The Success of Employer-Organized Christmas Parties: It Is Everyone's Business?

November 29, 2023

Workplace Christmas parties are just around the corner. While such celebrations are a great opportunity to strengthen team spirit and acknowledge everyone’s hard work, it is important to remember that it is not only up to employers to make sure they run smoothly—their entire workforces, managers and employees alike, are also responsible. Just think of potential situations of harassment where alcohol and fun times are combined. Who is responsible for what when it comes to Christmas parties?

Employer’s obligations

Legal framework

Generally speaking, many existing employer (and employee) obligations provided for in legislation, regulations or company policies, can be transposed to employer-organized Christmas parties. This is particularly true where harassment is involved. In recent years, the scope of legislation offering protection against harassment and violence in the workplace has broadened. In addition to the obligation to take reasonable steps to prevent psychological harassment¹, employers, since 2021, must take measures to protect an employee who has been “exposed to physical or psychological violence, including spousal, family or sexual violence, in the workplace.”²

Even more recently, on November 23, 2023, the Minister of Labour introduced Bill 42, An Act to prevent and fight psychological harassment and sexual violence in the workplace (the “Bill”). Although the Bill is only at the introduction stage and may see a number of amendments, the Minister explains that its aim is to make workplaces healthier, more respectful and safer, and to eliminate unacceptable behaviour.³ Further information on Bill 42 will be provided in a separate publication.

Employer’s management rights

When an employer witnesses or otherwise becomes aware of inappropriate behaviour at a Christmas party it has organized, it is well within its rights to investigate and take appropriate action, including disciplinary action up to and including dismissal.⁴ For example, an employer could impose a three-day disciplinary suspension on an employee having committed a gesture of a sexual nature during a Christmas party.⁵ Dismissal was also deemed to be an appropriate measure for an employee who committed acts of violence against his colleague and former spouse at a Christmas party.⁶

An employer’s investigation can sometimes even cover events having taken place after a Christmas party, outside the workplace. For example, in a decision from 2022, an arbitrator reiterated that the employer in question was entitled to conduct an investigation into allegations of sexual assault and harassment that were said to have taken place in a hotel room after a Christmas party, because the connection between the personal activities and the employer was sufficient.⁷ Despite the private nature of the events, they had a negative impact on the work climate and, therefore, an employer investigation in which employees were required to cooperate was warranted.⁸ Similarly, another arbitrator upheld the dismissal of an employee who had assaulted his supervisor, even though the events had occurred during an after-party.⁹

Measures to avoid abusive and excessive behaviours

Employers can implement a number of measures before their parties to avoid abusive and excessive behaviours, including:

Reminding employees of applicable policies, including codes of conduct and harassment prevention policies
Authorizing only a limited number of alcoholic drinks per person
Closing the bar or ceasing alcohol service a few hours before the party’s end
Making sure there is enough food, water and non-alcoholic beverages throughout the evening
Providing individual hotel rooms
Providing a safe-ride-home service

Obligations of employees

During employer-organized Christmas parties, employees who attend as part of their employment do so under the same status they hold with their employer.¹⁰ They must therefore comply with their various obligations, including having good manners and being civilized, not endangering their or their colleagues’ health and safety, using appropriate language and not engaging in harassment and, more generally, adhering to their employers’ policies. In a sense, the party becomes an extension of the workplace. In the specific case of managerial staff, employers are entitled to have higher expectations of exemplary behaviour.

Moreover, when an employer investigates events that are said to have taken place during or after such a party, employees are required to cooperate in good faith.

What about witnesses?

As mentioned above, making sure that a Christmas party runs smoothly is everyone’s business. However, is it realistic to rely on employees to report problematic behaviour they may witness during such events? Is the duty of loyalty sufficient to create a general obligation to report all wrongful behaviour? The answer is not clear.

As for managerial staff who are employers’ eyes and ears, they are even further bound by their duty of loyalty given their line responsibilities.¹¹ Employers can therefore expect them to report problematic behaviour that takes place at a Christmas party.

In the case of regular employees (non-managerial staff), the imposition of a general obligation to report all wrongful behaviour was deemed unreasonable,¹² as such an obligation “[translation] jeopardizes the serenity of the work climate.”¹³ However, there are cases where the obligation to report is legitimate. It applies where the obligation is intended to protect the health and safety of colleagues and the public. The very nature of the duties performed by an involved employee will be decisive in determining the validity of the obligation to report.¹⁴ In all cases, that employee must dissociate themselves from the wrongful behaviour and avoid any participation.

