Canada’s Modern Slavery Act applies to some social purpose organizations: What you need to know

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (commonly referred to as Canada’s Modern Slavery Act) came into force on January 1, 2024. The purpose of the Act is to reduce the use of forced labour and child labour by increasing transparency in supply chains. It seeks to implement into Canadian law several international conventions that define and prohibit forms of forced labour and child labour. The Act may apply to certain charities, non-profits and/or social enterprises, so it is important to determine whether your organization is affected.

Organizations to which the Act applies are required to prepare an annual report and submit it by May 31 of each year to the Minister of Public Safety and Emergency Preparedness. The first annual report for such organizations is due on or before May 31, 2024.

Is your organization affected?

The Act imposes reporting obligations on certain non-governmental entities, including corporations, trusts, partnerships, and unincorporated associations, if they:

1. produce, sell, or distribute goods in Canada or elsewhere;
2. import goods into Canada; or
3. control another entity involved in producing, selling, distributing, or importing goods.

The Act only applies to such entities that have a place of business in Canada, or have assets in Canada, and that either:

1. are listed on a stock exchange in Canada; or
2. met at least two of the following criteria in one of their two most recent financial years (based on their consolidated financial statements):

• • have at least $20 million (CAD) in assets;
  • generated at least $40 million (CAD) in revenue; or
  • employed an average of at least 250 employees.

What do affected organizations need to report on?

In the annual report filed with the Minister of Public Safety and Emergency Preparedness, affected organizations must disclose the steps they have taken in the previous financial year to reduce the risk that forced or child labour is used at any point in their supply chain. Annual reports must also include information on the organization’s governance structure, its policies related to forced and child labour, the parts of its supply chain at risk of forced and child labour, remedial measures taken, employee training, and the assessment method chosen to ensure the absence of forced and child labour.

An affected organization is also required by the Act to publish its annual report in a prominent place on its website. An affected organization that is incorporated under the Canada Not-for-Profit Corporations Act is also required to provide the report to its members along with its annual financial statements.

What are the consequences for failure to comply?

Every entity (including any director, officer, agent or mandatary of such entity) who fails to file and publish its annual report, obstructs or fails to cooperate with an investigation or an enforcement action, or provides false or misleading information is:

• Guilty of an offence punishable on summary conviction; and
• Liable to a fine of not more than $250,000.

For more information on Canada’s Modern Slavery Act and the reporting obligations it imposes, please check out our Primer on the topic.

If you have questions about the Act and whether it applies to your organization, please reach out to any member of Miller Thomson’s ESG and Carbon Finance Group or the Social Impact Group.