Pay Equity Act Into Force on August 31: What You Need to Know
This article is not intended or offered as legal advice and is presented for educational and information purposes only.
On July 7, Minister of Labour Filomena Tassi announced that the Pay Equity Act would come into force on August 31, 2021.
This legislation, passed in December 2018, applies to both the federal public service and federally regulated private companies with 10 or more employees.
Minister Tassi explained that the implementation of the Pay Equity Act is an important part of the Government of Canada’s commitment to close the gender wage gap and ensure that workers receive equal pay for work of equal value. It aims to put into place long-term, sustainable changes that will ensure that women’s work is valued and compensated fairly, now and into the future.
Always at the forefront of labour issues, CPHR Canada appeared before the Standing Senate Committee on National Finance on this legislation in December 2018. We provided our views on the question and made a series of recommendations including the need to set up a single pay equity committee, requests to be made to the Pay Equity Commissioner, and an estimate of salary gaps.
Here are some key takeaways on the new obligations that will come into force on August 31, from a HR perspective.
Obligations and general overview
Under this legislation, employers will be required to:
- establish a pay equity plan (within three years of becoming subject to the Act) comparing 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)
- revise and update the pay equity plan at least every five years to ensure that no gaps have been reintroduced, and to close them if they have.
Before the new law, employers could wait for an employee or union to file a complaint about unequal pay for work of equal value. But starting August 31, under the new law, all federally regulated employers must review their compensation practices, even if they have not received a complaint or they believe that there is no wage gap in their organization.
Pay increases for those who have been underpaid are slated to start September 3, 2024. Employers must also make their pay equity plans available to employees by this date.
A Commissioner with extensive powers
To ensure effective oversight and administration of this Act, a Pay Equity Commissioner has been appointed. Working with the Canadian Human Rights Commission and supported by the Pay Equity Division, the Commissioner will assist workplaces in understanding their rights and obligations under the Act and facilitate pay equity dispute resolution.
Should an employer choose not to review their compensation practices to make sure men and women are being paid fairly, the Commissioner will be able to step in and use the powers it has under the Act to require them to do so.
For every dollar earned by a man in Canada, a woman earns 89 cents.
Other Pay Equity Act requirements
By November 1, 2021, employers will be required to post a notice informing their employees that they will establish their pay equity plan. Organizations with 100 employees or more, or with unionized employees, will also need to form a pay equity committee before creating and implementing their pay equity plan. This committee can be a mix of employees. The regulations don’t provide a maximum number of members nor do they identify requirements for individual committee members.
The effort, time and money involved will most probably be significant for employers at the beginning (data gathering, setting up the committee, plan implementation, etc.). However, to counter the costs of this initiative, the Act provides for a phased-in approach and some relief measures for certain employers, such as the option of spreading out the wage increases over time if the total amount of the increases exceeds one per cent of the payroll.
The goal of the Pay Equity Act is to correct salary differences due to gender discrimination. Although this is a necessary and crucial task, it is not an easy one. Human resources professionals should not hesitate to work closely with colleagues from every department involved in the process (legal, finance, etc.) to ensure proper communications with employees and seamless pay equity plan implementation.
For more information, please see the Government of Canada website.