Public Safety Canada publishes updated guidance for modern slavery reporting

On November 15, 2024, Public Safety Canada (“PSC”) published updated guidance for entities (“Updated Guidance”) relating to the reporting requirements set out in the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”).

Although the guidance is being made available in advance of the reporting deadline on May 31, 2025, reports prepared using previous versions of the online guidance will be accepted in the 2025 reporting year.

For further information on the Act, see our previous articles, Public safety Canada’s inaugural annual report - KPMG Canada, November 2024, Fighting Modern Slavery in Canadian Supply Chains, September 2024, and Canada’s New Forced Labour Reporting Act, dated July 21, 2023. 

As set out below, the Updated Guidance clarifies several aspects of the scope and applicability of the Act, as well as the reporting requirements and related processes.

The Updated Guidance frames the question of applicability of the Act as a two-step test, stating organizations can determine whether they are subject to the Act by:

1. Determining whether the organization is an “entity” (as defined in the Act) and meets the reporting thresholds, and
2. if so, whether the entity has reporting obligations based on its activities.

Updates relating to each step are set out below.

Step 1 – Are you an organization that is an entity (as defined in the Act) and meets the reporting thresholds?

• Organizations can continue to determine whether they are “doing business in Canada,” by evaluating factors considered by the Canada Revenue Agency such as if the person is “carrying on business in Canada” for GST/HST purposes. The Updated Guidance provides a non-exhaustive list of relevant factors for consideration, including the location(s) where: goods are produced, sold, or distributed; employees are located; deliveries, payments, purchases, or contracts are made or assets are acquired; and assets, inventories, or bank accounts are located.
  
• Organizations assessing whether they have “assets in Canada” need only consider tangible property, and exclude intangibles such as intellectual property, securities, and goodwill.
• When assessing whether an entity meets the prescribed size-related thresholds for employees, the Updated Guidance no longer refers to the meaning of employee as set out in Canadian common law. Instead, employee headcount is now calculated based on the number of full-time, part-time, and temporary employees in Canada and other jurisdictions and excludes independent contractors.
• Previously, there was some confusion over whether certain provincial and municipal institutions were previously subject to the reporting requirements for entities under the Act. The Updated Guidance clarifies and seemingly broadens this category to state that other provincial or municipal government bodies, may be captured by the definition of entity.

Step 2 – Do you conduct reportable activities?

• Entities solely involved in distributing and selling, (i.e., not producing or importing goods, or controlling entities that produce or import goods), are no longer required to report and PSC will not seek enforcement action in those instances.
• An entity is importing goods if it is the “true importer” and caused the goods to be brought into Canada. In general, this covers entities that account for or pay the duties on goods being imported. Purchasing goods from a third party outside Canada, where the third party is considered the importer, is not considered “importing goods” 
• The Updated Guidance states the following organizations are not considered importers and generally excludes customs brokers, express couriers, trade consultants or other “third parties authorized to transact business on behalf of the importer, or to account for goods in lieu of the importer".
• “Goods” is defined as tangible physical property that are the subject of trade and commerce, and understood in the ordinary sense of the word, expressly excluding real property, electricity, software services, and insurance plans.
• Under the previous guidance, PSC excluded “very minor dealings” in the import or producing of goods. The Updated Guidance further clarifies this concept, interpreting it based on “de minimis” threshold and evaluated within the context of each entity’s business. Therefore, very small, insignificant, or trifling matters do not give rise to a reporting requirement.
• The Updated Guidance refers entities to the Office of the Superintendent of Financial Institution as an available resource, in addition to accounting standards, to determine whether it directly or indirectly controls another entity for the purposes of the Act.

• PSC reiterated that it is “expected and acceptable” for entities to have overlap between the steps it identified across its responses to the various reporting requirements
  
• Entities are not required to report on specific cases or allegations of forced or child labour, particularly if it compromises any individual’s privacy. Entities may report instances of forced or child labour as anonymized case studies 
• The annual report should not contain personal information, except for the names of the official(s) signing the attestation 
• After conducting a risk assessment, if an entity finds there is no evidence of instances of forced or child labour, it can select “not applicable” under subsection (d) (remediation efforts) as a response in the questionnaire and reflect this in their report
  
• Entities are no longer expected to report on training provided to its direct suppliers or parties, having removed this from its reporting requirements under subsection (f)

• The Updated Guidance no longer restricts the form of attestation, allowing companies to either rely on the example language or to draft their own attestation language that satisfies the requirements in the Act
  
• PSC confirmed that reports submitted without an attestation statement and signature will not be published on its library catalogue. Companies are encouraged to leave enough time before the deadline to go through the approval process. In addition, typing “signed” in the signature block does not constitute a signature 
• PSC will accept reports developed to meet requirements in other jurisdictions so long as the report also complies with the reporting obligations in the Act 
• PSC will accept revised reports for up to one year of the reporting deadline should any new information become available. The revised report will need to be reapproved and attested by the appropriate governing body 
• Documents submitted in a file format other than PDF will not be published to the PSC website 
• The Updated Guidance encourages companies to maintain a public repository of their previous annual reports on their own websites

• Where the questionnaire limits an entity’s ability to elaborate on complex information or provide nuance, it is encouraged to respond “to the best of their ability” and provide further clarification and detail in the annual report
  
• Entities must include all necessary information to comply with the Act in the PDF report, as well as the questionnaire responses. They must complete both
  
• PSC confirmed that questionnaire responses would be stored and disposed of in accordance with the Policy on Service and Digital, and Access to Information Act, the Privacy Act and the Library and Archives Act

The updated guidance provides critical clarifications for entities and government institutions preparing for the 2025 reporting deadline under the Act. In particular, the Updated Guidance appears to broaden the scope of applicability to include certain “other provincial and municipal government bodies.” At the same time, PSC clarifies that it no longer “expects” reporting from organizations that solely sell or distribute goods or that do not meet the de minimis threshold for importing. Additionally, PSC outlines criteria for the reporting thresholds and activities, offering greater flexibility in certain aspects of the reporting form.

Although it is not mandatory for certain organizations to prepare reports for the 2025 reporting year based on the Updated Guidance (and they may continue relying on PSC’s previous guidance), adopting the guidance may prove beneficial for some. Importantly, although the Updated Guidance provides valuable insight into how PSC interprets and intends to enforce the Act, it does not carry the weight of law and is not binding on organizations. Companies must continue to ensure compliance with the obligations explicitly outlined in the Act.