Increasing pay transparency for federally regulated employers under Employment Equity Regulations

Brian G. Johnston, QC, Jennifer Thompson and Daniel Roth

The Government of Canada has announced the final Regulations Amending the Employment Equity Regulations (“Regulations”). The Regulations come into force on January 1, 2021 and will bring increased pay transparency to federally regulated workplaces. Federally regulated employers with 100 or more employees will be required to file annual employment equity reports with the Minister of Labour on or before June 1 each year, with the first report due by June 1, 2022 covering the 2021 reporting period. These reports will be used to compile aggregated wage gap information on women, Aboriginal people, persons with disabilities, and members of visible minorities.¹ This information will then be published for the first time in the Employment Equity Act: Annual Report 2022.

The existing version of the Regulations will continue to apply to employment equity reports for the 2020 reporting period. The amended Regulations in force as of January 1, 2021 will only apply to reports for the 2021 reporting period and onward.

The Regulations seek to simplify the definition and calculation of salary, no longer requiring employers to annualize salaries for the purposes of reporting. Rather, employers will be required to report more readily available information, including:

• salary, not including bonus pay or overtime pay;
• the period over which the salary was paid;
• the number of hours worked that can be attributed to the salary earned;
• the amount of any bonuses paid during the reporting period; and
• the amount of any overtime paid during the reporting period with the corresponding hours worked giving rise to that overtime pay.

The Regulations also provide definitions for overtime pay, overtime hours, and bonus pay, to help guide employers. Employers will be required to maintain and retain records to support their reporting. Employers must also retain information about each employee’s occupational unit group classifications and code under the North American Industrial Classification System.

The Regulations further prescribe that employers must use the definitions found in the Employment Equity Act (“Act”) for the purposes of self-identification in workplace questionnaires feeding into their reporting. The Act provides definitions of Aboriginal people, persons with disabilities, and members of visible minorities, who along with women, constitute the designated groups. Prior to the amended Regulations coming into force, employers were permitted to use their own definitions of designated groups insofar as they were “consistent” with the definitions in the Act. After the Regulations come into force, employers will all be required to use the prescribed definitions, seeking consistent comparison across the aggregated self-identification data.

Canada will be the first country in the world to make wage gap information with respect to women, Aboriginal people, persons with disabilities and members of visible minorities working in federally regulated workplaces available to the public. In addition to the above pay transparency measures, the related Pay Equity Act is also expected to come into force sometime in 2021 following the conclusion of the federal government’s public consultation on the proposed Pay Equity Regulations. The public consultation on the Pay Equity Regulations will remain open until January 13, 2021.

The federal government will be updating the forms associated with filing the annual reports, and the Workplace Equity Information Management System will be updated in advance of the June 1, 2022 reporting deadline.

All federally regulated employers with more than 100 employees who have employment equity obligations should review their policies and procedures in light of these changes to ensure compliance for the 2021 reporting period.

¹ Note that this is the terminology utilized by the Employment Equity Act itself.

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

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