The Fighting Against Forced Labour and Child Labour in Supply Chains Act (also known as the Modern Slavery Act; the "Act") came into force on January 1, 2024.

With the new Act, directors and officers may be personally liable for offences committed by their organization under the Act. In this blog, we'll be discussing the director and officer liability arising from the Act, some proactive steps your organization can take to ensure compliance with the Act and how to help protect yourself if you are a director or officer of a company. Additionally, since reports filed under the Act are publicly available online, there are also reputational considerations for your organization.

Offences under the Act

For those captured by the reporting obligations of the Act, there are several offences which may result in summary convictions and a fine up to $250,000:

  • failing to comply with the reporting, disclosure, approval or attestation requirements;
  • failing to publish the report prominently on your website and make it available to the public;
  • failing to provide assistance to designated public officials;
  • failing to comply with an order made by the Minister;
  • knowingly making a false or misleading statement or knowingly providing false or misleading information to the Minister; or
  • obstructing or hindering a designated person exercising powers or performing duties or functions under the Act.

If you would like to know more about whether your company is captured by the Act and your reporting obligations, we discuss these in our earlier blog Canadian guidance released on Modern Slavery Act reporting.

Director, officer, agent and mandatary liability for offences

Any director, officer, agent or mandatary that directed, authorized, assented to, acquiesced in or participated in the offence committed by a person or entity under the Act is also guilty of the offence, resulting in a fine up to $250,000.

A key point to note is that a director or officer may be liable regardless of whether the underlying person or entity has been prosecuted or convicted. This means all fingers may be pointed at a director or officer depending on the nature of the offence.

Protecting yourself from liability

The first step to protect yourself from liability as a director or officer is to carefully consider your company's obligations under the Act and assess your operations to determine the scope of its obligations. It is important to ensure that any entity within the corporate group that is required to report either files its own report or a joint report.

Given the nature of these offences, a key takeaway to avoid liability is transparency and honesty in the report. As a director or officer, it is essential that you carefully review any reports or disclosure provided under the Act and critically consider whether these accurately reflect business operations and address the mandatory disclosure requirements under the Act. The report should be an accurate reflection of the effectiveness of your organization's due diligence process and policies, the gaps in those processes and policies, as well as the risks associated with those gaps.

At the same time, if your organization (i) is committed to respecting human rights, (ii) takes a risk-based approach to combatting child labour and forced labour, and (iii) is committed to making continuous improvement in its processes and policies, this may also be stated in the report.

Going forward, developing an appropriate and effective risk management system that is subject to continuous review will be key to not only meeting the legal requirements under the Act but preserving your organization's reputation by doing your part to end modern slavery.

Closing remarks

The Act serves as a good reminder for directors and officers of the potential personal liability that may arise from these positions and that the processes and policies adopted by directors and officers have implications well beyond the company. Depending on the industry the company is involved in – and the risks involved – there are also reputational considerations that need to be taken into account.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.