clients.
Is reporting required for my company?
The scope of companies that need to report is very broad as it encompasses companies that “have a place of business in Canada, do business in Canada or have assets in Canada” and that meet at least two of the following criteria (based on the two most recent financial years):
- At least $20m in assets
- At least $40m in revenues
- An average of at least 250 employees
What are my reporting obligations?
Companies are required to submit an annual report by May 31st each year. The report should delineate the company's structure, activities, and supply chain, and emphasise actions taken in the previous financial year, including:
- Policies and due diligence process
- Risk identification, assessment, and management
- Risk remediation
- Remediation for loss of income
- Employee training
- Effectiveness assessment
Approval of the report is mandatory by the governing body of the entity, and the board member approving it assumes personal liability, facing potential summary conviction (see below).
Where should the report be published?
The report must be featured prominently on the company's website. Many organizations opt to include a readily accessible link in the website footer, ensuring visitors can find it effortlessly, regardless of the page they are on.
For companies incorporated under the Canada Business Corporation Act (CBCA), it is crucial to send the report, along with the financial statements, to each shareholder. This aspect is especially significant, as it might advance the publishing deadline, depending on the typical timing of statements sent to shareholders.
How doess this Act differ from the UK and Australia Modern Slavery Acts? Penalties and child labour
Firstly, unlike other Modern Slavery Acts, where penalties are mainly about naming and shaming, the Canadian ‘Modern Slavery’ Act is a hard law with tangible consequences. Penalties are triggered for non-compliance with reporting obligations or for providing false or misleading statements. The repercussions under the law encompass:
- Summary conviction (up to 6 months in jail)
- Fine up to $250,000
Another distinction lies in its explicit focus on combatting child labour, evident in the Act's full title. This emphasis is crucial to consider in your risk assessment, ensuring it comprehensively addresses the potential risks associated with both forced labour and child labour.
In conclusion, as the 'Modern Slavery' Act takes center stage in Canada, companies must navigate a comprehensive set of reporting obligations. The expansive scope, coupled with the stringent penalties, underscores the gravity of addressing forced and child labour in supply chains. To comply, businesses need to diligently document their structure, activities, and supply chain actions, adhering to the May 31st deadline annually. With tangible repercussions for non-compliance, including jail time and substantial fines, the Act establishes a firm legal framework, deviating from the naming-and-shaming approach seen in other legislations.
At BeeAware Consulting, we empower businesses on their sustainable procurement journey and help them achieve compliance with the 'Modern Slavery' Act. If you need assistance with your reporting, don’t hesitate to contact us at info@beeaware-consulting.com.
As we approach the Act's enforcement in January 2024, businesses should proactively engage in due diligence and transparency to ensure a socially responsible and ethically sound supply chain.
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