Public Safety Canada releases updated guidance for the Fighting Against Forced Labour and Child Labour in Supply Chains Act

On December 22, Public Safety Canada released updated guidance (the Updated Guidance)¹ under the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the Act). The revisions provide some clarifications that may assist entities in assessing their obligations, but also contain changes that may affect how entities assess whether they are required to report.

Clarified de minimis guidance

The Updated Guidance adds clarifying language around the “very minor dealings” exception for reporting obligations under the Act.

While the Updated Guidance does not establish a brightline threshold, it confirms that de minimis activities should be assessed contextually, taking into account the scale, frequency and relevance of the activity in the entity’s overall operations. In practice, this suggests that minimal or incidental production or importation activities in the context of an entity’s overall business may fall outside the intended scope of the reporting regime.

Entities relying on this interpretation should ensure that their analysis is documented and defensible, particularly in light of the absence of quantitative thresholds.

Removal of non-enforcement language for sellers and distributors

The Updated Guidance also removes prior language stating that Public Safety Canada would not pursue enforcement action against entities whose activities are limited to selling or distributing goods.

Importantly, while this express non-enforcement assurance has been removed, the Updated Guidance continues to state that entities engaged solely in selling or distributing goods do not have reporting obligations under the Act. As a result, the practical scope of who is required to report appears unchanged.

Entities whose activities are limited to sales or distribution should continue to carefully assess whether they meet the criteria for reporting and should consider documenting their rationale for concluding that they are not required to report.

Additional clarifications

The Updated Guidance includes additional clarifications that may assist entities in assessing their obligations, including advising entities to consider adding suppliers and subcontractors to their organizational structure and removing suppliers of “services” from the definition of “supply chain”.

What’s next

Overall, the updates are largely clarificatory and do not expand the scope of the Act. However, the enhanced de minimis guidance and the removal of express non-enforcement language for sellers and distributors underscore the importance of carefully assessing and documenting whether an entity falls within the reporting regime.

In light of these changes, entities preparing for upcoming reporting cycles should review the Updated Guidance to confirm that their conclusions regarding reporting obligations remain supportable.