Federal pay equity comes into force August 31, 2021

Annie Gray and Dante Manna

The federal government has announced that the Pay Equity Act (“Act”) will come into force on August 31, 2021. It has also published the final version of the Pay Equity Regulations (“Regulations”), to come into effect on the same date.

For its part, the Canadian Human Rights Commission has also updated its website with a number of interpretations, policies and guidelines in order to facilitate the successful creation of pay equity plans under the Act and Regulations.

Refresher on pay equity

Pay equity is focused on achieving equal pay for work of equal value, recognizing that female jobs have historically been undervalued when compared to traditionally male positions of comparable value.

The Act and Regulations mandate a proactive approach to the achievement of pay equity by federally regulated employers with 10 or more employees. Once the Act comes into force, such employers will have three years to establish and implement a pro-active pay equity plan. This marks a monumental shift from the current, complaint-based pay equity regime under the Canadian Human Rights Act.

Timeline for employers

The government’s announcement confirms the general timeline for qualifying federally regulated employers as follows:

• November 1, 2021 – Employers must post a notice, informing their employees of their obligations under the Act. This notice must remain posted until the plan is completed or employer obligations change. The government has published template notices here.
• Employers with an average of more than 100 employees, or any unionized employees, will be required to establish a pay equity committee. A pay equity committee is a joint committee comprised of employer, employee and/or union representatives, as required by the Act.
• The employer (or pay equity committee, if there is one) must develop the pay equity plan, by:
  • Identifying job classes in the workplace;
  • Determining which job classes are commonly held by women and which ones are commonly held by men;
  • Valuing the work done in each of these job classes;
    
  • Calculating total compensation for each predominantly male and female job class; and,
  • Determining whether there are differences in compensation between jobs of equal value. If so, the pay equity plan must provide pay increases calculated using the mathematical formulas given in the Regulations.

• The employer must post a draft of the pay equity plan along with a notice to employees of their right to provide comments. Employees must have 60 days to comment on the plan.
• September 3, 2024 – Final date for employers to share their final pay equity plan and notice of related pay increases with employees. If less than 1% of the total payroll, pay increases are to be made the day after the final plan is posted.
• The pay equity plan may phase in pay increases over 3-5 years (depending on number of employees) if the total amount of increases is greater than 1% of total payroll.
  
• Collect “snapshot” data annually and review any changes made in the prior year that may impact pay equity.
• Update the plan at least once every five years.

The final Regulations

In a previous post, we outlined key takeaways from the draft regulations, which were published in November of 2020. Following a round of consultations, the final Regulations remain broadly similar, but include several changes from their draft form, including:

• specifying when and how long documents must be posted in the workplace;
• eliminating certain time limits for filing applications and notices;
• requiring plans and annual statements to note when predetermined values of work have been used;
• changes to the process for updating a pay equity plan; and
• changes to provisions addressing the application of the Act to employee bargaining units whose wages are frozen.

The Regulations can be found here.

Time to act

Now that the date of effect has been announced, it is crucial that federally regulated employers begin laying the groundwork for the creation of their pay equity plans. We would be pleased to assist in providing guidance and advice regarding the pay equity process.

This update is intended for general information only. If you have questions about the above, please contact a member of our Labour and Employment group.

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