New legislation applies to all federally regulated employers with more than ten employees
On Nov. 1, the first requirement of Canada’s new federal pay equity legislation will come into effect, requiring affected employers to notify their employees of their new pay equity process and establish a committee of employer and employees.
The Pay Equity Act, which came into force on Aug. 31, applies to all federally regulated public and private employers with more than ten employees. The Act is a massive, multi-year undertaking that aims to help ensure that women’s work is valued and compensated fairly compared to men’s work.
“It’s a big piece of legislation,” says Wendy Glaser — who in September joined KPMG in Canada as its first director of pay equity — and employers must understand how it applies to them.
The new Act will have a wide-ranging impact across federally regulated businesses and organizations, including airlines and airports, banks, radio and television broadcasting, and telecommunications, which account for thousands of employees across Canada. It will affect HR and compensation strategies, governance, risk management, collective bargaining, costing and change management and help close the gender wage gap.
Read more: Federal Pay Equity Act to come into force Aug. 31
“Pay equity is really a critical part of the ‘E’ [in] diversity, equity and inclusion,” says Glaser, who works closely with KPMG Law’s Employment and Labour practice. “It’s important for ensuring that there’s equitable opportunity for every employee in an organization. What we’re seeing is that businesses that invest and promote in pay equity … are really able to show their employees using concrete actions – so, increasing compensation in female-dominated jobs — that they’re committed to their DE&I strategy.”
Although the pay equity legislation is new to federal employers, similar legislation has been enforced in Ontario and Quebec since 1987 and 1996, respectively, in the public and private sectors. Provincial and federal pay equity requirements necessitate a complex analysis to determine which jobs require a salary increase.
Unlike “equal pay for equal work,” pay equity requires an analysis of the value of jobs, taking into account the required qualifications, responsibilities, effort involved and working conditions.
Coming up to Nov. 1, “we’re sending our reminders to clients,” says Glaser, that they must post a notice to all employees informing them of their intention to create a pay equity committee. The Act requires this notice for federally regulated employers that are unionized and those with over 100 employees. Employers must also develop a pay equity plan by that date.
Canada’s Pay Equity Act is significant in requiring cooperation between employers and employees, Glaser tells Canadian Lawyer. Employees can join a pay equity committee, which provides “a great opportunity for employees to have a say in how the pay equity exercise is carried out and ultimately to ensure that they’re being treated equitably,” she adds.
In preparation for implementing pay equity plans, employers are starting to put together project teams to oversee the pay equity process, and engaging with pay equity professionals to understand important next steps, says Glaser. “This includes establishing timelines and milestones, budgeting, and communicating with internal and external teams like Human Resources, Labour Relations, Legal and Total Rewards.”
Employers are also preparing by assessing the availability of data, she says, and determining who will be responsible for collecting data, and reviewing documents such as job descriptions.
And they are starting to establish their pay equity committees, which is a necessary first step before developing the pay equity plan. There are also specific criteria about the composition of the pay equity committee, including a 50-per-cent representation of women.
“Because the pay equity process can be complex, employers are also looking to provide training to their project team and pay equity committee as well as other relevant stakeholders,” she says.
Finally, pay equity is “not a one-and-done process,” Glaser notes. “It’s the employer’s responsibility to ensure that pay equity is maintained in their compensation practices,” which for federally regulated employers means conducting “a deep dive into their compensation practices every five years. That’s the legal obligation.
“It’s really something that has to be done on an ongoing basis, made part of your annual process, [to] ensure that you continue to be pay-equity compliant.”
The Government of Canada provides a “Step by Step to Pay Equity” kit for employers.