Lastly, despite the absence of a general obligation to report harassment, employers may validly encourage employees to report harassment, without making it mandatory.¹⁵

Conclusion

Employer-organized Christmas parties are certainly something to look forward to. With the situation in recent years and the explosion of telecommuting and hybrid working conditions, such events are even more important to bring people together. However, they have to remain fun for everyone. With simple yet reliable measures, such as making everyone aware of their own responsibilities and mutual respect, such celebration can be a real success. Happy festivities to all!

The Act respecting labour standards, CQLR, c. N-1.1, section 81.19.
The Act respecting occupational health and safety, CQLR, c. S-2.1, section 51 (16).
Office of the Minister of Labour and Minister responsible for the Mauricie and Nord-du-Québec regions, “Le ministre Jean Boulet présente le projet de loi 42, Loi visant à prévenir et à combattre le harcèlement psychologique et la violence à caractère sexuel en milieu de travail Gouvernement du Québec” (quebec.ca), November 23, 2023 (in French only).
For more information, read the following bulletin: Lavery, “The return of Christmas parties: What employers need to know,” December 9, 2022, URL: The return of Christmas parties: What employers need to know (lavery.ca).
Teamsters Québec, section locale 1999 and Univar Canada ltée (Jean-Martin Gobeil), 2020 QCTA 344.
Travailleurs et travailleuses unis de l’alimentation et du commerce, section locale 500 (TUAC-FTQ ) and Royal Vézina inc. (St-Hubert), 2017 QCTA 304.
Syndicat des salariés(es) de l’agroalimentaire de Ste-Claire (CSD) and Kerry Canada inc. 2022 QCTA 224.
See also: CSN-Syndicat du personnel de bureau du CISSS de la Gaspésie and Centre intégré de santé et de services sociaux de la Gaspésie, 2023 QCTA 131.
Syndicat des inspecteurs du RTM-CSN and EXO (Charles-David Lapointe), 2020 QCTA 24.
Association internationale des machinistes et des travailleuses et travailleurs de l'aérospatiale, district 140, section locale 2309 and Servisair (Avo Minassian), D.T.E. 2009T-448 (T.A.).
Shell Canada ltée and Travailleurs unis du pétrole du Canada, section locale 121 du SCEP, D.T.E. 2010T-68 (T.A.); Journal de Montréal and Syndicat des travailleurs de l’information du Journal de Montréal (CSN), 2015 QCTA 52.
Id.; See also: Viterra inc. and Unifor, Local 2022, 2020 QCTA 565.
Shell Canada ltée and Travailleurs unis du pétrole du Canada, section locale 121 du SCEP, D.T.E., supra, note 11, para. 88.
Id.
Journal de Montréal and Syndicat des travailleurs de l'information du Journal de Montréal (CSN), supra, note 11.

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Geneviève Beaudin
Partner, Lawyer
Simon Gagné-Carrier
Lawyer

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December 11, 2024

Hiring Process: Can Knowledge of a Language Other Than French Be Required by an Employer?

