- (i) under section 56 of the Federal Public Sector Labour Relations Act , cannot be altered except under a collective agreement or with the consent of the Federal Public Sector Labour Relations and Employment Board,
- (ii) under subsection 24(4) of the Canada Labour Code , cannot be altered except pursuant to a collective agreement or with the consent of the Canada Industrial Relations Board, or
- (iii) under paragraph 50(b) of the Canada Labour Code , cannot be altered without the consent of the bargaining agent. ( gelée )
References to employers
2 If a group of employers is recognized by the Pay Equity Commissioner as a single employer under section 106 of the Act, every reference in sections 10, 14 and 15, subsection 16(1), sections 18 to 20 and 22, subsections 23(1) to (6), and sections 24 to 26, 28 to 31, 39 and 41 to 46 to an employer is, in respect of the group of employers, to be read as a reference to that group of employers, unless the context otherwise requires.
Postings — General Rules
Format and place
3 A document that is required under the Act to be posted must be posted in printed or electronic form and in such a way as to be readily available to all employees to whom the document relates. A document in printed format must be posted in a conspicuous place.
Accessibility
4 If an employee to whom a document that is required to be posted under the Act relates has a disability as defined in section 2 of the Accessible Canada Act , that document must be posted in a form that is accessible to that employee.
Information to be provided
5 An employer that posts in electronic form a document that it is required to post under the Act must provide the employees to whom the document relates with any information necessary to enable them to access the document.
Date of posting
6 An employer that makes any posting under the Act must indicate in the posting the date on which the posting is made.
Pay Equity Plan
Notice — employer's obligation
7 (1) An employer that is required to post a notice under subsection 14(1) or (2) of the Act must do so within 60 days after the day on which it becomes subject to the Act.
Duration of posting
(2) The employer must keep the notice posted until it posts the final version of the pay equity plan in accordance with subsection 55(1) or paragraph 57(2)(b) or 94(1)(b) of the Act, until it posts a notice under subsection 15(1) or (2) of the Act or until it becomes required under subsection 30(6) of the Act to establish more than one pay equity plan.
Notice — group of employers' obligation
8 (1) An employer that is in a group of employers and that is required to post a notice under subsection 15(1) or (2) of the Act must do so within 60 days after the day on which the group of employers becomes subject to the Act for the purposes of subsection 55(1) and paragraphs 61(1)(b) and 89(2)(b) of the Act.
Duration of posting
(2) The employer must keep the notice posted until each employer in the group of employers posts the final version of the pay equity plan in accordance with subsection 55(1) or paragraph 57(2)(b) of the Act, until the employer posts a notice under subsection 14(1) or (2) of the Act or until the group of employers becomes required under subsection 30(6) of the Act to establish more than one pay equity plan.
Notice — establishment of plan without committee
9 (1) An employer that is required, under section 25, 26, 28 or 29 of the Act, to post a notice of the establishment of a pay equity plan without a pay equity committee must do so within 60 days after the day on which the Pay Equity Commissioner approves the establishment of the plan without a committee.
Duration of posting
(2) The employer must keep the notice posted until it posts the final version of the pay equity plan in accordance with subsection 55(1) or paragraph 57(2)(b) or 94(1)(b) of the Act.
Process for Establishment of Pay Equity Plan
Frozen Compensation
Prohibited comparison — frozen compensation
10 In carrying out the comparison of compensation under sections 47 to 50 of the Act, an employer — or, if a pay equity committee has been established, that committee — must ensure that no comparison is made between frozen compensation associated with a predominantly female or predominantly male job class and compensation that is not frozen and that is associated with a predominantly female or predominantly male job class in which unionized employees occupy positions, unless the salary rate that is used to determine salary in the calculation of the frozen compensation associated with a job class is
- (a) the salary rate obtained by adding, to the highest salary rate in the range of salary rates for positions in the job class, the product obtained by multiplying
- (i) the salary at the highest rate in the range of salary rates for positions in the job class
- (ii) the average percentage by which, since the compensation associated with the job class became frozen, the salary for positions in job classes that contain positions occupied by unionized employees in respect of whom the pay equity plan applies and who are governed by a collective agreement that is not expired has increased; or
Factors
Calculation — equal average method
11 (1) The factor referred to in paragraph 49(1)(d) of the Act and the factor referred to in paragraph 28(d) are determined by the formula
- (a) if there is more than one predominantly male job class within the band, the average compensation associated with the predominantly male job classes within the band,
- (b) if there is only one predominantly male job class within the band, the compensation associated with that job class, or
- (c) if there are no predominantly male job classes within the band, the compensation calculated under paragraph 49(1)(b) of the Act or paragraph 28(b), as the case may be;
Clarification
(2) In the calculation of the factor referred to in paragraph 28(d), references in subsection (1) to a predominantly male job class are to be read as references to a predominantly male job class chosen or created, as the case may be, under subsection 19(1).
Calculation — equal line method
12 (1) With respect to a predominantly female job class, the factor referred to in paragraph 50(1)(c) of the Act and the factor referred to in paragraph 29(1)(c) are determined by the formula
((A × B) ÷ C) + (D – (E × B)) where A is determined by the formula F ÷ G where F is the absolute value of the difference between the compensation associated with the predominantly female job class and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class, and G is the compensation associated with such a predominantly male job class; B is determined by the formula ((H − I) − (J × K)) ÷ (L − (M × K)) where H is the sum of the products obtained by multiplying, for each predominantly female job class, the value of work performed in the job class by the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class, I is the sum of the products obtained by multiplying, for each predominantly female job class, the value of work performed in the job class by the compensation associated with that job class, J is determined by the formula (P – Q) ÷ R where P is the sum of the compensation associated with predominantly male job classes, were such job classes located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job classes, Q is the sum of the compensation associated with the predominantly female job classes, and R is the sum of the absolute values of the differences, for each predominantly female job class that is located below the male regression line, between the compensation associated with the job class and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class; K is the sum of the products obtained by multiplying, for each predominantly female job class that is located below the male regression line, the value of the work performed in the job class by the absolute value of the difference between the compensation associated with the job class and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class, L is the sum of the products obtained by multiplying, for each predominantly female job class that is located below the male regression line, the value of the work performed in that job class by the quotient calculated for the job class using the formula set out in A in this subsection, M is determined by the formula (N ÷ O) where N is the sum of the quotients calculated using the formula set out in A in this subsection, for each predominantly female job class that is located below the male regression line, and O is the sum of the absolute values of the differences between the compensation associated with each predominantly female job class that is located below the male regression line and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class; C is an amount equal to the difference referred to in paragraph 50(1)(c) of the Act or paragraph 29(1)(c), as the case may be; D is the value determined for J in this subsection; and E is the value determined for M in this subsection.
Job class chosen or created
(2) In the calculation of the factor referred to in paragraph 29(1)(c), a reference in subsection (1) to a predominantly male job class is to be read as a reference to a predominantly male job class chosen or created, as the case may be, under subsection 19(1).
Clarification
13 The factors referred to in sections 11 and 12 must be calculated without regard either to the number of employees or to the number of positions in a job class.
