On February 5, 2020, Senator Julie Miville-Dechêne introduced Bill S-211 into the Senate, which if passed would enact the proposed Modern Slavery Act. The Bill proposes mandatory modern slavery disclosure by companies in Canada or doing business in Canada, and an amendment to the Customs Tariff to prohibit the importation of forced labour and child labour-made goods.
Unlike many jurisdictions, including many of Canada's major trading partners (e.g. U.K., Australia and California), Canada currently has no modern slavery disclosure legislation. Nor is there any general restriction on the importation into Canada of goods produced by forced or child labour — or any law barring the procurement by Canadian governments of goods or services produced by forced or child labour.
The recent Senate Bill follows in the footsteps of a virtually identical Private Members Bill (Bill C-423) introduced into the House of Commons by Liberal MP John McKay in December 2018. McKay's Bill received First Reading but did not proceed further, despite there being a Liberal majority government at the time. It died on the Order Paper when the 2019 Federal Election was called.
Below, we highlight the key details of Senate Bill S-211:
What Are the Proposed Import Restrictions?
The proposed Modern Slavery Act would amend the Customs Tariff to prohibit the importation into Canada of goods manufactured or produced, in whole or in part, by forced labour or child labour, as those terms are defined in subsection 2(1) of the proposed Act. If such a provision was to be enacted, this would entail the creation by the Canada Border Services Agency of regulatory and administrative infrastructure to implement an effective enforcement regime for this prohibition - perhaps similar to that implemented by Customs and Border Protection in the U.S.
What Would Businesses Be Required to do?
Businesses subject to the Act would be required to provide to the Minister an annual modern slavery report that sets out the steps the business has taken during its previous financial year to prevent and to reduce the risk of forced labour or child labour being used at any step of the production of goods in Canada or elsewhere by the business, or of goods imported into Canada by the business.
It does not, however, require the business to carry out a due diligence inquiry to determine if there is modern slavery occurring in its business or supply chains, nor does it require the business to take steps to address modern slavery practices that may be occurring in its business or supply chains.
In their modern slavery reports, businesses must also include the following information:
(a) The structure of the business and the goods that it produces in Canada or elsewhere or that it imports into Canada;
(b) Its policies in relation to forced labour and child labour;
(c) Its activities that carry a risk of forced labour or child labour being used and the steps it has taken to assess and manage that risk;
(d) Any measures taken by the business to remediate any forced labour or child labour; and
(e) Any training provided to employees of the business on forced labour and child labour.
The report must include an attestation made by a director or officer of the business that the information in the report is true, accurate and complete. Unlike modern slavery legislation in the U.K. and Australia, the annual modern slavery report would not need to be approved by the board of directors of the business.
The business is required to make the report available to the public, including by posting it in a prominent place on its website.
Which Canadian Businesses Must Comply with the Annual Reporting Regime?
If it becomes law, it would apply to every corporation, trust, partnership or unincorporated organization that
(a) is listed on a stock exchange in Canada; or
(b) has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
(i) at least CAD$20 million in assets, (ii) at least CAD$40 million in revenue, and (iii) employs an average of at least 250 employees;
and that
(c) produces or sells goods in Canada or elsewhere;
(d) imports into Canada goods produced outside Canada; or
(e) controls an entity engaged in any activity described in paragraph (c) or (d).
What are the Penalties for Non-Compliance?
If a business fails to file the annual modern slavery report or to post the report on its website, it could be found guilty of an offence punishable on summary conviction and liable to a fine of not more than $250,000.
If a business commits an offence under the Act, any officer or director of the business who directed, authorized, assented to, acquiesced in or participated in committing the offence is a party to and guilty of the offence and liable on conviction to the punishment provided for the offence.
The Bill also includes broad search and seizure powers to verify compliance with the Act, including the power of a person designated to enforce the Act to enter a dwelling-house in which the designated "person has reasonable grounds to believe there is anything to which this Act applies or any document related to the administration of this Act."
In the coming weeks (or months), we will see whether Bill S-211 gains any traction and becomes part of the Government of Canada's legislative agenda, and, if so, whether it will seek to assess the constitutionality of the proposed Act and will undertake comprehensive consultations across Canada in the manner that the Government of Australia did before enacting its Modern Slavery Act. I will keep you up to date of developments.