In a decision rendered on September 16, 2024,1 the Administrative Labour Tribunal (the “ALT”) found that a company (the “employer”) had violated the Charter of the French language2 (the “CFL”) by requiring knowledge of languages other than French as part of a hiring process. This is one of the first decisions ruling on the new complaint mechanisms introduced by Bill 96, An Act respecting French, the official and common language of Québec3 (“Bill 96”), aimed at amending the CFL. The Legislative Changes Made in 2022 On May 24, 2022, the Quebec government passed Bill 96, which received royal assent on June 1, 2022. This law made significant amendments to the CFL and other laws. Even before the amendments introduced by Bill 96 were adopted, the CFL prohibited employers from requiring that a person have knowledge or a specific level of knowledge of a language other than French to keep or obtain a position, unless the nature of the duties required such knowledge. Bill 96 has clarified the scope of employer obligations in this respect. In particular, employers must have taken all reasonable means to avoid imposing such a requirement,4 and, if they do impose it, they must indicate the reasons justifying this requirement in their job postings.5 Bill 96 also made it possible for job applicants and employees to challenge employers’ requirements respecting knowledge of a language other than French. The CFL now stipulates that if an employer does not meet the “necessity” conditions described below, requiring knowledge of a language other than French will be deemed a prohibited practice. The notion of a complaint for “prohibited practice” already exists in the Act respecting labour standards,6 notably in section 122. It enables employees to file a complaint if they believe they have been subjected to sanctions, discriminatory measures or reprisals for exercising a right provided under this law. The amendments introduced by Bill 96 have thus broadened the concept of prohibited practice to also include the exercise of certain language rights. The CFL was further amended to allow employees to directly file a complaint with the Commission des normes, de l’équité, de la santé et de la sécurité du travail (the “CNESST”)7 if they believe that an illegal requirement to know a language other than French is being imposed on them. These are the issues addressed by the ALT in this decision. The facts On March 3, 2023, the complainant, Byung Chan Kim, filed a complaint for prohibited practice under the CFL. He believed that he was not granted a position posted by the defendant, the employer, because it required knowledge of a language other than French as part of a hiring process. The complainant came across a job posting in the defendant’s procurement and logistics department, which it had published in January 2023. The posting appeared exclusively in Korean in an online newspaper aimed at the Korean community. The complainant submitted his application in February along with his resume, which was written in French only. A representative of the defendant requested the complainant to provide an English version of the document, which the complainant provided. The complainant then participated in an interview, during which the defendant’s representative asked the complainant to speak in English and Korean because he did not understand French. Since the complainant’s application was not selected, he filed a complaint for prohibited practice based on the provisions of the CFL. Presumption of Prohibited Practice Section 46 of the CFL prohibits an employer from requiring knowledge of a language other than French, except when such a requirement is necessary for the performance of duties. The provision reads, in part, as follows: 46. An employer is prohibited from requiring a person, in order for the person to be able to keep a position, or to obtain a position through, in particular, recruitment, hiring, transfer or promotion, to have knowledge or a specific level of knowledge of a language other than the official language, unless the nature of the duties requires such knowledge; even in the latter case, the employer shall first take all reasonable means to avoid imposing such a requirement. [...] The second paragraph of section 45 of the CFL equates the requirement for knowledge of a language other than French in the context of employment to a prohibited practice: 45. The fact that an employer requires a person to have knowledge or a specific level of knowledge of a language other than the official language to keep a position or to obtain a position, in particular through recruitment, hiring, transfer or promotion, is considered a prohibited practice under the first paragraph, unless the employer shows, in accordance with sections 46 and 46.1, that the performance of the duty requires such knowledge and that he first took all reasonable means to avoid imposing such a requirement. Based on these provisions, the ALT confirmed that a person in a hiring process, and therefore not bound to the employer by an employment agreement, bears the burden of demonstrating that the following conditions exist to benefit from a presumption of prohibited practice. They must:8 apply to a position in response to a job posting by the employer;9 demonstrate that the employer requires knowledge, or a specific level of knowledge, of a language other than French to access the position;10 and file a complaint within 45 days after the occurrence of the practice complained of.11 The ALT concluded that the complainant did indeed prove that all the conditions to apply the legal presumption of prohibited practice were met, such that it is presumed that the language requirements associated with the employer’s job posting violated the CFL. At that stage, it was a simple presumption. The presumption in favor of the complainant places the burden of proof on the employer, requiring it to demonstrate why the language requirement associated with the position was necessary, and