Rules if Regression Lines Cross
Choice of method
14 For the purposes of subsection 50(2) of the Act, the following rules apply:
- (a) an employer — or, if a pay equity committee has been established, that committee — must apply the rules set out in paragraphs 50(1)(b) to (d) of the Act, without taking into account subparagraph 50(1)(b)(i); and
- (b) if the application of the rules in paragraph (a) does not cause the regression lines to coincide without reducing the compensation associated with any job class, the employer or pay equity committee, as the case may be, must instead compare the compensation using
- (i) the equal average method set out in section 49 of the Act,
- (ii) the segmented line method set out in section 15, or
- (iii) the sum of differences method set out in section 16.
Segmented line method
15 An employer or pay equity committee, as the case may be, that uses the segmented line method must apply the following rules:
- (a) the employer or pay equity committee must divide the predominantly female job classes and the predominantly male job classes into the following two segments:
- (i) one segment that includes the job classes in which the value of work performed is less than the value at which the regression lines established under paragraph 50(1)(a) of the Act intersect, and
- (ii) one segment that includes the job classes in which the value of work performed is equal to or greater than the value at which the regression lines established under that paragraph intersect;
Sum of differences method
16 (1) The employer or pay equity committee, as the case may be, that uses the sum of differences method must multiply, for each predominantly female job class that is located below the male regression line established under paragraph 50(1)(a) of the Act, the factor calculated in accordance with subsection (2) by the absolute value of the difference between the compensation associated with the predominantly female job class and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class.
Factor
(2) For the purposes of subsection (1), the factor is the result of the formula
(A − B) ÷ C where A is the sum of the compensation associated with predominantly male job classes, were such job classes located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job classes; B is the sum of the compensation associated with the predominantly female job classes or the value determined for A, whichever is less; and C is the sum of the absolute values of the differences, for each predominantly female job class that is located below the male regression line, between the compensation associated with the job class and the compensation associated with a predominantly male job class, were such a job class located on the male regression line, in which the value of the work performed is equal to that of the predominantly female job class.
Increase in compensation
(3) The increase in compensation associated with a predominantly female job class located below the male regression line is the product calculated in accordance with subsection (1) in respect of that job class.
Clarification
17 The segmented line method set out in section 15 and the sum of differences method set out in section 16 are to be applied without regard either to the number of employees or to the number of positions in a job class.
Obligations — No Predominantly Male Job Classes
Application
18 Sections 19 to 29 apply with respect to an employer — or, if a pay equity committee has been established, to that committee — for the determination of differences in compensation for the purposes of section 60 of the Act, if the employer or committee, as the case may be, has determined that there are no predominantly male job classes.
Choice of method
19 (1) An employer — or, if a pay equity committee has been established, that committee — must use, to determine differences in compensation for the purposes of section 60 of the Act
- (a) at least three predominantly male job classes of its choice from another employer that meets the conditions set out in subsection (2); or
- (b) three fictional predominantly male job classes, each of which is created by the employer or committee based on a different typical job class set out in the schedule.
Other employer
(2) For the purposes of paragraph (1)(a), the other employer must meet the following conditions:
- (a) it must have at least three job classes that it — or, if a pay equity committee has been established by the other employer, that committee — has determined under section 35 of the Act to be predominantly male and for which the compensation has been calculated in accordance with sections 44 to 46 of the Act; and
- (b) it must agree to provide the employer — or, if a pay equity committee has been established by that employer, that committee — that has chosen to use those job classes with the data in its possession that is necessary to determine the value of work performed in those job classes and, for each job class chosen, with the salary at the highest rate in the range of salary rates for positions in the job class.
Criteria
(3) An employer — or, if a pay equity committee has been established, that committee — choosing job classes provided by another employer under paragraph (1)(a) must, to the extent possible, ensure that those job classes
- (a) come from an employer with characteristics similar to its own — or, in the case of a pay equity committee choosing job classes, those of the relevant employer — such as the following:
- (i) the two employers are part of the same industry,
- (ii) they operate in regions where the cost of living is similar,
- (iii) they have a similar number of employees,
- (iv) they have a similar proportion of unionized employees, and
- (v) they have similar compensation practices; and
Determination of value of work
20 (1) An employer — or, if a pay equity committee has been established, that committee — must determine the value of the work performed in each predominantly female job class determined under section 35 of the Act and in each predominantly male job class chosen or created under subsection 19(1). The value of the work performed in those predominantly male job classes is to be determined as if the work were performed in the course of the operations of the employer.
Value already determined
(2) For greater certainty, an employer or a pay equity committee, as the case may be, may determine that the value of the work performed in each of the predominantly female job classes determined under section 35 of the Act is the value that has already been determined by means of a method that complies with the requirements set out in sections 21 and 22.
Group of job classes
(3) If an employer or a pay equity committee, as the case may be, treats a group of job classes as a predominantly female job class in accordance with section 38 of the Act, the value of the work performed in that job class is considered to be the value of the work performed in the individual predominantly female job class within the group that has the greatest number of employees.
Criterion
21 The criterion to be applied in determining the value of the work performed is the composite of the skill required to perform the work, the effort required to perform the work, the responsibility required in the performance of the work and the conditions under which the work is performed.
Method
22 In addition, an employer — or, if a pay equity committee has been established, that committee — must, to determine the value of the work performed, use a method that
- (a) does not discriminate on the basis of gender; and
- (b) makes it possible to determine the relative value of the work performed in all of the predominantly female job classes determined under section 35 of the Act and in all of the predominantly male job classes chosen or created under subsection 19(1).
Calculation of compensation
23 (1) The employer — or, if a pay equity committee has been established, that committee — must calculate the compensation, expressed in dollars per hour, associated with each job class for which it has determined, under section 20, the value of the work performed.
Compensation plan — job classes chosen
(2) If the employer or pay equity committee, as the case may be, uses predominantly male job classes chosen under paragraph 19(1)(a), it must make any adaptations necessary in the calculation of any form of compensation other than salary so that the compensation associated with those predominantly male job classes is in accordance with the compensation plan that applies to the employees of the employer.
Compensation — job classes created
(3) If the employer or pay equity committee, as the case may be, uses predominantly male job classes created under paragraph 19(1)(b), it must calculate the compensation for full-time work, expressed in dollars per hour, associated with each of those job classes
- (a) taking into account
- (i) the elements set out in columns 2 to 5 of the schedule for the typical job class on which the job class that was created is based, and
- (ii) salaries that are generally accepted as current for positions that have duties and responsibilities similar to those set out in the schedule for the typical job class on which the job class that was created is based, that require experience, education and training similar to those set out in the schedule for that typical job class and that are under employers that, to the extent possible, have similar numbers of employees as the employer and are in the same industry and geographic area as the employer or a geographic area where the cost of living is similar;
- (i) in the case of a job class that was created based on the maintenance worker typical job class described in item 1 of the schedule, the minimum hourly rate that is generally applicable, regardless of occupation, status or work experience, under the law of the province where the work would be done or, if the work would be done in more than one province, the highest of those minimum hourly rates,
- (ii) in the case of a job class that was created based on the technician typical job class described in item 2 of the schedule, 2.5 times the minimum hourly rate referred to in subparagraph (i), and
- (iii) in the case of a job class that was created based on the manager typical job class described in item 3 of the schedule, 3.33 times the minimum hourly rate referred to in subparagraph (i); and
Group of job classes
(4) If an employer or a pay equity committee, as the case may be, treats a group of job classes as a predominantly female job class in accordance with section 38 of the Act, the compensation associated with that job class is considered to be the compensation associated with the individual predominantly female job class within the group that has the greatest number of employees.
