The Government of Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act: What to Expect in Year Three

The third reporting cycle under the Canadian federal government’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Act”) is now underway, marking another year of mandatory reporting for certain entities that produce, distribute or import goods into Canada. The purpose of the Act is to encourage these entities to take meaningful steps to prevent and reduce the risk of forced labour and child labour in their operations and supply chains.

We have provided yearly updates since the Act came into force in January 2024, which can be read about in our previous articles from 2024 and 2025.

Who Is Required to Report Under the Act?

The Act applies to government institutions and private entities that meet the conditions specified in the Act.

An “entity” is defined under the Act as a corporation or a trust, partnership or other 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 consolidated financial statements, meets any two of the following conditions for at least one of its two most recent financial years: (i) it has $20 million or more in assets; (ii) it has generated at least $40 million in revenue; and (iii) it employs an average of at least 250 employees.

In 2025, the following sectors were most commonly represented among reporting entities:

1. Manufacturing (24.9% of entities);
2. Wholesale Trade (11.8% of entities);
3. Retail Trade (8.9% of entities);
4. Mining, quarrying, and oil and gas extraction (6.5% of entities); and
5. Transportation and warehousing (5.8% of entities).^[1]

Reporting Obligations under the Act

Under the Act, entities and government institutions must submit an annual report to the Ministry of Public Safety and Emergency Preparedness if it (a) produces, sells or distributes goods in Canada or elsewhere; (b) imports into Canada goods produced outside Canada; or (c) controls an entity engaged in any activity described in paragraph (a) or (b).

The entity must disclose the measures it took during the previous financial year to prevent and mitigate the risk of forced labour or child labour, including details on:

(a)     its structure, activities and supply chains;

(b)     its policies and due diligence processes in relation to forced labour and child labour;

(c)     the parts of its business and supply chains 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 to remediate any forced labour or child labour;

(e)     any measures taken to remediate the loss of income to the most vulnerable families that results from any measure taken to eliminate the use of forced labour or child labour in its activities and supply chains;

(f)      the training provided to employees on forced labour and child labour; and

(g)     how the entity assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.

Enforcement Mechanisms and Penalties for Non-Compliance

Any person or entity that contravenes the Act may be liable on summary conviction to a fine of up to $250,000. Offences include, but are not limited to, failing to file a required report or failing to make the report publicly accessible in a prominent location on the organization’s website. The Act also holds directors, officers or agents personally accountable if they direct, approve or otherwise take part in the commission of an offence.

In the second year of reporting, Public Safety Canada focused on ensuring entities were aware of their obligations under the Act. In 2025, no enforcement orders were issued, and no charges were laid against any person or entity.^[2]

2025 Annual Report to Parliament – New Data and Insights

In 2025, reporting entities identified the following as being at risk of forced labour or child labour:

• The raw materials or commodities used in the entities’ supply chains (34.1%);
• The sectors or industries in which the entities operate (30.4%);
• Tier one (direct) suppliers (29.7%);
• The location of  the entities’ activities, operations or factories (29.6%); and
• The types of products the entities  source (28.5%).^[3]

Preparing for 2026 Reporting under the Act

Public Safety Canada has opened its reporting portal for the 2026 reporting cycle. Entities and government institutions subject to the Act are legally responsible for fulfilling the reporting requirements. Any information provided to Public Safety Canada by an entity or a government institution may be subject to verification at any time.

The deadline for the submission of an annual report this year under the Act is May 31, 2026.

For assistance with preparing an annual report, navigating compliance obligations under the Act or for further information, please contact Roland Hung or Laura Crimi in the Corporate/Commercial Group at Torkin Manes LLP.

The authors would like to thank Articling Student Kayla Oliveira for her contributions to drafting this article.