Federal Pay Equity Act to come into force Aug. 31

Federally regulated employers have three years to develop and implement pay equity plans

Federal Pay Equity Act to come into force Aug. 31

The federal government’s Pay Equity Act will come into force on Aug. 31 after receiving royal assent in December 2018, Minister of Labour Filomena Tassi announced on Wednesday. The final Pay Equity Regulations are also now available in Part II of the Canada Gazette.

The Act requires all federally regulated employers, which employ about six per cent of Canadians, to develop a pay equity plan within three years of becoming subject to the Act, and to pay employees if they are found to have been undercompensated.

The pay equity regime set out in the Act and its supporting regulations are intended to ensure that women and men in federally regulated workplaces – including banks, interprovincial transportation companies, federal Crown corporations, and parliamentary institutions and workplaces including the prime minister’s and ministers’ offices -- receive equal pay for work of equal value. 

Bringing the Act into force was a long time coming. “I think to appreciate where we are today, it's important that we take a step back and take a look at where we've travelled over the last few years,” Minister Tassi said at a press conference on Wednesday.

“Women have participated in Canada's workforce for many decades now, and have been responsible for at least one-third of our country's economic growth,” she said. But the average hourly earnings among full-time and part-time workers have shown that for every dollar a man earned in Canada, a woman earned 89 cents.

“I think we can all agree that's not acceptable, and that is something that we needed to change.”

Pay equity compares compensation given to workers in different jobs, and in particular compares compensation in “predominantly female job classes” to “predominantly male job classes” in order to ensure that women are not paid less than men for doing work of equal value, albeit in different occupations. This differentiates “pay equity” from “equal pay for equal work.”

“In order to address the gender pay gap we had to look at how society valued traditional work done by women,” Tassi said. Women have been overrepresented in fields such as the caring occupations, social services and customer service; “those sectors are often undervalued and underpaid compared to historically male dominated fields requiring similar skill, effort and responsibilities.”

The government’s approach therefore needed to take into account the complexities of workplaces “and the norms that have become embedded over time in our institutions,” she added. “We'd have to put in place solutions at the institutional level that would be sustainable both in practice, as well as in the long term.”

In 2019, Canada's Pay Equity Commissioner, Karen Jensen was appointed, and the first and second set of regulations to implement the Pay Equity Act were developed, with significant stakeholder consultation. The Pay Equity Division will play a key role in education and promotion, including development of tools and educational materials; dispute resolution; and enforcement and compliance measures.

What the Pay Equity Act requires

The government explains in a backgrounder that, once the legislation comes into force, employers with 10 or more federally regulated employees will be required to:

  • establish a pay equity plan within three years of becoming subject to the Act that examines differences in compensation between positions of equal value that are mostly held by women and those mostly held by men;
  • eliminate differences in compensation identified in the plan (within three to five years, depending on the size of the employer and the total amount of the wage adjustments due); and
  • revise and update the pay equity plan at a minimum of every five years to ensure that no gaps have been reintroduced and to close them if they have.

Employers will be required to post a notice by Nov. 1, 2021, informing their employees that they will establish a pay equity plan. To develop such a plan, employers must evaluate the work done primarily by women and that done primarily by men in their workplaces, and then ensure that the work done primarily by women that is of equal value to the work done primarily by men is paid the same. Employers of 100 employees ore more, or with unionized employees, will also need to form a pay equity committee.

Employers must then pay any compensation adjustments owing, as well as post their pay equity plans, by Sept. 3, 2024. The Pay Equity Division has been consulting regularly with employers, employer associations, unions and employee associations to inform them of the coming requirements under the Act.

Resources and supports

The Pay Equity Division is also developing guidance and information documents to help employers employees and unions understand their obligations and rights under the Pay Equity Act, including explanations of technical terms and concepts. A downloadable tool is also being developed for small- and medium-sized employers to build a Pay Equity Plan by inputting their compensation and job data.

“The tool then provides a job evaluation instrument, and it does all of the calculations needed to determine if there are any wage gaps in the enterprise,” Jensen said. an online dispute resolution platform is also being developed to resolve disagreements that arise between employers, employees and unions “in a fast and fair and economical way.”

A long time coming

“Women in federally regulated workplaces have had to wait far too long to get the proactive pay equity protections that have been in force in Ontario since 1988 and Quebec since 1996,” says Mary Cornish of Cornish Justice Solutions in Toronto, who has spent her legal career advancing equality rights.

A 2004 Federal Pay Equity Task Force report called for this law, says Cornish; “that was ignored by the Harper government. The Liberals promised in the 2015 election to bring in such a law. Six years later we are finally getting such a law in force, but payouts to women are delayed another three years, to 2024.” The payouts should have been retroactive to the date the Act comes into force, she says: Aug. 31, 2021.

“The ongoing delays have just allowed employers to keep the money which should rightfully have been in women's paycheques,” she adds. “The right of women to be paid based on the value of their work and not their gender is an international human right. It must be rigorously enforced.”

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