Federal government publishes guidance regarding Canada’s new modern slavery legislation

On the eve of Canada’s new modern slavery legislation coming into force, the federal government published guidance to help organizations determine whether they need to comply and, if so, what they must do to meet the new requirements.

Canada’s new modern slavery disclosure legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act), came into force on January 1, 2024. It imposes reporting obligations on entities producing, manufacturing, growing, extracting, processing, selling or distributing goods in Canada or elsewhere or that import goods into Canada. For a more detailed overview of the Act and the reporting requirements, you can access our earlier publications here and here.

At the end of December, the federal government published long-awaited guidance on the new legislation (the Guidance), which includes information about the following topics:

• the application of the Act (and determining which organizations need to comply);
• the substance and contents of the report; and
• the overall steps and process considerations related to preparing, approving and submitting the report.

The federal government has since held an information session, which served to clarify some of its Guidance.

While much of the published Guidance was a repetition of the requirements set out in the Act, we note the following new or clarified information:

Questionnaire

In addition to the report itself, reporting entities must complete an online questionnaire when submitting the report to the government. The questionnaire comprises more than 30 questions, which are mandatory to complete. Some of the questions relate to the reporting entity (jurisdiction, whether the entity reports under other modern slavery legislation, how the entity meets the test for a reporting entity, etc.). Other questions relate to the Act’s reporting requirements and the specific activities taken by the entity to comply. Many of the mandatory questions are followed by optional open-ended questions that allow entities to elaborate on their responses if desired. Entities are “strongly encouraged” by the federal government to complete the optional questions.

The end result of the new questionnaire requirement is that reporting entities will need to precisely disclose the activities they did and did not undertake in the previous financial year to assess and reduce the risk of modern slavery in their supply chains and businesses. 

During the recent information session, the government advised that the completed questionnaires will not be made public – only the reports. The questionnaire responses will be used to facilitate preparation of the annual report that the responsible minister must table in Parliament.

Report format 

• Language / translation: Companies may complete the questionnaire and submit their reports in either French or English. The government has recommended reports be submitted in both English and French “in order to make reports accessible to the broader Canadian public.” It has also noted that “requests for translated copies of reports may be directed to the responsible entity.” Translation is not required by the Act itself.
• Page limit: In the Guidance, the government set a limit of 10 pages for the report (or 20 pages for reports provided in both English and French). However, during the government’s recent information session, it advised that the 10-page limit is a guideline only, not a requirement. Reports may exceed 10 pages. The only true limit is the PDF file size of 100 MB.

Joint reports

• Submitting a joint report: As provided in the Act, an entity may choose to submit a joint report covering its own actions and those of its subsidiaries or other entities belonging in the same corporate group that are “reporting entities” and therefore also required to file a report. Joint reports must clearly identify the name of each entity covered by the report.

In the Guidance, the government has clarified that a joint report should only be submitted if the information provided generally applies to all entities covered by the report. In addition, the report should specify which information applies to which of the entities covered by the report. The government advises that a joint report should not be submitted in cases where entities have risk profiles or policies or have taken actions that diverge significantly in a way that would make it difficult to prepare a report accurately describing all entities.

• Reporting in multiple jurisdictions: Recognizing that some entities already report in other countries with similar modern slavery reporting legislation, the government has advised that entities can submit a global report, provided it meets the mandatory criteria of the Canadian Act. The government also advises that entities should indicate in their reports whether they also report under the legislation of another jurisdiction.

Scope of the report

Although the Guidance is somewhat unclear on this point, we understand the report should include information on all controlled subsidiaries of the reporting entity that themselves meet the definition of “entity.” Pursuant to the Guidance: “If an entity controls other entities, it must also describe the steps that these controlled entities have taken to prevent and reduce risks of forced labour and child labour.” Similar wording is repeated throughout the Guidance in each section of the report. 

Approval of the report and questionnaire

The report must be approved by the board of directors of the reporting entity and signed by at least one of the directors. The Guidance sets out the wording of the required attestation. 

The individual who submits the report and accompanying questionnaire on behalf of the entity must be authorized to submit them and must be in a position to confirm that the report has received the required approvals and attestations (including appropriate approvals by all other entities covered by a report in the case of joint reporting).

Year 1 approach

While questions remain regarding the applicability of the Act and required contents of the report, the federal government provided some assurance during its recent information session that it would be taking an incremental approach to implementing the Act and that its current focus is on increasing awareness.

In particular, the government is seeking to increase awareness of the Act’s reporting requirements, build operational knowledge for reporting entities and establish engagement mechanisms to improve reporting information over time. While it is the legal responsibility of in-scope entities to comply with the reporting requirements set out in the Act, and entities should assume that the information they provide will be subject to verification by the government, the government has advised that, in the short and medium term, it intends to focus on compliance promotion and awareness.