The Federal Pay Equity Act – Employer Obligations as of November 1, 2021
The federal Pay Equity Act (“the Act”) came into effect on August 31, 2021. The Act was introduced as Bill C-86 under the Budget Implementation Act, 2018 No. 2 and received Royal Assent in December 2018. Starting November 1, 2021, employers will be required to take steps towards complying with their obligations under the Act.
What is the Purpose of the Act?
The Act’s purpose is the achievement of pay equity. The Act is aimed at ameliorating systemic gender-based discrimination in employer’s compensation practices and systems. The Act recognizes the wage gap in predominately female job classes and seeks to ensure equal pay for work of equal value, while also recognizing the diverse needs of employers.
Who does the Act Apply to?
The Act applies to all federally regulated employers with an average of 10 or more employees. This ranges from the private sector (e.g. banking, communications and transportation) to the public sector (e.g. federal public service) and Parliamentary institutions (e.g. the House of Commons and Senate).
Currently, exemptions apply to the governments of Yukon, the Northwest Territories, and Nunavut and Indigenous governing bodies.
By November 1, 2021, employers are required to provide notice to employees of the commencement of a pay equity process. The information an employer is required to provide depends on the size of the employer.
- Employers with 100 or more employees or with 10-99 employees, where some or all are unionized, are required to provide the following information in their notice:
- the employer’s obligation to establish a pay equity plan;
- the employer’s obligation to make all reasonable efforts to establish a pay equity committee;
- the requirements for the committee’s membership;
- inform non-unionized employees of their right to designate committee members; and
- inform unionized employees, if any, that their bargaining unit will select committee members.
- Employers with 10-99 non-unionized employees are required to provide the following information in their notice:
- the employer’s obligation to establish a pay equity plan; and
- if it has decided to a establish a pay equity committee, it must set out the committee’s membership requirements and inform employees of their right to designate members.
The Act provides for the option to create a pay equity committee to assist in the creation and implementation of the pay equity plan. The degree of optionality varies among types of employers. Employers with 100 or more employees and employers with 10-99 employees, where some or all are unionized, are required to make all reasonable efforts to establish a pay equity committee. An employer with 10-99 non-unionized employees can voluntarily establish a pay equity committee, but in doing so, is required to provide notice to the Pay Equity Commissioner.
The Act sets out requirements for the pay equity committee’s composition. A pay equity committee must have a minimum of three members and meet the following requirements:
- at least two-thirds of its membership must represent the employees to whom pay equity relates;
- at least 50% of the members must be women;
- at least one member must represent the employer;
- at least one member from each bargaining unit for unionized employees, where applicable; and
- at least one elected member for non-union employees, where applicable.
To develop a pay equity plan, an employer, or where applicable, the pay equity committee, must take the following steps:
- Identify the different job classes of positions in the workplace.
- Determine whether a job class is predominately female, male or gender neutral.
- Determine the value of the work performed of each predominately female or male job class.
- Calculate the total compensation of each predominately female or male job class.
- Compare the total compensation of predominately female job classes with predominately male job classes doing work of equal or comparable value.
- Identify the wage gaps.
Once the employer or pay equity committee has created a draft plan, the employer must provide employees 60 days to review and provide written feedback. A final pay equity plan and notice of any pay increases is not required until September 3, 2024.
If you have any questions regarding pay equity requirements, please do not hesitate to contact any member of the Labour & Employment Group at McCarthy Tétrault.
Pay Equity Act, (S.C. 2018, c. 27, s. 416) at sections 10 and 11 [Pay Equity Act].
Pay Equity Act at section 16.
Pay Equity Act at section 19.
Pay Equity Act at section 54.