Canada Laws and Legislation
The private member’s bill was introduced entitled “C-423 – An Act respecting the fight against certain forms of modern slavery through the imposition of certain measures and amending the Customs Tariff” (the Bill).1 The Bills introduction was to further Canada’s international commitment to eliminate modern slavery, especially child labour and was implemented as of January 1, 2020.
In October of 2018, the Parliament of Canada Standing Committee on Foreign Affairs and International Development and the Subcommittee on International Human Rights issued a report titled, “A Call To Action: Ending The Use of All Forms of Child Labour in Supply Chains”.
On December 13, 2018, following that report, Bill C-423, to be known as the Modern Slavery Act, was introduced in the Parliament of Canada, with the stated purpose of implementing Canada’s international commitment to contribute to the fight against modern slavery through the imposition of reporting obligations on entities involved in the manufacture, production, growing, extraction or processing of goods in Canada or elsewhere or in the importation of goods manufactured, produced, grown, extracted or processed outside Canada.
However, since its introduction, Bill C-423 has not proceeded any further through the parliamentary process; and, on September 11, 2019, the current Parliament was dissolved in preparation for the upcoming federal election on October 21, 2019. As a result of the dissolution of Parliament, Bill C-423 will not pass.
So what’s next for the regulation of modern slavery in Canada?
Bill C-423 was proposed by John MacKay, a Member of Parliament affiliated with the Liberal Party, which held a majority in Parliament when the Bill was introduced. If the Liberal Party wins a majority in the election, it is possible that Bill C-423 will be reintroduced in a form that is the same as, or substantially similar to, the version that was introduced in 2018. Alternatively, if another party wins a majority in the election, or if a minority government comes to power, it is possible that a different solution will be proposed to regulate modern slavery in Canada.
In its latest incarnation, Bill C-423 was proposed to apply to any entity (a) that manufactures, produces, grows, extracts, processes or sells goods in Canada or elsewhere, (b) that imports into Canada goods manufactured, produced, grown, extracted or processed outside Canada, or (c) that controls an entity described in (a) or (b). The scope of application was proposed to be limited to entities listed on a stock exchange in Canada or with at least $20 million in assets or generating at least $40 million in annual revenue or employing an average of at least 250 employees.
Bill C-423 proposed to require those entities, on an annual basis, to provide the government with a report that sets out the steps the entity has taken during the previous year to prevent and reduce the risk that forced labour or child labour is used at any step of the manufacture, production, growing, extraction or processing of goods in Canada or elsewhere by the entity or of goods imported into Canada by the entity. Specifically, the report was to require information respecting:
- the entity’s structure and the goods that it manufactures, produces, grows, extracts or processes in Canada or elsewhere or that it imports into Canada;
- 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 it has 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.
To assist in its interpretation, Bill C-423 contained the following definitions:
- child labour: “labour or service provided, or offered to be provided, in Canada by children under circumstances that are contrary to the laws applicable in Canada or provided or offered outside Canada under circumstances that, if provided or offered in Canada, would be contrary to the laws applicable in Canada.”
- forced labour: “labour or service provided, or offered to be provided, by a person under circumstances that could reasonably be expected to cause the person to believe that their safety or the safety of a person known to them would be threatened if they failed to provide, or offer to provide, the labour or service.”
Essentially, these definitions mean that labour in question would be unlawful in Canada even if it was not unlawful in the jurisdiction in which it was being performed.
The Bill also contemplated powers for inspection and investigations, the ability for the government to issue orders for compliance, and the ability for the government to prohibit importation of product into Canada in situations where its production has been in violation of the Modern Slavery Act. Penalties for non-compliance were proposed to be in the form of fines of not more than $250,000 per offence.
Although Bill C-423 has not yet become law, combatting modern slavery is an issue on the minds of many international business leaders and, evidently, at least some Canadian politicians. Foreign governments in other jurisdictions have passed legislation to address this issue, including, for example, the United Kingdom’s Modern Slavery Act, 2015, the California Transparency in Supply Chains Act (2010), France’s Corporate Duty of Vigilance Law, and Australia’s Modern Slavery Act.
Responding to the focus on modern slavery domestically and abroad, several Canadian businesses have chosen to voluntarily report their efforts in combatting modern slavery and many more have begun to develop internal best practices for eliminating child labour and forced labour in their supply chains. This presents an opportunity for an organization’s supply chain and human resources professionals to work together to understand the laws of all jurisdictions in which they operate and the interplay between those laws and to proactively address potential legislative compliance obligations in the future.
The upcoming federal elections in Canada and the soon-to-be-new Parliament also presents an opportunity for organizations to provide constructive feedback on Bill C-423 before any future iteration of the Bill is introduced and to work with political representatives to design an optimal regulatory compliance regime for modern slavery in Canada.
Who needs to report?
Entities will need to report under the Act if they are an Canadian entity or carry on business in Canada with a minimum annual consolidated revenue of $100 million.
What does reporting entail?
Reporting obligations relate to the risk of modern slavery in the operations and supply chain of a reporting entity (and its owned and controlled entities), as well as the steps it has taken to respond to the risks identified.
Unlike other jurisdictions, the reporting criteria in Canada are mandatory. Reporting entities must have a reasonable basis for any opinions expressed in their Modern Slavery statement, so it is important that reporting entities take the time to assess their risk. The reporting criteria can be found here.
What should entities do?
It is crucial that reporting entities begin reviewing their supply chains and operations to comply with the new reporting obligations.
What is the timing?
A modern slavery statement must be submitted within six months after the end of the reporting entity’s financial year. The reporting period is the entity’s first full financial year that commences after 1 January 2020.
|Entity’s annual financial reporting period||First reporting period under the Commonwealth Act||Due date for statement|
|1 July to 30 June||1 July 2019 to 30 June 2020||31 December 2020|
|1 January to 31 December||1 January 2020 to 31 December 2020||30 June 2021|
|1 April to 31 March||1 April 2019 to 31 March 2020||30 September 2020|