New Pay Equity Act for Federally Regulated Employers

The Pay Equity Act (Act), introduced as part of the Budget Implementation Act, 2018, No. 2. (Bill C-86), will come into force as of August 31, 2021, affecting federally regulated employers with 10 or more employees.

The Act and its supporting Pay Equity Regulations introduce a regime intended to “achieve pay equity through proactive means by redressing the systemic gender-based discrimination in compensation practices.” The Act aims to eliminate the gender wage gap and re-affirm Canada’s commitment to ensuring “equal pay for work of equal value.”

As of August 31, 2021, federally regulated employers subject to the Act will have three years to establish and implement a proactive pay equity plan in accordance with the requirements of the Act. Pay equity plans must be re-assessed and updated at least once every five years to ensure that no new wage gaps have been introduced, and if they have, to ensure that they are closed.

In developing their pay equity plans, federal employers will be required to:

• Identify job classes within their workplace

• Determine the gender predominance of the identified job classes

• Determine the value of work performed by each job class

• Identify the level of compensation associated with each job class

• Compare compensation associated with predominantly female job classes with the compensation associated with predominantly male job classes of similar value

• Identify predominantly female job classes that require an increase in compensation and set out a date on which the increase in compensation is payable (see Blakes Bulletin: Canada Looks To Close Gender Pay Gap Introduces Pay Equity Legislation For Federal Employers | Blakes)

Federal employers with 100 or more employees, or those with 10-99 employees where at least some of the employees are unionized, will additionally be required to develop a pay equity committee to establish and revise the pay equity plan. The pay equity committee (Committee) must be composed of at least three members and, in non-unionized workplaces, must meet the following requirements:

• At least two thirds of the members must represent the employees to whom the pay equity plan relates

• At least 50 per cent of Committee members must be women

• At least one member must be a person selected by the employer to represent the Committee

• At least one member must be a person selected by those employees to represent them

For those employers who become subject to the Act on August 31, 2021, the final version of the first pay equity plan must be posted by no later than August 31, 2024. For those not yet subject to the Act, a final version of the plan must be posted no later than the third anniversary of the date upon which the employer became subject to the Act.

The Pay Equity Commissioner will be responsible for the enforcement and administration of the Act and its supporting Regulations, which includes resolving disputes, administering compliance audits and enforcing the prescribed monetary penalties for conduct in contravention to the Act.

For further information, please contact:

Anna Abbott                             416-863-4277
Francis Laperrière Racine      514-982-4149

or any other member of our Employment & Labour group.