Recap

In a series of prior publications, which you can find here and here, we set out Canada’s modern slavery reporting obligations under the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act), which came into force on January 1, 2024. The Act aims to prevent forced and child labour in supply chains by having businesses submit an annual report regarding the measures they have taken to combat these issues.

Updated guidance

Since the Act came into force, Public Safety Canada released guidance on the reporting requirements. The first guidance was published on December 20, 2023, and focused on the reporting requirements beyond the reading of the Act, including prescribing a mandatory questionnaire that can be used as an entity’s report or in addition to it, and providing further guidance on the key threshold issues for determining if an entity must report. For more details on this initial guidance, please visit our blog post here.

On March 7, 2024, Public Safety Canada updated its December 20, 2023 guidance, changing the sections regarding which entities must file a report and the prescribed format of the report.

Determining whether an entity must report

Under section 9 of the Act, the reporting obligation applies to any entity:

  1. Producing, selling or distributing goods in Canada or elsewhere;
  2. Importing into Canada goods produced outside Canada; or
  3. Controlling an entity engaged in any activity described in paragraph (a) or (b).

Previously, the guidance referred to this entire list of activities but the reference to “selling or distributing” goods has now been removed from the section of the guidance on “Determining whether an entity is a reporting entity.” The terms “selling or distributing,” however, remain in Section 9(a) of the Act. The inconsistency between the guidance and the Act creates ambiguity. However, the Act has not been amended. Therefore, the changes to the guidance do not change any legal requirements that were previously established. Sales and distribution remain criteria to determine if an entity must report.

Entity size threshold

The new guidance also clarifies that when determining if they must file a report, subsidiary companies should assess whether they meet the revenue, asset, and size thresholds of the Act1 independently of their parent company. Relatedly, the update explains that a business’s employment and tax records may be used to determine if it meets the requirement of “doing business in Canada” or having assets in Canada.

Municipal governmental institutions

The updated guidance further clarifies that provincial and municipal governmental institutions are not subject to the reporting requirements under the definition of “government institutions” in the Act, however, some provincial Crown corporations, may fall under the definition of “entity.”

Page limit/language of report

Regarding the form of the report, the updated guidance clarifies that its 10-page limit is merely a recommendation. Accordingly, reports longer than 10 pages are acceptable and reports may be filed in only one (or both) of the official languages. We note that this was always the case, and the clarification is helpful in noting that guidance will not amend the regulatory or legal requirements.

Conclusion

The update to the guidelines provides some helpful clarifications for reporting entities but has also created new ambiguity for some entities. As a reminder, reports under the Act are due by May 31, 2024.2