that all reasonable means were taken to avoid imposing it. In order to prove the second criterion, the employer must show that it conducted an analysis of reasonable means before imposing the language requirement, and that it had indicated the reasons justifying this requirement in the job posting. Assessment of Language Requirements The defendant argued that the requirement for knowledge of English and Korean is necessary because the position includes tasks such as acquiring equipment on the international market, and because the defendant’s representative and employees communicate in Korean. In its analysis of these arguments, the ALT reaffirmed that the legislator has provided that any law must be interpreted in a manner that promotes the use and protection of the French language.12 Thus, the ALT emphasized that, to achieve the objectives of the law, a narrow interpretation must be made of the exceptions set out in the CFL, and that the criteria set out in sections 46 and 46.1 of the CFL are cumulative for each language requirement involving a language other than French. The ALT further noted that any decision to require knowledge of a language other than French to access a position must be based on a thorough and well-documented understanding of the actual constraints of the service in question.13 In this case, the ALT found that the defendant had failed to meet its burden of proof. First, the reasons justifying the English and Korean language requirements were not included in the job posting, an omission which in itself contravenes section 46 para. 2 of the CFL. Furthermore, the defendant failed to provide evidence regarding the nature of the positions already held within the company and the tasks associated with them, nor did it demonstrate the English language proficiency that was already required of employees. Lastly, according to the evidence, all employees in the company’s supply and logistics department spoke Korean. However, the defendant failed to prove that it had ascertained, prior to publishing its job posting, that the knowledge of English and Korean already required of other employees was insufficient. It also failed to demonstrate that it had limited the number of positions involving tasks requiring knowledge of either of these languages to the greatest extent possible. As a result, the ALT concluded that the defendant had not taken all reasonable measures to avoid imposing these requirements and, therefore, did not succeed in rebutting the presumption of prohibited practice. Limited Defence The defendant claimed that it was not because the complainant had insufficient knowledge of languages other than French that he was not hired, but rather because he lacked the skills required for the position. However, the ALT concluded that the CFL does not allow a defendant to raise an additional defence, such as having another just and sufficient cause that does not relate to the requirement for knowledge of a language other than French, to be used to avoid the application of the presumption. Since the defendant failed to prove that the performance of the task required knowledge of a language other than French, and because it failed to previously take all reasonable measures to avoid imposing such a requirement, the simple presumption became an absolute presumption, and the defendant cannot counter it with any other defence. Consequently, when a hiring process includes language requirements other than French and does not comply with the conditions of section 46.1 of the CFL, the process becomes irreparably tainted by an unlawful motive. The ALT thus confirmed that the only way to rebut the presumption of section 45, paragraph 2, and section 46 of the CFL, is to demonstrate that the performance of the duties requires knowledge of a language other than French, and that the employer has preemptively taken all reasonable means to avoid imposing such a requirement. The ALT therefore upheld the complainant’s complaint and reserved its powers to determine the appropriate remedies. Conclusion This decision marked a significant turning point in the application of the CFL. The ALT emphasized the importance of complying with the new provisions introduced by Bill 96, which aims to strengthen the language rights of Quebec workers. This decision serves as a reminder to employers of the obligation to clearly justify any language requirement and to demonstrate that they have taken all reasonable measures to avoid imposing conditions contrary to the CFL. Furthermore, this decision unequivocally rules out the possibility of defending against such a complaint with a defence based on the existence of another just and sufficient cause to justify the employer’s decision. It is crucial for businesses in Quebec to ensure compliance with these rules to prevent potential litigation, while respecting the fundamental right of workers to carry on their activities in French. Moreover, in light of this decision enforcing the prohibition on imposing language requirements under the amended CFL, it will also be pertinent to monitor how the ALT might eventually interpret the notion of “unreasonable reorganization” of a business. Indeed, the CFL stipulates that the first paragraph of section 46.1 must not be interpreted in a way that imposes on an employer an unreasonable reorganization of its business. Such an interpretation could provide employers with a way to avoid being bound by the conditions provided by the CFL. It will be important to closely follow any subsequent developments. Kim c. Ultium Cam, 2024 QCTAT 3295. CQLR, c. C-11. SQ 2022, c. 14. S. 46 para. 1 of the CFL. S. 46 para. 2 of the CFL. CQLR, c. N-1.1. S. 47 of the CFL. S. 47.2 para. 2 of the CFL, which refers to the Labour Code, CQLR, c. C-27, s. 17 with the necessary modifications. S. 46 of the CFL. S. 46 of the CFL. S. 47 of the CFL. Interpretation Act, CQLR, c. I-16, s. 40.3. Gatineau (Ville de) c. Syndicat des cols blancs de Gatineau inc., 2016 QCCA 1596.

