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Government Guidance Released regarding Modern Slavery Act: An Update

Further to our bulletin on December 6, 2023, Deadline for Fighting Against Forced and Child Labour in Supply Chain Reporting Obligations for Companies is May 31, 2024: Is Your Organization Prepared?, Canada’s new modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act), requires reporting entities to complete and submit to the government a mandatory online Questionnaire and a Report about the measures they have taken to address and prevent forced and child labour in their supply chains during their previous fiscal year.

The Act came into force on January 1, 2024, and the initial Report is due by May 31, 2024  (or earlier for certain federally incorporated entities that provide their annual financial statements to shareholders before May 31 of each year). 

The Governmental Guidance was released on December 20, 2023, and provided insight into the Government of Canada’s expectations and interpretation of the Act.

In addition, on January 3, 2024, the Government released the Questionnaire, thereby providing access to view the complete list of questions and the information necessary for entities to complete their Report.

Notably, the Government has said that it considers a failure to complete the Questionnaire to be an offence under section 19(1) of the Act.

The Government Guidance provides general information and examples with respect to the reporting process, what type of information will likely satisfy the content requirements of the Report and where information from another jurisdiction’s reporting obligations may be acceptable. In this Guidance document, the Government confirms as follows:  

  • To have an obligation to submit a report, a corporation or a trust, partnership or other unincorporated organization must be an entity, as defined in section 2 of the Act, but must also be engaged in (a) producing, selling, or distributing goods anywhere, (b) importing goods into Canada, or (c) controlling an entity that is engaged in (a) or (b).
  • An entity incorporated pursuant to the Canada Business Corporations Act, or any other Act of Parliament, must provide a copy of the Report to each shareholder, “along with its annual financial statements.” The Guidance does not provide any additional clarity as to the method or timing for delivery of the completed Report. As a result, federally incorporated or organized entities should consider how these requirements will be met in the context of the applicable corporate or other organizational statute and, in the case of public entities, applicable securities laws.
  • The Act can have extraterritorial application as the definition of entity includes entities that are headquartered and operating in any country or jurisdiction. This means that the Act can apply to non-Canadian companies if they otherwise meet the test.
  • The Minister of Public Safety will maintain an online repository of the Reports that is searchable and publicly accessible. Personal or confidential information should not be included in the Questionnaire responses.

The Government Guidance also provides some helpful commentary regarding the Government’s interpretation of various aspects of the Act. Specifically, the Government Guidance notes that: 

  • there is no prescribed minimum in the Act for the value of goods that an entity must produce, sell, distribute or import for the Act to apply;
  • an entity will be importing goods only where it is responsible for accounting for those goods under the Customs Act;
  • whether one entity controls another entity should be assessed on a “substance over form” basis;
  • “supply” chain includes suppliers of goods and services that contribute to the production of goods produced, sold, distributed or imported by the entity, from sourcing the raw materials to the final product. This, therefore, captures direct and indirect suppliers and service providers, both in Canada and outside Canada, but excludes the end users or customers who purchase its products or services;
  • entities may include a description of the range of activities it is implementing that are not solely dedicated to child and forced labour, such as human rights due diligence, environmental, social and corporate governance initiatives (ESG), and other aspects of responsible business conduct; and
  • the Report should not serve as an aspirational statement but should rather focus on concrete actions the entity has taken, with the understanding that some actions and steps may span multiple years.

If you have any questions about this topic or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer

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