Salary — job classes chosen
(5) If an employer or pay equity committee, as the case may be, uses predominantly male job classes chosen under paragraph 19(1)(a),
- (a) for the purpose of determining salary in the calculation of the compensation associated with a predominantly female job class, the salary at the highest rate in the range of salary rates for positions in the job class is to be used; and
- (b) for the purpose of determining salary in the calculation of the compensation associated with a predominantly male job class, the salary at the highest rate in the range of salary rates for positions in the job class, provided by the employer from which the job class was chosen, is to be used.
Salary — job classes created
(6) If an employer or pay equity committee, as the case may be, uses predominantly male job classes created under paragraph 19(1)(b), for the purposes of determining salary in the calculation of the compensation associated with a predominantly female job class, the salary at the highest rate in the range of salary rates for positions in the job class is to be used.
Definition of full-time work
(7) For the purposes of subsection (3), full-time work means 30 or more hours of work over a period of one week.
Exclusions from compensation
24 An employer — or, if a pay equity committee has been established, that committee — may exclude from the calculation of compensation, with respect to each job class in respect of which compensation is required to be calculated, any form of compensation that is equally available, and provided without discrimination on the basis of gender, in respect of all of those job classes.
Differences in compensation excluded
25 An employer — or, if a pay equity committee has been established, that committee — must exclude from the calculation of compensation associated with a predominantly female job class any differences in compensation that either increase or decrease compensation in any or all positions in that job class as compared with the compensation that would otherwise be associated with the position, if the differences are based on any one or more of the following factors and those factors have been designed and are applied so as not to discriminate on the basis of gender:
- (a) the existence of a system of compensation that is based on seniority or length of service;
- (b) the practice of temporarily maintaining an employee's compensation following their reclassification or demotion to a position that has a lower rate of compensation until the rate of compensation for the position is equivalent to or greater than the rate of compensation payable to the employee immediately before the reclassification or demotion;
- (c) a shortage of skilled workers that causes an employer to temporarily increase compensation due to its difficulty in recruiting or retaining employees with the requisite skills for positions in a job class;
- (d) the geographic area in which an employee works;
- (e) the fact that an employee is in an employee development or training program and receives compensation at a rate different than that of an employee doing the same work in a position outside the program;
- (f) the non-receipt of compensation — in the form of benefits that have a monetary value — due to the temporary, casual or seasonal nature of a position;
- (g) the existence of a merit-based compensation plan that is based on a system of formal performance ratings and that has been brought to the attention of the employees; or
- (h) the provision of compensation for extra-duty services, including compensation for overtime, shift work, being on call, being called back to work and working or travelling on a day that is not a working day.
Comparison of compensation
26 An employer — or, if a pay equity committee has been established, that committee — that has calculated under section 23 the compensation associated with each job class must, using the compensation so calculated, compare, in accordance with sections 27 to 29, the compensation associated with the predominantly female job classes with the compensation associated with the predominantly male job classes chosen or created under subsection 19(1), for the purpose of determining whether there is any difference in compensation between those job classes.
Compensation comparison methods
27 The comparison of compensation must be made in accordance with the equal average method set out in section 28 or the equal line method set out in section 29.
Equal average method
28 An employer or pay equity committee, as the case may be, that uses the equal average method of comparison of compensation must apply the following rules:
- (a) the average compensation associated with the predominantly female job classes within a band — or, if there is only one such job class within a band, the compensation associated with that job class — is to be compared to
- (i) if there is more than one predominantly male job class chosen or created under subsection 19(1) within the band, the average compensation associated with those predominantly male job classes within the band,
- (ii) if there is only one predominantly male job class chosen or created under subsection 19(1) within the band, the compensation associated with that job class, or
- (iii) if there are no predominantly male job classes chosen or created under subsection 19(1) within the band, the compensation calculated under paragraph (b);
- (i) the amount determined by the formula (A × B) ÷ C where A is the average compensation associated with the predominantly male job classes chosen or created under subsection 19(1) — or, if there is only one such job class, the compensation associated with that job class — that are within the band that is closest to the band within which the predominantly female job class or classes are located, B is the average value of the work performed in the predominantly female job classes within the band or, if there is only one such job class, the value of the work performed in that job class, and C is the average value of the work performed in the predominantly male job classes within the band referred to in the description of A or, if there is only one such job class, the value of the work performed in that job class, or
- (ii) despite subparagraph (i), if there is at least one predominantly male job class chosen or created under subsection 19(1) within each of two bands that are equidistant from the band within which the predominantly female job class or classes are located and there is no other band containing at least one predominantly male job class that is closer to that band, the amount determined by the formula (A + B) ÷ 2 where A is the average compensation associated with the predominantly male job classes chosen or created under subsection 19(1) within one of the two bands or, if there is only one such job class, the compensation associated with that job class, and B is the average compensation associated with the predominantly male job classes chosen or created under subsection 19(1) within the other band or, if there is only one such job class, the compensation associated with that job class;
- (c) the compensation associated with a predominantly female job class within a band is to be increased only if
- (i) that compensation is lower than the compensation or average compensation referred to in subparagraph (a)(i), (ii) or (iii), as the case may be, and
- (ii) the average compensation associated with the predominantly female job classes within the band — or, if there is only one such job class, the compensation associated with that job class — is lower than the compensation or average compensation referred to in subparagraph (a)(i), (ii) or (iii), as the case may be;
Equal line method
29 (1) An employer or pay equity committee, as the case may be, that uses the equal line method of comparison of compensation must apply the following rules:
- (a) a female regression line must be established for the predominantly female job classes and a male regression line must be established for the predominantly male job classes chosen or created under subsection 19(1);
- (b) the compensation associated with a predominantly female job class is to be increased only if
- (i) the female regression line is entirely below the male regression line, and
- (ii) the predominantly female job class is located below the male regression line;
Crossed regression lines
(2) Despite paragraphs (1)(b) to (d), if the female regression line crosses the male regression line, an employer or pay equity committee, as the case may be, must apply the equal average method set out in section 28 for the comparison of compensation.
Additional Information in Pay Equity Plan
Job classes chosen or created
30 If an employer — or, if a pay equity committee has been established, that committee — has determined under section 35 of the Act that there is no predominantly male job class, the pay equity plan must
- (a) indicate whether the predominantly male job classes used to determine differences in compensation for the purposes of section 60 of the Act were those referred to in paragraph 19(1)(a) or those referred to in paragraph 19(1)(b) and, if job classes referred to in paragraph 19(1)(a) were used, indicate the job classes that were chosen and the other employer that provided the data about them;
- (b) if a group of job classes has been treated as a single predominantly female job class, identify the individual predominantly female job class within the group that was used for the purpose of subsections 20(3) and 23(4);
- (c) indicate any job classes in which differences in compensation have been excluded from the calculation of compensation under section 25 and give the reasons why; and
- (d) if a comparison of compensation was made to determine differences in compensation for the purposes of section 60 of the Act, indicate which of the methods referred to in section 27 was used to make the comparison.