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October 29, 2024

Employers’ Right to Require Medical Certificates: New Restrictions as of January 1, 2025

Quebec is currently facing a major shortage of physicians. To remedy the situation, several ministers in the CAQ government announced in early 2024 that significant changes would be implemented to reduce physicians’ administrative burden. In this context, on October 9, 2024, the National Assembly assented to Bill 68, An Act mainly to reduce the administrative burden of physicians.1 The provisions of the Act The new Act comprises 11 sections, many of which introduce amendments to the Act respecting labour standards2 (ALS) by restricting the right of employers to require documents attesting to the reasons for certain absences. Under the current legislation, an employer may be entitled to require a document from an employee who misses work owing to sickness in order to assess the reasons for the absence, its duration, or the employee’s ability to return to work. This is because, under the terms of a contract of employment,3every employer is entitled to expect their employee to fully perform the work agreed upon. Depending on the circumstances, the supporting document provided must in some instances indicate a specific medical diagnosis, an estimated duration of absence and other details relevant to handling the employee’s absence. In keeping with these principles, section 79.2 of the ALS provided that an employer informed of an absence owing to sickness, an organ or tissue donation, an accident, domestic violence, sexual violence or a criminal offence may, “[i]f it is warranted by the duration of the absence or its repetitive nature, for instance, [...] request that the employee furnish a document attesting to those reasons.” According to arbitral jurisprudence4 and that of the Administrative Labour Tribunal5, unwarranted refusal to provide such a document may constitute valid grounds for imposing an administrative or disciplinary measure, depending on the circumstances. That said, the new Act as adopted changes this balance. Indeed, a paragraph has been added to section 79.2 of the ALS specifying that “[...] no employer may request the document referred to in the first paragraph for the first three periods of absence not exceeding three consecutive days taken over a period of 12 months.” It will therefore be prohibited to require a supporting document, including a medical certificate, for the first three short-term absences (less than four days) occurring over the 12 preceding months. According to the comments of the Minister of Labour, such calculation of absences is to begin with the first absence during the year rather than as of January 1st of each year.6 The Act does not provide for an exception in cases where absences are excessive or otherwise questionable. Under which conditions will employers be entitled to require a medical certificate? Under the Act, employers retain the right to require a medical certificate where the absence is likely to last four consecutive days or more. What is more, the provision does not deny employers the right to investigate situations that appear questionable. The aforementioned prohibition will also apply to employers whose employees are governed by the Act respecting labour relations, vocational training and workforce management in the construction industry.7 Furthermore, the Act includes an amendment to the provisions relating to family or parental leave and absences. The third paragraph of section 79.7 of the ALS is amended so as to prevent employers from requiring a medical certificate to justify such absences. However, we believe this amendment in no way affects their right to require any other type of documentation, particularly as regards obligations relating to daycare services or educational institutions. Where an offence is committed, the penal provisions already included in sections 139 to 147 of the ALS apply. As these amendments are of public order and take precedence over any contract, policy or collective agreement, any measure imposed on an employee that would contravene any of these new obligations may be deemed invalid or result in a prohibited practice complaint. How will the Act affect insurers and employee benefit plan administrators? On another note, the Act mainly to reduce the administrative burden of physicians also introduces a new prohibition applicable to insurers and employee benefit plan administrators. They will no longer be entitled to require that a medical service, such as a consultation, be received in order to reimburse the cost of services or a technical aid, nor will they be entitled to require that a medical service be received at a predetermined frequency different from that considered appropriate by the attending physician for the purpose of maintaining the payment of disability benefits. Coming into force The amendments to the ALS will come into force as of January 1, 2025. The amendments concerning insurers and employee benefit plan administrators will apply subsequently at a date or dates to be set by the Government. S.Q., 2024, c. 29. CQLR, c. N-1.1. Civil Code of Québec, CQLR, c. CCQ-1991, art. 2085. See in particular the case law cited in Linda Bernier, Guy Blanchet and Éric Séguin, Les mesures disciplinaires et non disciplinaires dans les rapports collectifs du travail, 2nd ed. Cowansville, Éditions Yvon Blais, loose-leaf, updated to May 30, 2024, paras. 1.055 et seq. See in particular : Marchessault et CPE Les Petits Adultes, 2019 QCTAT 1632, paras. 37–38; Labourdette et Protecteur du citoyen, 2019 QCTAT 4831, para. 52. COMMITTEE ON LABOUR AND THE ECONOMY, Clause-by-clause consideration of Bill 68, An Act mainly to reduce the administrative burden of physicians, October 1, 2024. CQLR, c. R-20.

