Public Safety Canada updates to S-211, the Fighting Against Forced Labour and Child Labour in Supply Chains Act. What you need to know to comply in 2025.

With updated guidance, Canadian companies must prioritize transparency in combating forced labour and child labour.

In brief:

• The Fighting Against Forced Labour and Child Labour in Supply Chains Act didn’t change in 2024.
• Even so, wording and definition updates within Public Safety Canada’s guidance is creating additional nuances that companies in Canada need to consider.
• Businesses must review what’s new and adapt processes to meet reporting requirements and avoid penalties.

One year has passed since Canada’s forced labour and child labour reporting obligations came into force under the Fighting Against Forced Labour and Child Labour in Supply Chains Act. The federal government recently provided updates to the guidance, creating new areas entities will need to consider. Understanding the implications of this additional guidance is essential for compliance with the requirements in 2025 and beyond.

When did the Act come into play and what does it entail?

The International Labour Organization estimates 27.6 million people are victims of forced labour around the world. A business in Canada could very well be producing or importing goods that were produced using child labour or forced labour at some point in their supply chain.

Implementing Bill S-211 was a key step in Canada’s ongoing work to meet international commitments, build industry awareness, foster transparency and encourage responsible business practices.

For the first time in 2024, the Act required entities to file an annual report on the steps taken to prevent and reduce the risk of forced or child labour in the production or importation of goods. The first reports were submitted by May 31, 2024 to Public Safety Canada. Additionally, entities were required to publish their reports prominently on their websites and, in the case of entities incorporated under the Canada Business Corporations Act, distribute the reports to their shareholders.

Failure to comply with the requirements limits progress on fighting forced and child labour. Entities that don’t report, or knowingly make false or misleading statements, can incur fines up to $250,000.

How should companies prepare ahead of May 2025 filings?

If you were required to report in May 2024 but still haven’t, it’s not too late. The government portal remains open. We recommend making an initial filing to ensure you’re in compliance with the legislation and set a foundation for annual reporting.

For companies that did report, we recommend taking these five steps to prepare for the next annual reporting cycle:

1. Review any commitments disclosed in your first report.

Go back and review commitments made. Consider what actions you have taken over the past year in relation to those commitments. At a minimum, outline resources and stakeholders you’ll need to execute the initiatives so you’re ready to provide fulsome disclosure on your progress in year two, even if the initiative hasn’t yet been fully operationalized.

2. Make note of material changes to your structure, operations and supply chains to assess reporting requirements.

The latest updates to the legislation provide clarity around what constitutes a reporting entity. Changes to your business structure may impact how you align with the law’s application.

In addition, the updates offer more detail into definitions of words like “employees” and “assets,” “tangible and intangible goods” and “very minor dealings.” Understanding these definitions will help set you up for a successful reporting year.

3. Determine whether any of your subsidiaries have reporting requirements.

The guidance clarifies that control includes both direct and indirect control and extends down the entity's organizational chain. For example, if the reporting entity controls a business that controls another business, both businesses are captured by the definition of control, which also includes deemed control.

Accounting standards may be used as the basis for determining whether one entity controls another. However, the definition of control is not limited to accounting standards; the Office of the Superintendent of Financial Institutions (OSFI) guidance can be used as the basis for determining whether one entity controls another. Control may also include situations in which an entity exercises joint control of an operation.

Subsidiaries must determine if they meet the definition of entity independently from their parent company. If a subsidiary does not meet the definition of entity based on its own financial statements, it does not have reporting obligations. It’s important to be clear on this — as well as with how the parent company’s policies, processes and due diligence related to forced and child labour apply to its subsidiaries — to meet reporting requirements.

With that established, collect information required to satisfy the seven legislative requirements from internal stakeholders within the business and any covered subsidiaries.

4. Carry out a risk assessment to identify the risks of forced and child labour that may exist within operations and supply chains.

Last year, entities identified parts of their activities and supply chains that carry a risk that forced labour or child labour is used in either the entity's own activities, those of any entities it controls or the activities of the entity’s direct or indirect suppliers.

Originally on Public Safety Canada’s online questionnaire, entities could indicate they had identified risks in 20 major sectors, whereas now the questionnaire asks reporting entities to identify risks in greater detail in a total of 95 industries available.

5. Begin early.

By beginning early, you have the advantage of determining a goal for your organization’s overall reporting maturity. Doing so helps you decide whether the business is ready to make forward-looking commitments and how you’ll act on them. This may include establishing due diligence policies and processes that align with the UN Guiding Principles on Business and Human Rights, OECD Due Diligence Guidance for Responsible Business Conduct and ISO 24000.

Issuing an S-211 report requires considerable effort to gather data to produce the report, progress through an approval and attestation process, and complete the fulsome online questionnaire. Building a project timeline that incorporates the necessary activities is essential.

Last year, a number of reports weren’t filed properly. What stood out? Findings included companies submitted the questionnaire without a complete PDF report, attestation or signatures, used the wrong document format and included personal information that should not be included.

Time allows you to be strategic not only about what steps you’re taking to mitigate the risk of forced or child labour, but to report effectively and avoid potentially costly errors like these.