Determination — value already determined
31 If an employer — or, if a pay equity committee has been established, that committee — makes the determination referred to in subsection 41(2) of the Act or subsection 20(2), the pay equity plan must include an indication to this effect.
Confidentiality
Confidentiality of data received from another employer
32 (1) Except to identify differences in compensation for the purposes of section 60 of the Act and to comply with section 30, an employer and each member of a pay equity committee that is, directly or indirectly, provided with data from another employer for the purpose of the identification of those differences must keep that data confidential.
Bargaining agent
(2) A bargaining agent that receives from a member of a pay equity committee data that the member is required under subsection (1) to keep confidential must also keep the data confidential.
Posting
Draft pay equity plan
33 An employer that is required under section 52 or 53 of the Act to post a draft pay equity plan and a notice must post those documents on the same day and keep them posted for at least 60 days and, if they are posted in paper form, post them close together.
Final version of pay equity plan
34 An employer that is required, in accordance with subsection 55(1) or paragraph 57(2)(b) of the Act, to post the final version of the pay equity plan must keep that plan posted until it posts, in accordance with section 83 or paragraph 85(2)(b) of the Act, the final version of the revised pay equity plan as first updated.
Notice — increases and phase-in period
35 An employer that is required to post a notice under subsection 56(1) of the Act relating to increases or a notice under subsection 56(2) of the Act for a longer phase-in period must keep that notice posted until the later of the 60th day after the day on which it is posted and the day on which the increases to which the notice relates are paid in full.
Pay Equity Maintenance Review
Updated Pay Equity Plan
Notice — employer's obligation
36 (1) An employer that is required to post a notice under subsection 65(1) or (2) of the Act must do so before the first day with respect to which workplace information must be collected under subsection 39(1) in respect of the update referred to in the notice.
Duration of posting
(2) The employer must keep the notice posted until it posts the final version of the revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act or until it posts a notice under subsection 66(1) or (2) of the Act.
Notice — group of employers' obligation
37 (1) An employer that is required to post a notice under subsection 66(1) or (2) of the Act must do so before the first day with respect to which workplace information must be collected under subsection 39(1) in respect of the update referred to in the notice.
Duration of posting
(2) The employer must keep the notice posted until it posts the final version of the revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act or it posts a notice under subsection 65(1) or (2) of the Act.
Notice — update of plan without committee
38 (1) An employer that is required under section 73, 74, 76 or 77 of the Act to post a notice that the pay equity plan will be updated without a pay equity committee must do so within 60 days after the day on which the Pay Equity Commissioner authorizes the updating of the plan without a committee.
Duration of posting
(2) The employer must keep the notice posted until it posts the final version of the revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act.
Process for Updating Pay Equity Plan
Workplace information
39 (1) For the purpose of identifying any differences in compensation under subsection 78(1) of the Act, an employer — or, if a pay equity committee has been established, that committee — must collect the following information:
- (a) in the case of an employer referred to in any of paragraphs 3(2)(a) to (d) of the Act, for each March 31 during the period beginning on the day after the day on which the most recent pay equity plan was posted and ending on the day before the day on which the revised pay equity plan is posted under section 80 or 81 of the Act, information that represents its workplace as it was on that March 31 and that is necessary to identify changes — other than changes excluded in accordance with section 40 — that are likely to have had an impact on pay equity since the day on which the most recent pay equity plan was posted or the previous March 31 with respect to which information must be collected under this subsection, if that day is more recent; and
- (b) in the case of an employer referred to in any of paragraphs 3(2)(e) to (i) of the Act, for each day on which the employer's fiscal year ends during the period beginning on the day after the day on which the most recent pay equity plan was posted and ending on the day before the day on which the revised pay equity plan is posted under section 80 or 81 of the Act, information that represents its workplace as it was on the day on which the employer's fiscal year ends and that is necessary to identify changes — other than changes excluded in accordance with section 40 — that are likely to have had an impact on pay equity since the day on which the most recent pay equity plan was posted or the previous day with respect to which information must be collected under this subsection, if that day is more recent.
Other last day
(2) However, the last day with respect to which information must be collected before the posting of the final version of the revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act may be a day selected by the employer or the pay equity committee, as the case may be, if the day that is selected is not more than one year before that version is posted and is before the day on which the revised pay equity plan must be posted under section 80 or 81 of the Act.
Excluded changes
40 For the purposes of subsection 78(1) of the Act, the following changes are excluded:
- (a) all changes that are likely to have an impact on the identification of job classes in accordance with sections 32 to 34 of the Act, other than changes that are likely to result in
- (i) the creation or elimination of a job class that is predominantly female or predominantly male, or
- (ii) the merger of a predominantly female or predominantly male job class with another job class;
- (i) the change of a predominantly male job class to a predominantly female job class,
- (ii) the change of a predominantly female job class to a predominantly male job class,
- (iii) the change of a job class that was neither predominantly female nor predominantly male to a job class that is either predominantly female or predominantly male, and
- (iv) the change of a predominantly female or predominantly male job class to a job class that is neither predominantly male nor predominantly female;
- (i) that are significant,
- (ii) that impact a substantial portion of the positions in the job class, and
- (iii) whose impact on the job class is not temporary; and
Use of workplace information — first period
41 (1) Subject to subsection (3), the employer — or, if a pay equity committee has been established, that committee — must use the workplace information collected under section 39 with respect to the first day referred to in that section in respect of the pay equity plan being updated to identify, for the purposes of subsection 78(1) of the Act, any differences in compensation for the period beginning on the day on which the most recent pay equity plan was posted and ending on that first day.
Use of workplace information — subsequent periods
(2) Subject to subsection (3), for each subsequent day referred to in section 39 in respect of the pay equity plan being updated, the employer or pay equity committee, as the case may be, must use the workplace information collected under that section with respect to that subsequent day to identify, for the purposes of subsection 78(1) of the Act, any differences in compensation for the period beginning on the day after the previous day with respect to which information must be collected under section 39 and ending on that subsequent day.
Retroactive salary rate change
(3) If workplace information that is collected with respect to a day referred to in section 39 contains a salary rate that, after that day but before the posting of the final version of the revised pay equity plan, is changed with retroactive effect starting from that day or earlier, the employer or pay equity committee, as the case may be, must use the retroactive salary rate applicable to that day rather than the salary rate in the information that was collected or a salary rate calculated under section 45.
Job classes not treated as part of group
42 If an employer — or, if a pay equity committee has been established, that committee — treated a group of job classes as a single predominantly female job class in its most recent pay equity plan and if workplace information collected under section 39 indicates that any of the following has occurred in a period set out in subsection 41(1) or (2), then for the purposes of subsection 78(1) of the Act, that employer or committee, as the case may be, may not continue to treat those job classes as a group in accordance with section 38 of the Act for that period or for any subsequent period until the posting of the final version of the updated pay equity plan:
- (a) less than 60% of the positions in the group are occupied by women;
- (b) a job class has been created since the most recent posting of the pay equity plan and added to the group; or
- (c) a job class within the group has been combined with another job class within or outside the group.