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August 1, 2024

Major change to the Canada Labour Code with new anti-replacement-worker provisions

Bill C-58, An Act to amend the Canada Labour Code and the Canada Industrial Relations Board Regulations, 2012, was passed on June 20, 2024, introducing anti-replacement-worker provisions to the Canada Labour Code. While anti-replacement-worker legislation has existed in Quebec since 1977, nothing of the sort existed for federal jurisdiction employers. Before Bill C-58, federal legislation only stipulated that an employer or a person acting on behalf of an employer could not use replacement workers “for the demonstrated purpose of undermining a trade union’s representational capacity rather than the pursuit of legitimate bargaining objectives.” Unions faced a heavy burden of proof to demonstrate that replacement workers were being used for this purpose. As a result, union activists have been pushing for decades for more protection during labour disputes. New anti-replacement-worker provisions Bill C-58 adds a new subsection to section 94 of the Canada Labour Code on unfair practices, which limits and regulates the use of replacement workers during strikes and lockouts. The new provisions no longer require unions to demonstrate the employer’s intention to undermine the union’s representational capacity and they prevent federal jurisdiction employers from using the services of any of the following persons to perform the duties of an employee who is in the bargaining unit on strike or locked out: Any employee hired after the day on which notice to bargain collectively was given. Any person who performs management functions or who is employed in a confidential capacity in matters related to industrial relations, if the person was hired after the day on which notice to bargain collectively was given. Any contractor, other than a dependent contractor, or any employee of another employer whose services were not being used on the day on which notice to bargain collectively was given. If, before the day on which notice to bargain collectively was given, an employer was using the services of a contractor or an employee of another employer and those services were the same as or substantially similar to the duties of an employee in the bargaining unit, they may continue to use those services during a labour dispute, so long as they do so in the same manner, to the same extent and in the same circumstances as they did before the notice was given. Any employee whose normal workplace is a workplace other than that at which the strike or lockout is taking place or who was transferred to the workplace at which the strike or lockout is taking place after the day on which notice to bargain collectively was given. Any volunteer, student or member of the public. Any employee who is in a bargaining unit on strike or locked out. However, the new provisions allow employers to use the services of such persons during a strike or lockout as long as the services are used solely to deal with a situation that presents or could reasonably be expected to present one of the following imminent or serious threats: A threat to the life, health or safety of any person. A threat of destruction of, or serious damage to, the employer’s property or premises. A threat of serious environmental damage affecting the employer’s property or premises. The use of the services must be necessary in order to deal with the situation because the employer is unable to use the services of the employees on strike or locked out. As in Quebec’s Labour Code, an employer may only rely on the services of a person referred to above for conservation purposes, and not for the purpose of continuing the supply of services or production of goods by the employer. Finally, the bill specifies that the employer must first offer these conservation duties to the employees who are on strike or locked out. The bill also includes provisions applicable to employers who contravene the anti-replacement-worker provisions. These offences can result in fines of up to $100,000 per day. The government may also ensure compliance with the new provisions by adopting regulations to establish an administrative framework with financial penalties. New provisions regarding the maintenance of activities during a strike or lockout In order to prevent imminent and serious threats to public health and safety, Bill C-58 provides that the union and employer must reach an agreement on the activities to be maintained in the event of a labour dispute. If no activities need to be maintained, the parties must still enter into an agreement to this effect. An employer and a union must enter into this agreement no later than 15 days after the day on which notice to bargain collectively was given to the Minister of Labour and the Canada Industrial Relations Board. If the parties do not reach an agreement, the matter will be brought before the Board at the request of one of the parties. The 72-hour strike or lockout notices referred to in section 87.2 of the Canada Labour Code may be given only once this agreement has been reached and a copy has been filed with the Minister and the Board, or if no agreement has been reached, if the Board has determined an application made by one of the parties. Coming into force Bill C-58 will come into force on June 20, 2025. Until then, the new anti-replacement-worker provisions will undoubtedly cause federal jurisdiction employers to seriously consider their bargaining power and level of preparedness for possible labour disputes. Our team is here to help you through this process.

