Although the Canadian Human Rights Act recognizes the right to pay equity, wage differences between men and women still exist. Such was the focus of the Pay Equity Act [the Act], adopted by the federal Parliament on December 13, 2018, and the accompanying Pay Equity Regulations, which will implement a proactive pay equity regime applicable to both public and private sector employers under federal jurisdiction and with at least 10 employees. As of August 31, 2021, when the Act becomes effective, employers will be held to a careful appraisal of their compensation practices and to award the pay increases required to compensate the differences between salaries paid to men and women for work of equal value.
The current regime of complaints under s 11 of the Canadian Human Rights Act will remain applicable to employers under federal jurisdiction with less than 10 employees.
Pay equity plan
At the core of this new regime is the pay equity plan that employers will have to establish and update periodically. The plan will allow finding and fixing gender-based compensation gaps for predominantly female job classes. Employers will have to establish a plan within three years of the date on which they became subject to the Act. Employers with 100 or more employees, or whose employees are totally or partially unionized, will have to establish a specially appointed pay equity committee. Employers with less than 100 employees, all non-unionized, may also voluntarily establish a pay equity committee, in which case the Pay Equity Commissioner will have to be notified. Ms. Karen Jensen, a member of the Canadian Human Rights Commission, has already been designated in anticipation of the coming into force of the Act.
Composition of the pay equity committee
A pay equity committee is composed of at least three members, at least two-thirds of whom must represent the employees to whom the pay equity plan relates; 50% or more of the members must be women. At least one member must be a representative of the employer. With unionized employees, each bargaining unit may designate one member to represent it. The committee must also include at least one member selected by the non-unionized employees.
Establishment and operation of the pay equity plan
To establish a pay equity plan, the employer, or the pay equity committee, if one has been appointed, must:
- Identify the various classes of positions in the workplace and determine for each one the dominating gender (male or female) if any, and the value of work for each category, under the criteria provided for in the Act;
- Calculate the compensation for each predominantly female or male class;
- Compare the compensation of both classes for work of equal value to reveal any difference in compensation between both classes.
Following this, employers must post their draft pay equity plan for a period of 60 days, to allow employees to make comments on the draft; those comments will have to be considered by the employer, or the pay equity committee, in the establishment of the final pay equity plan.
The final version will have to be posted within three years of the coming into force of the Act: employers will then have to increase the compensation of all predominantly female job classes that, according to the plan, receive compensation inferior to that paid to predominantly male classes. The increase will be payable on the day following the posting of the plan, at the latest. Note that certain employers will be allowed to phase in the increases for a period of three to five years if the increase represents more than 1% of their payroll.
In a unionized context, in the event of an inconsistency between the pay equity plan and the collective agreement, the plan will prevail. Increases that the employer will have to pay will be deemed to be incorporated into the collective agreement.
Update and maintenance of the pay equity plan
After its initial implementation, employers, or pay equity committees, will have to update the plans every five years, to compensate any discrepancy that could arise, ensuring that pay equity will persist. Updating the plan basically involves performing the same steps as the establishment of the initial plan every five years after that plan was established.
The few lines above provide a summary of a complex regime that could generate costly obligations for employers. As it will soon come into force, we recommend that all employers consult with a qualified advisor to help them ascertain whether the Act applies to them and prepare an adequate response.