Group of job classes — number of employees
43 For the purposes of subsection 78(1) of the Act, with respect to a period referred to in subsection 41(1) or (2) of these Regulations, the rules under subsections 41(3) and 44(2) of the Act apply as if the reference in those subsections to “the individual predominantly female job class within the group that has the greatest number of employees” were a reference to the predominantly female job class within the group of job classes that had the greatest number of employees on the day with respect to which the workplace information that is used for that period was collected under section 39 if, when the employer — or, if a pay equity committee has been established, that committee — is using this information, it treats the group of job classes as a single predominantly female job class in accordance with section 38 of the Act.
Calculation of compensation
44 (1) For the purpose of identifying any differences in compensation under subsection 78(1) of the Act, the employer — or, if a pay equity committee has been established, that committee — must calculate compensation associated with predominantly female job classes and predominantly male job classes in accordance with the rules set out in sections 44 to 46 of the Act for each period for which the workplace information that has been collected must be used under section 41.
Phase-in of increases
(2) If an increase in compensation associated with a predominantly female job class is being phased in under subsection 61(2), 62(4) or 63(2) of the Act, then for the purposes of subsection 78(1) of the Act, the employer or pay equity committee, as the case may be, must calculate the compensation associated with the job class for each period set out in subsection 41(1) or (2) as if the increase had been made without being phased in.
Prohibited comparison — frozen compensation
45 For the purposes of subsection 78(1) of the Act, in carrying out the comparison of compensation using the rules and factors set out in sections 47 to 50 of the Act, an employer — or, if a pay equity committee has been established, that committee — must ensure that, for each period set out in subsection 41(1) or (2), no comparison is made between frozen compensation associated with a predominantly female or predominantly male job class and compensation that is not frozen and that is associated with a predominantly female or predominantly male job class in which unionized employees occupy positions, unless the salary rate that is used to determine salary in the calculation of the frozen compensation associated with a job class is
- (a) the salary rate obtained by adding, to the highest salary rate in the range of salary rates for positions in the job class, the product obtained by multiplying
- (i) the salary at the highest rate in the range of salary rates for positions in the job class
- (ii) the average percentage by which, since the compensation associated with the job class became frozen, the salary for positions in job classes that contain positions occupied by unionized employees to whom the pay equity plan applies and who are governed by a collective agreement that is not expired has increased; or
Difference in compensation during last period
46 For the period beginning on the day after the last day with respect to which workplace information must be collected under section 39 before the posting of the final version of a revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act and ending on the day before the day of that posting, any difference in compensation is the same as the difference that the employer or pay equity committee, as the case may be, identified for the preceding period.
Posting
Postings regarding updating
47 An employer that is required to post documents under section 80 or 81 of the Act must keep those documents posted for at least 60 days.
Final version of revised pay equity plan
48 An employer that is required, in accordance with section 83 or paragraph 85(2)(b) of the Act, to post the final version of the revised pay equity plan and of the document referred to in subsection 79(2) of the Act must keep them posted until it posts the final version of the subsequent revised pay equity plan under that section or paragraph.
Notice — increases
49 An employer that is required under section 84 of the Act to post a notice relating to increases must keep the notice posted until the later of the 60th day after the day it is posted and the day on which the increases to which the notice relates are paid in full.
Determination by member or panel
50 If the member or panel conducting an inquiry into a question of law or jurisdiction that has been referred to the Chairperson of the Tribunal under section 162 of the Act requires, under subsection 167(2) of the Act, an employer to post the determination issued at the conclusion of the inquiry into the question, the employer must keep the determination posted for the period specified by the member or panel, as the case may be.
Decision or document issued by Pay Equity Commissioner
51 If the Pay Equity Commissioner requires, under section 176 of the Act, an employer to post any decision, order, notice of violation or other document issued by that Commissioner, the employer must keep that decision, order, notice of violation or other document, as the case may be, posted for the period specified by the Commissioner.
Lump Sum
Entitlement
52 (1) For the purposes of subsection 88(2) of the Act, an employee referred to in subsection 88(1) of the Act is entitled to a lump sum in respect of each period set out in subsection 41(1) or (2) or section 46 in which a difference in compensation is identified between the predominantly female job classes and the predominantly male job classes and that falls within the maximum period described in subsection 88(2) of the Act.
Amount
(2) The amount of the lump sum to which the employee is entitled in respect of a period set out in subsection 41(1) or (2) or section 46 is the product obtained by multiplying the amount of the increase in compensation that was calculated with respect to the period for the job class in which the employee occupied a position by the number of hours the employee worked in the period.
Annual Statement
Employer
53 (1) For the purposes of paragraph 89(1)(h) of the Act, the following information is prescribed:
- (a) if the employer — or, if a pay equity committee has been established, that committee — has made the determination referred to in subsection 41(2) of the Act, an indication to that effect; and
- (b) if the employer — or, if a pay equity committee has been established, that committee — has made the determination referred to in subsection 20(2), an indication to that effect.
Group of employers
(2) For the purposes of paragraph 89(2)(h) of the Act, the other information that is prescribed is the following:
- (a) if the group of employers — or, if a pay equity committee has been established, that committee — has made the determination referred to in subsection 41(2) of the Act, an indication to that effect; and
- (b) if the group of employers — or, if a pay equity committee has been established, that committee — has made the determination referred to in subsection 20(2), an indication to that effect.
Transfers
Final version of pay equity plan
54 An employer that is required, in accordance with paragraph 94(1)(b) of the Act, to post the final version of the pay equity plan must keep it posted until it posts the final version of the revised pay equity plan in accordance with section 83 or paragraph 85(2)(b) of the Act.
Coming into Force
S.C. 2018, c. 27
55 These Regulations come into force on the first day on which both section 181 of the Pay Equity Act and section 417 of the Budget Implementation Act, 2018, No. 2 are in force, but if they are registered after that day, they come into force on the day on which they are registered.
