Pay Equity Act Canada: Quick Overview Of Obligations

One of the more recent HR disciplines is equal pay for equal work, aka ‘pay equity.’ HR Strategies Consulting Inc’s founder and CEO, Ruby Maini, has a particular interest in pay equity having served on committee, and heading many pay equity projects in the past.

The new legislation – Pay Equity Act – is an Act to establish a proactive pay equity regime within the federal public and private sectors in Canada. This will bring about a dramatic shift in how the right to pay equity is protected in federally regulated workplaces.

The Pay Equity Act will direct employers to take proactive steps to ensure that they are providing equal pay for work of equal value. The Act will apply to federally regulated public and private sector employers with 10 or more employees as well as Ministers’ offices. 

The new legislation will require employers to:

Establish a pay equity plan within three years of becoming subject to the Act. 

The pay equity plan must:

  • Indicate the number of employees;
  • Identify job classes within the workplace;
  • Indicate what gender is predominant in each class;
  • Evaluate the value of work performed by each job class;
  • Identify the compensation associated with each job class;
  • Compare the compensation associated with female- and male-predominant job classes of similar value;
  • Set out the results of the comparison, identifying which female-predominant job classes require an increase in compensation and when increases in compensation are due
  • Provide information on the dispute resolution procedure available to employees.

Employers will also be required to post notices setting out their obligations and reporting on their progress in fulfilling each of the areas above.

You’ll need a committee

The pay equity plans must be reviewed and updated at least once every five years by a joint Pay Equity Committee. Larger employers (with 100 or more employees) and all unionized workplaces with greater than 10 employees will be required to establish a pay equity committee for the purposes of developing a pay equity plan and reviewing the plan as required. Fifty percent of the committee must be made up of women.

You’ll also need to implement strategies to achieve the following:

Provide employees with the opportunity to comment on a proposed pay equity plan (or update) before it is finalized and require that any comments be taken into consideration before finalizing the plan;

Submit annual statements to the Pay Equity Commission regarding pay equity plans;

Provide mechanisms to request the review or appeal of decisions of the Pay Equity Commissioner;

Employers need to take time to understand the implications the legislation has on their organizations as it covers salaries, commissions, vacation pay, bonuses, employer contributions to pension plans, health insurance plans and other forms of remuneration.

What can you do to prepare your organization?

  • Do the initial pay equity exercise
  • Find out if there is a wage gap between employees doing comparable work.
  • Analyze job categories and salaries.
  • Adjust salaries

You might discover that employees in jobs traditionally or mostly done by women are paid less than employees in comparable jobs that are traditionally or mostly done by men. If this is the case, you will have to fix the wage gap by raising salaries. 

Gender predominance is determined by looking at the current, historical and stereotypical profile of employees who hold that role and determining if 60 per cent or more are of the same gender.

  • Remove salary history from the recruitment process 

Take the question off your job applications and train your hiring managers not to ask any questions related to compensation during the recruitment or interview process.

  • Review your compensation practices

Ensure that only non-discriminatory factors, such as education or experience, account for pay differentials. It is important that equally situated individuals who do similar jobs are not receiving disparate compensation that can be perceived as being due to factors such as gender, ethnicity, disability, nation of origin or any other protected category. 

  • Be prepared to offer pay scales 

While offering your salary range to candidates is not yet a law in most places, this kind of transparency is still good HR practice. Being up-front with compensation can help protect you from complaints of discrimination as well as foster a company culture of fairness. 

  • Train your hiring managers to have salary discussions in an appropriate way. 

Be clear you are asking for what they desire, just to make sure you aren’t wasting anybody’s time, and not what they’ve made in the past.

Tools to maintain pay equity

The Pay Equity Act requires employers to have policies in place that will maintain pay equity once they have established it.

There are several tools to help you maintain pay equity in your workplace.

  1. Maintain your job comparison results.
  2. Use job evaluation and job comparison system that you have developed to establish pay equity as a useful tool in maintaining pay equity.
  3. Keep a structured compensation system to ensure that fairness and consistency are practiced in salary administration.
  4. Review timeframes on a regular basis – deciding when you will deal with changes to job classes. 
  5. Keep a record of the job evaluations from your initial comparison process. 
  6. Tell your employees that you are maintaining pay equity. 

Get help when needed!

This new Federal pay legislation is a lot for HR departments to digest alone. If you would like to discuss setting up your pay equity audits, or any part of your pay equity plan, from consultation to implementation, we are happy to help. Contact Us directly 1-905-886-2097

Want to know if your organization already has a pay equity plan in place? 

Download our Quick Questionaire to find out


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