Pressure is growing in parliament for Canada to legislate on the use of modern slavery and forced child labour in supply chains
As discussed in our previous post of December 17, 2021 “Will Canada finally pass a law addressing the resort to modern slavery and child labour by commercial stakeholders and their supply chains?”, a bill to fight the use of forced labor and child labor was introduced in the Senate on November 24, 2021 by the Honorable Julie Miville-Dechêne. This bill, S-211 An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff (“Bill S-211”), is currently before the Standing Senate Committee on Human Rights, which held its first meeting on February 7, 2022.
While Bill S-211 is being considered in the Senate, the House of Commons has proposed a parallel bill to fight the use of forced labour and child labour by corporations in their supply chains, namely Bill C-243 An Act respecting the elimination of the use of forced labour and child labour in supply chains (“Bill C-243”). On February 8, 2022, Bill C-243 completed first reading and was added to the order of precedence for second reading.
While the substance of Bill C-243 is similar to S-211, there are some nuances:
- Scope: Although Bill C-243 provides a definition of “entity” that is identical to the definition in Bill S-211, its application does not extend to distributing corporations. Moreover, Bill C-243 does not include government institutions, which were explicitly added to the scope of Bill S-211. However, Bill C-243 does not exempt the Government of Canada from reporting obligations altogether; it provides for amendments to the Department of Public Works and Government Services Act to engage the Minister of Public Works and Government Services to prevent or reduce the risk that material and services acquired by its department are derived from forced or child labour, and requires the Minister to report annually to Parliament on the risk mitigation measures undertaken.
- Disclosure: Bill C-243 provides for the same annual reporting requirement as Bill S-211, but differs in that it creates a continuing obligation to update the information disclosed in the annual report by submitting a revised report as soon as the information on which the annual report is based changes or new relevant information becomes available. It will be interesting to see how this requirement and the type of information it captures will be interpreted, but for now, its effect suggests that reporting entities will need to ensure that they have the necessary compliance monitoring processes within their supply chain to ensure that they are informed in a timely manner of changes that need to be disclosed in a revised report.
- Copies to Shareholders: Bill C-243 requires all incorporated entities to provide their shareholders with a copy of their annual report along with their annual financial statements, without retaining the distinction made in Bill S-211 as to the statute under which the entity is incorporated; Bill S-211 limited this obligation to entities incorporated under the Canada Business Corporations Act.
- Right of Entry: The right of entry into any place for the purpose of investigation provided in Bill C-243 is somewhat expanded in that it provides for entry not only to verify compliance with the bill, but also to prevent non-compliance with the bill and regulations made under it, if any.
- Exclusion of Entities by Regulation: Bill C-243 will allow the Governor in Council to define, by regulation, the circumstances in which the bill would not apply to certain entities.
At this time, we cannot determine whether Bill C-243 or Bill S-211 will be adopted by Parliament, nor the exact obligations that will be imposed on reporting entities. However, the introduction of these bills evidence the mounting pressure for Canada to demand greater transparency from entities doing business in its market. Businesses in Canada must take note of these important issues, and adapt their compliance programs accordingly.
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