SCHEDULE
(Paragraphs 19(1)(b) and 23(3)(a) and (b))
Similar Job Titles
Characteristic Duties and Responsibilities
Experience, Education and Training
As assigned by a manager, perform tasks and activities and provide services that do not require specialized knowledge
- (a) perform basic or support tasks and activities within a team or organization, such as operating equipment, cleaning, conducting repairs and performing routine maintenance tasks;
- (b) assist technicians, specialists or tradespersons in the completion of tasks and projects; and
- (c) report to a manager on the status of tasks and projects
- (a) no prior work experience required;
- (b) a high school diploma or equivalent may be required; and
- (c) on-the-job training may be required
- (a) specialist; or
- (b) tradesperson
As assigned by a manager, perform tasks and activities and provide services that require a specialized degree of knowledge
- (a) perform activities and tasks that require a specialized or particular degree of knowledge in a field of work, such as conducting research and analysis, developing technical policies and procedures and designing and inspecting systems to ensure compliance with operating standards;
- (b) provide advice and support to management regarding the tasks and projects of the team or organization; and
- (c) report to a manager on the status of tasks and projects
- (a) a college diploma or other post-secondary program in a specialized field of study may be required; and
- (b) certification in a specialized field of study and a period of supervised work experience may be required
- (a) supervisor;
- (b) team leader; or
- (c) program director
Based on direction from senior executives, organize and supervise the carrying out of tasks and projects by personnel within a team or organization
- (a) plan, organize, direct, control and evaluate the operations and activities of a team or organization;
- (b) coordinate and assign tasks to personnel within the team or organization;
- (c) supervise the conduct and work of personnel and recommend measures to improve productivity, quality or other performance measurements;
- (d) report to a senior executive, board or owner on the status of tasks and projects; and
- (e) conduct personnel management tasks, including the recruitment, hiring, training and promotion of employees
REGULATORY IMPACT ANALYSIS STATEMENT
( This statement is not part of the Regulations .)
Executive summary
Issues: Despite having the right to pay equity protected under the Canadian Human Rights Act (CHRA) for over 40 years , many women continue to be underpaid relative to men. Additionally, ensuring that pay equity as a human right is respected is difficult when using the existing complaint-based system under the CHRA. In some cases, women are simply not aware that they are being underpaid compared to men doing work of equal value or that their work is undervalued. In other cases, they are afraid or discouraged by the idea of launching a human rights complaint against their employer. This process can be daunting, administratively burdensome and resource-intensive for all parties involved.
Description: The Pay Equity Act (the Act) and the Pay Equity Regulations (the Regulations) introduces a proactive pay equity regime to the federally regulated public and private sectors. The Regulations set requirements concerning certain areas of the Act, specifically around the posting of documents in the workplace; the mathematical factors for comparing compensation; steps to follow when regression lines cross under the equal line method; methods for developing a pay equity plan when there are no predominantly male job classes; additional requirements when predetermined values of work are used; and a process for updating pay equity plans (maintenance).
Rationale: The Government of Canada committed to introducing proactive pay equity legislation in response to the 2016 report of the House of Common's Special Committee on Pay Equity (ESPE) calling on the Government to replace the existing complaint-based regime with a proactive regime for the federal jurisdiction. On October 29, 2018, the Government of Canada tabled the Act in Parliament as part of the Budget Implementation Act, 2018, No. 2 . On December 13, 2018, the Act received royal assent.
The objectives of the new proactive pay equity regime are to ensure pay equity is achieved and maintained, to help address systemic gender discrimination in compensation practices and pay systems, and to contribute to reducing the gender wage gap by addressing the portion of the gap due to the undervaluation of work done by women. The Regulations support this broader policy objective by providing specific details on key elements of the pay equity process required to bring the Act into force, while also ensuring that the process is transparent and fair.
Employers in the federally regulated private sector (FRPS) will carry total quantified costs of $1.629B for the 10-year period of 2021–2030, expressed in terms of present value, 99.82% of which is a result of pay equity payouts, since all increases in compensation paid in the FRPS are attributable to the Regulations rather than to the Act. The costs are minimal for the public service of Canada (PSC) (i.e. the federal government as an employer) and $22,423 for the federal government as a regulator. There are no costs for employees in either the FRPS or PSC nor any costs for other Canadian households.
Over that same period, the monetized benefits associated with the Regulations are estimated at $30M over 10 years for the FRPS, approximately $2M for the PSC and $1.626B for employees in the FRPS (due to payouts resulting from pay equity increases).
Therefore, the total costs associated with the Regulations are $1.629B over 10 years, while the total benefits associated with the Regulations are $1.658B over the same period resulting in a net benefit of $29M over 10 years (present value).
Issues
Pay equity is the concept of equal pay for work of equal value. The Act aims to address the systemic gender-based discrimination faced by women in federally regulated sectors by achieving pay equity through proactive rather than complaint-based means. This systemic discrimination manifests itself in compensation practices and pay systems of employers, which often results in employees in predominantly female job classes receiving less compensation than employees in predominantly male job classes who perform work of equal value.
This is especially relevant in light of the COVID-19 pandemic, which has disproportionately impacted women. According to Statistics Canada data, the labour force participation rate among core-aged women (25 to 54 years of age) decreased between February 2020 (83.4%) and July 2020 (82%). footnote 1 This reflected that women were involved in non-employment-related activities, such as childcare, at a higher rate than prior to the COVID-19 pandemic. In addition, women have experienced a higher rate of labour underutilization than men, meaning that more women who could have potentially been working are not working as much or not at all. While there have been employment gains since July 2020, women — particularly women between the ages of 18 and 24 — have experienced heavier employment losses and remain further from their pre-pandemic employment levels than men. footnote 2
The Regulations prescribe key elements and details required to ensure that employers, bargaining agents and employees are able to fulfill their duties and obligations under the Act.
Background
Since 1977, the CHRA has provided women working in federally regulated sectors — in both the private and public sectors — with the right to be paid the same wages as men when their jobs are of equal value, as measured by an objective evaluation of the skill, effort, responsibilities, and working conditions of those jobs. Women working in a federally regulated workplace who believe that they are underpaid compared to equal valued male-predominant jobs are entitled to file a complaint under the CHRA.
While the right to equal pay for work of equal value has been enshrined in the CHRA for more than 40 years, many women continue to be underpaid. In 2020, for every dollar a man earned in Canada, a woman earned only 89 cents as measured in hourly wages for full-time workers. footnote 3
In 2004, a task force led by Dr. Beth Bilson (the Bilson Committee) published a report, entitled Pay Equity: A New Approach to a Fundamental Right (PDF), urging the federal government to adopt a proactive approach by replacing the complaint-based system with a requirement that all employers conduct a pay equity exercise to root out and correct gender-based pay inequities. Building off this report in 2016, the House of Common's ESPE tabled a report, entitled It's Time to Act , calling on the federal government to move away from the complaint-based system towards a new proactive pay equity regime for the federal jurisdiction.
The Government of Canada subsequently tabled legislation in Parliament on October 29, 2018, introducing a proactive pay equity regime. On December 13, 2018, the Act received royal assent.
The Act directs federally regulated employers with 10 or more federally regulated employees to take proactive steps to ensure that they are providing equal pay for work of equal value. Employers with fewer than 10 employees remain covered by the CHRA framework. The Act applies to the FRPS footnote 4 and the PSC, including the core public administration (CPA), separate agencies, the Royal Canadian Mounted Police (RCMP) and the Canadian Armed Forces, footnote 5 as well as to the Prime Minister's Office and Ministers' offices. The regime also applies to parliamentary workplaces through amendments to the Parliamentary Employment and Staff Relations Act (PESRA) in a manner tailored to respect parliamentary privilege.