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July 23, 2024

Requirements to Prevent and Reduce the Risk of Forced Labour or Child Labour: What Businesses Need to Know to Comply

On May 11, 2023, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, S.C. 2023, c. 9 (the “Act”) was passed. The purpose of this Act is to implement Canada’s international commitment to contribute to the fight against forced labour and child labour, and to require certain entities to report on the measures they have taken to reduce the use of forced labour and child labour. The Act came into force on January 1, 2024, and reporting entities and federal institutions were required to submit their first report under the Act by May 31, 2024. In addition, Public Safety Canada (the “Government”) released the Guidance for reporting entities. Scope of the Act The Act applies to government institutions and to any corporation, partnership, trust or other unincorporated organization that (i) is listed on a stock exchange in Canada or (ii) 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: (a) it has at least $20 million in assets (b) it has generated at least $40 million in revenue (c) it employs an average of at least 250 employees (collectively, the “entities”) Or (iii) is prescribed by regulations. The obligation to report applies to any entity (a) producing, selling or distributing goods in Canada or elsewhere; (b) importing into Canada goods produced outside Canada; or (c) controlling an entity engaged in any of these activities. Entities are considered to be operating in Canada if they produce, sell or distribute goods in Canada. They may also be considered to be operating in Canada if they have employees, if they make deliveries, purchases or payments in Canada, or if they have bank accounts in Canada. It is important to note that doing business in Canada does not require having a place of business in Canada. Forced Labour vs. Child Labour For the purposes of this Act, child labour is defined as labour provided by minors that (i) is provided or offered to be provided in Canada under circumstances that are contrary to the laws applicable in Canada; (ii) is provided or offered to be provided under circumstances that are physically, socially or morally dangerous to them; (iii) interferes with their schooling; or (iv) constitutes the worst forms of child labour, as defined in article 3 of the Worst Forms of Child Labour Convention.1 Forced labour is labour provided by a person (i) in circumstances in which it would be reasonable to believe that their safety or that of a person known to them would be threatened if they failed to provide such labour; or (ii) in circumstances which constitute forced or compulsory labour, as defined in article 2 of the Forced Labour Convention.2 Entities With Reporting Obligations Any entity required to report annually to the Government under the Act must include in its report the steps taken during its previous financial year to prevent and reduce the risk of forced labour and child labour. In order to comply with the obligations imposed by the Act, the entity must also include in its report information on its structure, its activities relating to the production, sale, distribution or importation of goods, as well as the type of goods and place of operation, and the countries or regions involved in its supply chains. Lastly, the report must include a brief explanation of the entity’s due diligence policies and processes regarding forced labour and child labour, information on the training provided to employees, and the parts of its business that carry a risk of forced labour or child labour. Given that the steps taken to prevent and reduce forced labour and child labour can result in a loss of income for vulnerable families, the Act requires entities to identify the measures taken to mitigate such impact on these families. Publication of Reports Entities must not only comply with the format, approval and attestation requirements for their report before submitting it to the Government but also make it available to the public by publishing it on a prominent place on their website. They can submit their report in one of the two official languages, although the Government recommends that reports be published in both English and French. In addition, the Act requires entities incorporated under the Canada Business Corporations Act or any other federal law to provide a copy of the report to each shareholder at the same time as their annual financial statements. Offences and Fines Reporting entities that fail to submit their report or make it available to the public are liable to a fine of not more than $250,000 per offence.3 The senior executives, directors and employees of an entity are also liable to fines and criminal prosecution should the entity contravene the Act.4 Any offence committed by an entity may also entail reputational risk. Our Advice Introducing policies, procedures, audit tools and other rules—or improving existing ones—to prevent and reduce modern slavery is essential. Such policies and rules may include procedures for reporting and an investigation process to address concerns, as well as a whistleblower protection system (whistleblower policy or similar measures). Businesses should think about how they select suppliers and whether they should adopt rules for monitoring the activities of their suppliers and partners. They should also consider updating their agreements with existing suppliers or partners to ensure compliance with the requirements of the Act, in particular by including provisions prohibiting the use of forced labour or child labour in suppliers’ business activities. Other measures may include raising awareness and training staff, directors and officers on how to implement company policies and procedures aimed at identifying and preventing forced labour and child labour. Our team has developed tools to help reporting entities identify the parts of their business that carry a risk of forced labour or child labour. We will be monitoring upcoming government publications in response to the first reports that reporting entities submit and, if need be, we will release another article to clarify reporting obligations. For any questions or advice relating to your obligations under the Act, do not hesitate to contact our team. Section 1 of the Act; see also the Worst Forms of Child Labour Convention, adopted in Geneva on June 17, 1999, article 3: Link Section 1 of the Act; see also the Forced Labour Convention, adopted in Geneva on June 28, 1930, article 2: Link Section 19 of the Act. Section 20 of the Act.

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