What is the Pay Equity Act in Canada?

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Although gender gap pay is a recurring issue in most organizations globally, most companies in Canada are devoid of any gender bias regarding employees’ rights, wages, and compensations.

In Canada, workers have the right to workplace compensation and benefits that are free from gender bias. Generally, this right is referred to as pay equity, and this article will be reviewing what it entails in Canada.

What is Pay Equity in Canada?

Pay equity means that all employees in an organization or establishment will get equal pay and equal compensation for doing equal work. That is, regardless of gender and other factors, as long you performed the same tasks as your colleagues, you will receive equal pay for the job done.

Pay equity in Canada aims to enforce employers to pay both male and female employees equally for doing an equal amount of work. This is why Canada’s federal government, on October 29, 2018, introduced the Pay Equity Act in Parliament. However, this Act is not in use yet as it will only be passed as law on an established date by the Governor in Council.

Since the pay equity Act is not active yet, the Canadian Human Rights Act (CHRA) protects employees’ rights to pay equity. In addition, there is a pay equity law that applies to all provinces and territories in Canada, with an exception for Quebec and Ontario. However, the pay equity laws apply to private organizations in Quebec and Ontario with ten or more employees.

Pay Equity Plan

If the Act is to be enforced this year, employers have had three years to develop a single, all-encompassing and comprehensive pay equity plan.

Nonetheless, this plan will replace the complaint-based model and shift the burden of ensuring compliance from employees to employers. In addition, once this plan becomes active, employers would have had years to prepare and increase pay adjustments.

Nonetheless, the current form of pay equity practised in Canada protected by a regime under the CHRA has a complaint-based model. In addition, in this Act, the employees or unions have to complain about the wage gap and pay inequities before employers are forced to comply with pay equity laws and compensate affected employees. This is to say that there won’t be any form of compliance unless an employee files a complaint.

However, the pay equity Act aims to reduce pay inequity between male and female employees working for federally regulated employers. 

According to the Act, roles that have equal contributions to an organization irrespective of differences should get the same pay. This means that female employees will get the same compensation as their male counterparts for equal work done.

Evaluation of Pay Equity in Canada

In developing the required pay equity plan, employers need to carry out job evaluations. The evaluation is to find out the following:

  • Identify the different job classes in the organization or institution
  • Determine the value of work done by each job class
  • Identify predominantly female job classes and those that are predominantly male or job classes that are gender-neutral
  • Calculate the overall compensation for every job class based on the dominant gender
  • Compare compensation for each job class to determine if there is a wage gap

However, if a wage gap exists, the employer must achieve pay equity in the workplace by raising the compensation for job classes that are predominantly female rather than reduce the compensation for predominantly male job classes.

In addition, employers must review and update their work law every five years once the Act is enforced to maintain pay equity and address wage gaps that may arise in the future.

Also, employers must submit a statement every year containing detailed information about how pay equity is being practised in their firms, organizations, and establishments. 

However, you should note that every employer will have to submit their statement to the Pay Equity Commissioner of their province responsible for the administration, education, and supervision of compliance with the Act.

Nonetheless, in some cases, a single pay equity plan might not be as practical or realistic. Hence, employers should request to develop multiple pay Equity from the Commissioner within 12 months of being subject to the Act.

Pay Equity Committees

If a workplace with 100 or more employees or a unionized federally regulated employer has more than ten employees, they must have a pay equity committee. In addition, the committee, alongside the organization’s management and the employer, will create a comprehensive pay equity plan.

Representatives of employees and employers must be present in the committee; precisely two-thirds of the committee must be employee representatives. Also, half of the committee members must be women. In a unionized workplace, all parties involved must be represented.

Conclusion

Pay equity exists in Canada but runs on a complaint-based model. Also, with the soon-to-be enforced Pay equity Act, employers in Canada will have to develop a pay equity plan to ensure no employee is sidelined.

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.