Canada’s anti-modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, (the “Act”)  came into force on January 1, 2024.

The Act requires government institutions and certain entities to provide annual reports on how they have addressed forced labour and child labour risks in regard to their operations and supply chains.

Application of the Act

The Act applies to government institutions and certain entities, including corporations, trusts, partnerships or other unincorporated organizations that produce, sell, distribute or import goods or that control entities that do so.

Are municipalities considered “entities” within the meaning of the Act?

Under the Act, an “entity” means a corporation or a trust, partnership or other unincorporated organization that:

  • (a) is listed on a stock exchange in Canada;
  • (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) it has at least $20 million in assets,
    • (ii) it has generated at least $40 million in revenue, and
    • (iii) it employs an average of at least 250 employees; or
  • (c) is prescribed by regulations

In Canada, the governing legislation for municipalities generally defines a municipality as a “corporation” or “municipal corporation.” When the Act came into force, a publication by the Government of Canada stated that:

Provincial and municipal governmental institutions are not subject to the reporting requirements as per the definition of “government institutions” in the Act. However, some provincial agent Crown corporations may be subject to the reporting requirements by falling under the definition of “entity.” It is their responsibility to determine whether they are a reporting entity under the Act.

Notably, that commentary was silent on whether a municipality could be an “entity” under the Act even though a municipality was not a “government institution.”

The Government of Canada has recently provided guidance for government institutions, including municipal governments, and has advised that municipal governments should assess whether they meet the definition of “entity” under the Act, and determine whether they are subject to the reporting obligations.

This recent guidance implicitly recognizes that in some jurisdictions a municipality is a corporation under governing legislation and therefore the municipality may be an “entity” under the Act. The Government of Canada has signaled in the recent guidance that the Act applies to a municipality that is an “entity” and which carries on the prescribed activities that trigger reporting requirements

As such, municipal governments are encouraged to seek legal advice regarding compliance with the Act and, in particular, whether the municipality is an “entity” and whether it is subject to reporting requirements.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.

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