What’s happening? On June 5, 2024, the federal government published final Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments): SOR/2024-101(“Amending Regulations”). The Amending Regulations amend the Pay Equity Regulations (the “Regulations”) under the federal Pay Equity Act (the “Act”). The Act came into effect on August 31, 2021 and has been phased in over a three year period. Employers become subject to the Act when they have an average of 10 or more employees. Employers must post a Pay Equity Plan within 3 years of becoming subject to the Act. Therefore, federally-regulated employers who had an average of 10 or more employees as of August 31, 2021, when the Act came into effect (“Regulated Employers”) are required to post their final Pay Equity Plan by September 3, 2024.
Effective Date. The Amending Regulations became effective June 5, 2024.
What does it say? The Act intends to address systemic gender discrimination in compensation practices and pay systems in federally regulated workplaces and that portion of the wage gap attributable to the undervaluation of work performed by women. The Amending Regulations make the following changes to the Regulations under the Act.
- Federal Minimum Wage: The Regulations did not align with the Canada Labour Code provisions regarding minimum wages for federally-regulated workplaces, which complicated the calculation of hourly rates of pay for typical job classes. The Amending Regulations now require employers to pay the higher of the federal minimum wage or the provincial minimum wage where the employees work. This change ensures that wages below the minimum wage is used for calculations.
- Updating Pay Equity Plans: The Regulations were silent on how to update Pay Equity Plans if the employer does not have any predominantly male job classes. The Amending Regulations now require employers and pay equity committees of workplaces with no predominantly male job classes to: (1) collect workplace data; (2) analyze workplace information; and (3) compare compensation. This process is based on the pre-existing process under the Regulations to establish the initial Pay Equity Plan in workplaces with no predominantly male job classes.
- Reporting Requirements: The Regulations required employers to submit annual statements about the implementation of pay equity in their workplaces, but there was no requirement to provide information about increases to the hourly rate of pay owed to predominantly female job classes receiving an increase in compensation. The Amending Regulations now require employers to submit the following information in their annual statements:
- (1) the dollar amount of the increase in the hourly rate of pay owed to each predominantly female job class receiving an increase in compensation;
- (2) the date that the increases in the hourly rate of pay are being made; and,
- (3) the number of women in the predominantly female job class receiving an increase in compensation and the total number of employees holding positions in the female job class.
Employers are now also required to include their legal name, business number, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan.
- Administrative Monetary Penalties (“AMP”): The Amending Regulations establish a framework for issuing AMPs in relation to non-compliance with certain provisions of the Act. The penalty ranges take into account the size of the workplace and compliance history of the workplace.
- Groups of Employers: The Amending Regulations change the deadlines for groups of employers to post their notice of obligations under the Act:
- A group of employers that becomes subject to the Act less than 60 days after they are recognized by the Commissioner as a group must post their notice within 60 days of being recognized.
- A group of employers that becomes subject to the Act 60 days or more after they are recognized by the Commissioner as a group must post their notice once they become subject to the Act.
What should we do? Federally-regulated employers should ensure that they are up to date on the changes established by the Amending Regulations, and their human resources staff and pay equity committees are made aware of these changes. Employers are reminded that the deadline for Regulated Employers to post a final Pay Equity Plan is September 3, 2024. However, employers must give their employees sixty days to review the Pay Equity Plan and provide written comments, meaning the draft Pay Equity Plan must be posted in the workplace for Regulated Employers by July 5, 2024 at the latest.
Not Federally-Regulated – why should we care? Pay equity, as the concept is defined in Canada, is also known as equal pay for work of equal value (not equal pay for equal work, which is a different legal concept addressed by different legal frameworks). Pay equity means if two different jobs contribute equal value to their employer’s operations then the employees in those positions should receive equal pay. There is a global trend toward more proactive pay equity and pay transparency, placing the onus of pay equity analysis onto employers.
If you are not a federally regulated employer, a number of jurisdictions, including Ontario and Québec, have pay equity regimes in place, while other provinces and territories address the right to equal pay through human rights and/or employment standards legislation. With the introduction of proactive pay equity for federally-regulated employers, it is very possible that some provinces and territories may adopt or implement similar legislation requiring employers to achieve pay equity within short order.
Interested in more legislative updates? ADP Comprehensive Services clients have access to federal and provincial legislative updates via HR Alerts and the HR Knowledge Library. Find out if Comprehensive Services is a fit for your organization.
The information contained in this document is summary in nature and is intended to provide general guidance only. It should not be viewed as a replacement for legal or professional advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the province or territory. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice. This content is the property of ADP Canada Co.
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