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Client Update: Pay equity legislation announced for federally regulated employers

Julia Parent and Graham Haynes

On October 29, 2018, the federal government tabled national pay equity legislation as part of its second budget implementation bill, Bill C-86. This legislation is targeted at reducing the portion of the gender wage gap which is caused by the undervaluation of work traditionally done by women.

Application

The Act, entitled An Act to Establish a Proactive Pay Equity Regime within the Federal Public and Private Sectors (Pay Equity Act) (the “Act”) applies to all federally regulated employers with 10 or more employees, including the federal public service, the federal private sector (i.e. banks, telecommunication companies, marine shipping companies, interprovincial and international transportation companies and others) and the Prime Minister and ministers’ offices.

It is worth noting that the requirements imposed under the Act are different for small employers (defined as those with 10 to 99 employees) and large employers (defined as those with 100 employees or more).

Obligations for employers

Development of a pay equity plan

The Act requires employers to develop a comprehensive pay equity plan within three years of becoming subject to the Act. The pay equity plan must, among other things, identify job classes and their gender predominance in the workplace, analyze the value of the job classes within the workplace and identify where imbalances exist between female and male predominant job classes of equal value.

Compensation equalization

If an employer’s pay equity plan identifies imbalances in a female-predominant job class when compared to male-predominant job classes of equal value, employers will have to phase-in compensation increases which equalize the compensation paid to the female-predominant job class. This may apply to more than one female-predominant job class. If the total equalization amount is at least one percent of the employer’s annual payroll, the employer will have to implement compensation increases. The number of years the entity will have to equalize payment is based on the size of the employer.

Other obligations

The Act also imposes other responsibilities on employers such as providing information to employees regarding dispute resolution procedures, updating the pay equity plan every five years and submitting a short annual statement regarding oversight of the program.

Enforcement

The Act contemplates the appointment of a Pay Equity Commissioner and the creation of a Pay Equity Unit of the Canadian Human Rights Commission which would administer and enforce the Act through a range of compliance and enforcement tools including monetary penalties.

Further information

This update is intended for general information only. If you have questions about the above information, and how it applies to your specific situation, please contact a member of the Stewart McKelvey Labour and Employment group.

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