Unfortunately, systemic sex-based or gender-based wage discrimination has been an issue across Canada for many years. Many jobs historically held by women, despite the invaluable nature of a position, have generally remained at a lower pay scale then jobs historically held by men. In 2020, statistics show that women earned 0.89 cents for every dollar a man earned in Canada which is about a $3.52 difference in hourly rate or about 11%.[1] This is a substantial wage gab, especially when added up over many years of service. To help remedy this wage gap, the province of Ontario and the federal government have established legislation to ensure that pay equity is achieved in workplaces. Pay equity is meant to address the undervaluation of work done by women that has contributed to the large gender wage gap.
Although seemingly similar, the term “equal pay” and “pay equity” have two very different meanings. In Ontario, the Employment Standards Act creates an obligation for employers to provide equal pay which essentially means that men and women must receive equal pay for equal work. Equal pay, simply put, means that if a woman and a man are performing work in the same position, with similar skills, and in a similar environment, for the same employer, then they must be paid the same amount. On the other hand, the term pay equity goes much further than this and is described as paying men and women the same pay for work that is of the same value, even if the position is different. This means that if a man and a woman are doing two different jobs, but the value to the employer's operations is the same then the employees in those positions should receive equal pay. Provincially, pay equity is enforced through the Pay Equity Act RSO 1990, c. P7 and applies to all provincially regulated workplaces with more than 10 employees. This Act goes further than the Employment Standards Act by ensuring pay equity, rather than just equal pay.
To make this a little more complicated, a new piece of federal legislation has recently come into force in 2021 with the same name as the provincial legislation. The Pay Equity Act S.C. 2018, c. 27, s. 416 governs federally regulated workplaces and places obligations on employers to ensure that employees receive equal pay for equal work of equal value. There are major differences in the legislation but the general idea of equal pay for equal work of equal value still stands. Between the two pieces of legislation, all federally governed and provincially governed employers located in Ontario with 10 or more employees are now required to ensure pay equity is provided to their employees.
These pieces of legislation put the onus on the employer to ensure that their employees are being properly compensated and not discriminated against with regards to pay based on gender. There are individual remedies that an employee can seek for discrimination under the Ontario Human Rights Code and the Canadian Human Rights Act, however the hope is that pay equity will mitigate the need for claims based on wage discrimination for most employees.
Federally Regulated Employers
As the new Pay Equity Act S.C. 2018, c.27, s.416 recently came into force, the rest of the blog post will focus on the obligations for federally regulated employers under this new piece of legislation. Federally regulated employers are now obligated to establish and periodically update a pay equity plan. The plan is meant to ensure employers examine their workplaces to ensure that they provide equal pay to men and women who are doing work of equal value.
The Act places an obligation on employers to establish a Pay Equity Committee. If an employer has 100 or more employees, they need to ensure the committee is established whether there is a union or not and if an employer has 10-99 employees and some of whom are unionized, then they need to ensure the committee is established. This committee will need to be made up of employee representatives, employer representatives, females, males, and sometimes bargaining agents. The Act outlines the make up of the committee.
This committee is established to determine a pay equity plan. The committee needs to assess the positions within the workforce and identify different job classes. Based on those determinations, they then need to establish whether the position is one that has been predominantly filled by women or men or whether it is gender neutral. The employer and the committee need to honestly assess what value those positions add to the company and what skill is needed to competently perform the job duties. The committee must then calculate the compensation for each job class that is either predominately filled by women or men. From there, they should be able to compare the compensation of these positions and the value added to the organization and ensure that positions held by predominantly female employees of equal value to positions predominately held by male employees, are provided equal pay. Once the plan has been established, it needs to be posted and put into action by September 2024.
There is a lot of detailed guidance in the Act and the Regulations and even some formulas that employers can use to calculate proper compensation and a position's value to the organization. Through this plan, the employer can ensure that equal work of equal value is being compensated equally and gender-based discrimination regarding wages is not present within their workplace.
If an employer finds that the compensation for predominately female positions in their workplace is indeed lower, despite equal value, then they need to increase the compensation to be in compliance with the legislation. The employer will have 3 years (September 2024) after the legislation comes into force to ensure the plan is established and followed. The plan will need to be reviewed and updated periodically as well to make sure that any new wage gaps are closed and that the organization is ensuring pay equity. There are reporting requirements in place (first report due June 30th, 2025) and all of this is enforced by the Pay Equity Commissioner. There are penalties for employers who do not comply as outlined in the Act.
If the employer wishes to use multiple pay equity plans, then they need to submit an application to the Pay Equity Commissioner. The Commissioner is tasked with a variety of roles, some of which include decision-making authority, dispute resolution, and remedial actions. This role is especially important as the legislation is new and will take time to flesh out the practical details as it is put into place over the next few years. The Federal Pay Equity Tribunal is available for referrals from the Commissioner regarding questions of law.
This new legislation is much needed and will hopefully make a positive impact to end the wage gap between men and women in Canada. Placing the onus on employers will hopefully ensure that there is more awareness regarding gender-based wage discrimination and that proactive and positive steps are taken to mitigate future gaps as well as remedy the current issues.
[1] https://www.payequitychrc.ca/en/about-act/what-pay-equity