The federal government passed the Pay Equity Act in 2018. However, it has not yet come into effect. This will change on August 31, 2021, when the Act finally comes into force. The new Act requires federal employers to establish and undergo a regular review of their pay equity plans in the workplace.

The Pay Equity Act and Federally Regulated Workplaces

The Act applies to federal workplaces, however, it does not apply to all federally regulated employers. Only those workplaces that have ten or more employees are mandated to comply with the Act. This includes both the public and private federal sector. For instance, the Prime Minister’s and other minister’s offices are regulated under the Act.

What is Considered a Federally Regulated Workplace?

The Canada Labour Code (Code) regulates a number of workplaces and industries. The Code sets out federal labour law, which regulates private and public sectors. The private sector includes:

  • Almost all federal Crown corporations, for example, Canada Post Corporation, Canadian Broadcasting Corporation, the Royal Canadian Mint, and more;
  • Port services, marine shipping, ferries, tunnels, canals, bridges, and pipelines (oil and gas) that cross international or provincial borders;
  • Radio and television broadcasting;
  • Railways that cross provincial or international borders and some short-line railways;
  • Road transportation services, including trucks and buses, that cross provincial or international borders;
  • Air transportation, including airlines, airports, aerodromes, and aircraft operations;
  • Banks, including authorized foreign banks;
  • First Nations band councils (including certain community services on reserve);
  • Telecommunications, such as, telephone, Internet, telegraph, and cable systems
  • Uranium mining and processing and atomic energy; and
  • Any business that is vital, essential, or integral to the operation of one of the above activities.

The public sector includes Parliament and the federal public service. Lastly, under Part I of the Code, private-sector firms and municipalities in the Northwest Territories, Nunavut and Yukon are also considered to be federally regulated.

How Does the Pay Equity Act Work?

Under the Act, federal employers must proactively scrutinize their compensation practice with the goal of ensuring they are providing equal pay to women and men who are doing work of equal value.

To achieve the aim of the Act, it mandates that workplaces establish and periodically update a pay equity plan. The legislation contains timing requirements, including the fact that employers must create their pay equity plan within three years of the Act coming into effect. Employers must then review and update their plans every three to five years. This is mandated in order to ensure that the employer is maintaining pay equity, and that any new pay gaps are identified and addressed.

Workplaces must take certain steps to achieve the Act’s aim, including:

  • Determine the value of work of each predominantly female or male job class;
  • Identify the different job classes made up of positions in their workplace;
  • Determine whether each job class is predominantly male, predominantly female or gender neutral;
  • Calculate the compensation of each predominantly female or male job class, and;
  • Compare the compensation between predominantly female and male job classes doing work of equal or comparable value.

How Will the Pay Equity Act Be Enforced?

The federal government has also created a new oversight body to enforce the Act and appointed a Pay Equity Commissioner, who will be responsible for the monitoring and enforcement of the Act. The Commissioner will also be responsible for dealing with any complaints of discriminatory practices related to pay equity under section 11 of the Canadian Human Rights Act.

Pay Equity Committees

Some federal employers must establish a pay equity committee, which is comprised of both employee and employer representatives. Those employers include:

  • Employers with 100 or more employees; and, 
  • Employers with 10 to 99 employees, if some or all are unionized.

Non-unionized employers with 10 to 99 employees are not required to establish a committee, but they may do so if they choose. These committees will participate in the development and periodic review of their employer’s pay equity plan and help to determine whether any increases in compensation are required within the workplace.

Contact Grosman Gale Fletcher Hopkins LLP in Toronto With Employment Concerns or Questions

The Canadian government regularly amends employment and health and safety laws. It is prudent for all employers to stay well-informed of changes in employment laws and health and safety laws and regulations.

For advice on employee rights, employer liability and other employment or labour law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues, including human rights matters. Contact us online or by phone at 416-364-9599 to schedule a consultation.