The Act applies to federally regulated employers with 10 or more federally regulated employees, and requires employers with 100 or more employees and employers with 10 to 99 employees, some of which are unionized, to form a pay equity committee made up of employer and employee representatives. This committee will be responsible for developing a pay equity plan for the employees employed by that employer that will identify pay equity gaps that exist between predominantly male and female job classes of equal value, and determine any increases in compensation owed to employees in those female job classes that the employer must pay to close those gaps. Once the plan is developed and posted, these same employers must also form a committee within five years to ensure that pay equity was maintained and update that plan. Employers with 10 to 99 employees, none of which are unionized, can develop and implement a pay equity plan without having to establish a committee (although they can choose to form a committee).
Employers with, on average, 10 or more employees in the year before the Act came into force are subject to the Act on the day it came into force and are required to develop a pay equity plan within three years of that day. When an employer comes to employ, on average, 10 or more employees at any time after the Act comes into force, they will become subject to the Act January 1 in the following year, and would be required to develop a pay equity plan within three years of that day.
The Act sets out the following steps an employer or pay equity committee must follow in establishing a pay equity plan.
The first step in establishing a pay equity plan is to identify the job classes found within the workplace. A job class is a group of positions that have similar duties, responsibilities and qualifications, are part of the same compensation plan and are within the same range of salary rates. For the core public administration (CPA), a job class consists of positions at the same group and level.
Next, the employer or pay equity committee must determine the gender predominance (i.e. female- or male-predominant, or gender neutral) of each of those job classes. A job class is to be considered predominant in one gender if at least 60% of the positions in the job class are occupied by one gender; historically, at least 60% of the positions in the job class were occupied by one gender; or the job class is one that is commonly associated with women or men due to gender-based occupational stereotyping.
Afterwards, the employer or pay equity committee must determine the value of work and calculate the compensation associated with each gender predominant job class. The criterion to be applied to determine the value of work is a composite of the skill, effort and responsibility required to perform the work, and the conditions under which the work is performed. In addition, when determining the value of work, the employer or committee must use a method that does not discriminate on the basis of gender, and makes it possible to determine the relative value of the work performed in all of the predominantly female and predominantly male job classes. When calculating the compensation of a job class, the employer or committee must include any form of remuneration payable for work performed by an employee — for example salaries, commissions, vacation pay, severance pay, bonuses, benefits and employer contributions to pension funds.
Next, the employer or pay equity committee must compare the compensation associated with female-predominant and male-predominant job classes of similar value in order to determine which female-predominant job classes require an increase in compensation. There are two methods in the Act that can be used for this comparison.
Equal average method: This method involves dividing up all predominantly male and female job classes into bands and then comparing the average compensation of all predominantly female job classes within a band with the average compensation of all predominantly male job classes within that band, or a neighbouring band or bands, as the case may be. A band is a range of job classes that are of equal or comparable value. It is up to the committee or employer to determine the width of the band. However, bands cannot overlap and must not be as wide as to encompass job classes that would not be considered of comparable value. A predominantly female job class will be owed an increase in compensation if the average compensation of all the predominantly female job classes in a band is less than the average compensation of the male job classes they are compared to, and the compensation of that particular predominantly female job class is below the male average. Pay equity is achieved when each of the male and female averages compared are equal when the increases are applied.
Equal line method : This method involves creating two regression lines: one for all the predominantly female job classes and one for all the predominantly male job classes. Each line represents the relationship between the job values and hourly rates of compensation. When the female regression line falls below the male regression line, all predominantly female job classes whose compensation is below the male regression line will be owed an increase in compensation. Pay equity is achieved when the male and female lines are made to coincide when the increases are applied.
A committee may use another method of its own choosing that it considers appropriate to compare compensation if it determines that neither method mentioned above can be used. If the employer is establishing the plan and determines that neither compensation comparison method can be used, the employer must apply to, and receive approval from, the Pay Equity Commissioner (Commissioner) within the Canadian Human Rights Commission (CHRC) for authorization to use another method.
After comparing compensation, the employer or pay equity committee must then set out when the increases in compensation are due. All increases in compensation will be payable in full as of the day after the final version of the plan is posted. However, if the total amount of the increases in compensation that is owed to all employees is greater than 1% of the employer's annual payroll, the employer will be allowed to phase in the increases over a number of years (no longer than three years for employers with 100 or more employees and no longer than five years for employers with 10 to 99 employees).
Finally, the employer or pay equity committee must post a draft pay equity plan and allow employees to provide comments on the draft plan. The employer or pay equity committee is then required to consider all comments received before preparing and posting the final version of the pay equity plan.
The Act also created the position of Commissioner to administer and enforce the Act. The Commissioner's role becomes effective the day the Act comes into force. The Commissioner plays a key role by assisting workplace parties in understanding their rights and fulfilling their obligations, including through the development of tools and education materials, investigating complaints and considering applications, and facilitating the resolution of disputes. Employers must submit annual statements to the Commissioner regarding their pay equity plans.
The Act sets out the steps to complete a pay equity plan outlined above and the requirement to form a pay equity committee and submit annual statements to the Commissioner. However, some details of the process to complete a pay equity plan, as well as details for meeting other requirements under the Act, are prescribed in the Regulations.
Objective
The objectives of the new proactive pay equity regime are to ensure pay equity is achieved and maintained, to help address systemic gender discrimination in compensation practices and pay systems, and to contribute to reducing the gender wage gap by addressing the portion of the gap due to the undervaluation of work done by women. The Regulations support this broader policy objective by providing specific details on key elements of the pay equity process, while also ensuring that the process is transparent and fair.
Description
The Regulations set requirements around posting of documents in the workplace, a mathematical factor for each of the compensation comparison methods, steps to follow when regression lines cross under the equal line method, methods for developing a pay equity plan when there are no predominantly male job classes, a process for updating pay equity plans (maintenance), and additional requirements when predetermined values of work are used.
(1) Requirements around posting of documents in the workplace
Under the Act, employers are required to post several types of documents in the workplace, including notices; drafts and final versions of their initial and updated pay equity plans; documents issued by the Commissioner (e.g. decisions, orders, notices of violation); and the results of the Canadian Human Rights Tribunal's inquiries into questions of law or jurisdiction.
The Regulations require employers to make all postings available in either printed form or electronically and accessible to all employees to whom the posting relates. Making documents accessible could include, for example, making them available in the following formats: digital accessible information system (known as DAISY); audio; e-text; braille; and accessible Portable Document Format (known as PDF); and ensuring documents are prepared in plain language. The Regulations will also ensure that postings are clearly dated.
The Regulations also lay out requirements related to posting draft and final pay equity plans. For example, the Regulations require that the draft plan remains posted for at least 60 days (i.e. the minimum period of time provided in the Act for employees to comment on the draft), and require that a final pay equity plan remain posted until an updated version of the plan is posted.
Additionally, the Regulations require that:
- (a) An employer, including an employer in a group of employers, post the notice stating their obligations under the Act within 60 days of becoming subject to the Act and keep that notice posted until their pay equity plan (final or updated version) is posted or, in cases where their obligations change because they decide to join or leave a group of employers or have been approved to establish more than one plan, until they post the new notice setting out their new obligations;
- (b) An employer who had applied to the Commissioner for approval to establish a pay equity plan without a pay equity committee must post notice of any such approval within 60 days of receiving it;
- (c) Decisions, orders, notice of violations or other documents issued by the Commissioner, and decisions issued by the Canadian Human Rights Tribunal remain posted for the duration specified by either the Commissioner or the Tribunal, respectively; and
- (d) Notices of an increase in compensation remain posted until the later of (a) the 60th day after it is posted; or (b) the day on which the increases to which the notice relates are paid in full.
