Labour & Employment Law Insights

New Legislation Requires Federally-Regulated Employers to be Proactive in Ensuring Pay Equity

November 19, 2018 | By Natalie Garvin

Legislation | Pay Equity

Bottom Line

On October 29, 2018, the federal government introduced An Act to Establish a Proactive Pay Equity Regime within the Federal Public and Private Sectors (the “Pay Equity Act”). This will require employers to be proactive in ensuring that employees of all genders are compensated equally for work of equivalent value.

Purpose of the new act

The federal government has indicated that the new Pay Equity Act is intended to address the systemic gender-based discrimination experienced by employees in predominantly female job classes. By requiring employers to take a proactive approach, the federal government hopes to better protect the right to pay equity.

If passed, the new legislation will apply only to federally regulated employers with 10 or more employees (both in the public and private sectors), Parliamentary workplaces, and the Ministers’ offices.

Employers must establish a pay equity plan

Under the Pay Equity Act, employers will be required to establish a pay equity plan. Employers with fewer than 100 employees can elect to develop the plan themselves or establish a Pay Equity Committee. However, employers with 100 or more employees must establish a Pay Equity Committee which will be responsible for developing and updating the plan.

In the spirit of the proposed legislation, the Pay Equity Committee must consist of at least 50% women. Two-thirds of the members must represent the employees, and there must be at least one employer representative.

In developing the pay equity plan, an employer and/or the Pay Equity Committee must thoroughly examine the employer’s compensation practices and systems. This will necessarily involve comparing the compensation and value of work associated with predominantly female job classes and predominantly male job classes.

Specifically, the pay equity plan must:

  • indicate the number of employees of the employer;
  • indicate whether a Pay Equity Committee has been established;
  • identify job classes within the workplace;
  • indicate the gender predominance of the identified job classes (i.e. female or male predominant, or gender neutral);
  • evaluate the value of work performed by each job class;
  • identify the compensation associated with each job class and the method used to compare compensation;
  • identify any predominantly female job class that requires an increase in compensation and the date the increase occurred; and
  • provide information on the dispute resolution procedures available to employees.

Employers will have three years to establish a pay equity plan once the Pay Equity Act comes into force. However, before the plan is finalized, employees must be given an opportunity to give feedback on the proposed plan. Pay equity plans must then be reviewed at least once every five years.

In addition, the Pay Equity Act will require the employer to post certain documents, including the pay equity plan, notices setting out employer obligations, and updates on how the employer has fulfilled its obligations.

Pay Equity Commissioner

To administer and enforce the Pay Equity Act, the federal government also proposes to establish a Pay Equity Commissioner within the Canadian Human Rights Commission. The Pay Equity Commissioner will publish research on pay equity matters, receive complaints (from employers, bargaining agents and employees), conduct investigations, engage in dispute resolution, and issue binding orders on the parties. Employers will also be required to submit annual statements regarding their pay equity plans to the Pay Equity Commissioner.

To establish the office of the Pay Equity Commissioner, the federal government has proposed to amend the Canadian Human Rights Act and the Parliamentary Employment and Staff Relations Act. If passed, these amendments will give the Pay Equity Commissioner the authority to conduct compliance audits and investigate parliamentary entities. They will also expand the maximum number of members appointed to the Canadian Human Rights Tribunal to create room for the appointment of individuals experienced in pay equity.

Check the Box

The Pay Equity Act has passed the second reading stage and has now been referred to the Standing Committee on Finance for further review. As the Pay Equity Act proceeds through the legislative process to Royal Assent, employers should keep informed about the changes with respect to their pay equity obligations and ensure they are prepared to adapt to these new requirements.

Need More Information?

For more information, please contact Natalie Garvin at 416-408-3221, or speak to your regular lawyer at the firm.

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