(2) Mathematical factors for comparing compensation
The Act requires that an employer or pay equity committee compare the average compensation between predominantly female and male job classes to identify and address any pay equity gaps in the workplace. This is to be achieved using the equal average or equal line method, as set out in sections 49 and 50 of the Act and briefly described in the ''Background'' section, and using the formulae determined through regulation.
The Regulations set the formulae for the two methods such that:
- (a) The size of the increase in compensation owed to each eligible female-predominant job class can be determined;
- (b) Proportional adjustments are made so that female job classes further below the average male compensation in a band (for the equal average method) or below the male regression line for a given job value (for the equal line method) would receive larger increases in compensation;
- (c) The prescribed formula will do this by generating a factor value with which to calculate each female job class increase. A factor of 1 would result in a job class receiving an increase equal to the full difference in compensation identified, and factors of between 0 and 0.99 providing a job with an increase equal to a percentage of that difference (e.g. a factor of 0.8 will provide the job class with an increase equal to 80% of the difference).
- (d) Female job classes above the average male compensation in a band (for the equal average method) or above the male regression line (for the equal line method) will not receive an increase in compensation;
- (e) After increases in compensation are made, the average female compensation aligns with the average compensation of the male job classes of equal or comparable value (for the equal average method) or that the female regression line coincides with the male regression line (for the equal line method); and
- (f) Compensation is never decreased for any job class to achieve pay equity.
(3) Steps to follow when regression lines cross under the equal line method
When using the equal line method, there may be instances when female and male regression lines cross, resulting in part of the female line resting higher than part of the male line. When this occurs, the Act requires employers and pay equity committees to use the method set out in the Regulations to perform the compensation comparison analysis.
As a first step, the employer or pay equity committee will calculate increases in compensation using the equal line method to see if, by applying those increases, the crossed male and female lines will coincide. If the lines can be made to coincide this way, then the employer or committee has completed all the steps to establish or update their pay equity plan. However, if the equal line method cannot make the crossed lines coincide, the employer or pay equity committee must choose to use one of the following three methods set out in the Regulations: (a) the equal average method; (b) the segmented line method; or (c) the sum of the differences method.
The equal average method would be applied as set out in section 49 of the Act. A description of the equal average method is provided in the “Background” section above.
The segmented line approach would see an employer or pay equity committee divide all the job classes that were used to draw the initial male and female regression lines into two segments, using the point where the lines cross as the dividing line. As a result, all the job classes located to the left of the intersection would be one segment and the other job classes located to the right of the intersection would be the other segment. The employer or committee would then apply the equal line method to the job classes in each segment separately to draw and compare two new sets of male and female regression lines. If either set of regression lines cross again, then the employer or committee would then be required to use one of the other two methods available to them: equal average or sum of differences.
The sum of differences approach determines increases owed to female job classes below the male regression line by multiplying the differences in compensation between the compensation of these job classes and the compensation these job classes would have received if they were on the male line (i.e. same job value but higher amount of compensation) by the factor determined using the prescribed formula so that the sum of those differences equals the sum of the differences for all the female job classes above the male line and the compensation those job classes would have received if they were on the male line (i.e. same job value but lower amount of compensation). Pay equity is achieved when the average compensation of all female job classes is equal to what their average compensation would be if they were on the male regression line. Just as female job classes in a band will not receive increases in compensation where the female average is above the male average using the equal average method. When using the sum of differences method, female job class would not be eligible for an increase if the sum of the differences for female job classes above the male line is equal to or larger than the sum of the differences for female job classes below the male wage.
(4) Method for developing a pay equity plan when there are no predominantly male job classes
Pay equity relies on the comparison of compensation of predominantly male and predominantly female job classes of equal value. Therefore, a predominantly male job class is required to serve as a comparator for the pay equity regime to work. The Regulations allow private and public sector employers without any predominantly male job classes to choose, with certain restrictions, between two methods outlined in the Regulations — the “proxy” or “typical job classes” methods — to establish a pay equity plan.
The proxy method requires an employer or pay equity committee without a male comparator to select three or more predominantly male job classes from another organization or business covered by the Act and to develop “proxy” male job classes in their plan. The Regulations set out requirements to be met by both the employer of the proxy workplace and by the employer or committee in need of a male comparator. To serve as a “proxy” workplace, the employer of that workplace must be subject to the Act, have identified at least three predominantly male job classes, calculated the compensation associated with each of those job classes, and agreed to provide data regarding the value of work and the compensation of the predominantly male job classes selected by the employer or committee in need of a male comparator. The Regulations also set out criteria that must be taken into account by the employer or workplace without a male comparator when selecting a proxy workplace that is similar to their own. With the information acquired from the proxy workplace, the employer or committee that uses the proxy method is then required, under the Regulations, to complete the steps of establishing a pay equity plan set out in the Act. It must do so by determining the value of work and calculating the compensation of the proxy male job classes as if they were job classes within the employer's business or organization, and then comparing the results of this exercise to the predominantly female job classes using either the equal average or equal line method to determine if increases are owed to those predominantly female job classes.
The typical job classes method requires an employer or pay equity committee without a male comparator to use three fictional predominantly male job classes (maintenance worker, technician, and manager) set out in the Regulations to complete their plans. The typical job classes set out in the Schedule to the Regulations
- Include general job descriptions including duties and responsibilities, as well as employment requirements (e.g. certification, education, experience) for each typical job class;
- Include specific requirements regarding the determination of hourly salary and calculation of compensation (e.g. the need to include benefits) for each of the typical job classes; and
- Adapt the steps for establishing a plan that is set out in the Act in order to allow an employer to value the work and calculate the compensation of the fictional male comparators as if they were part of the employer's business or organization.
Pursuant to the Regulations, after having created these male comparators, the employer or pay equity committee is then required to compare them to the predominantly female job classes using either the equal average or equal line method to determine if increases are owed to those predominantly female job classes.
Finally, the Regulations require the employer or pay equity committee to identify if they used either the proxy or typical job classes methods in their pay equity plan.
(5) Process for updating pay equity plans (maintenance)
The Act requires that the employer or pay equity committee update their pay equity plan at least once every five years in order to identify and address any pay equity gaps that have appeared since the posting of the initial — or, most recently updated — plan. However, the Act leaves many details on how to conduct a maintenance review prescribed by the Regulations.
The Regulations require that pay equity gaps found during the maintenance process be closed by adjusting the compensation of the predominantly female job class that is paid less than the predominantly male job classes of equal or comparable value. Additionally, the Regulations require employers to make retroactive lump-sum payments for any pay equity gaps found, as well as ongoing wage adjustments as needed, which begin once the updated pay equity plan is posted.
The Regulations set out the following process for updating pay equity plans.
Step 1: Collecting data
The Regulations require the employer or pay equity committee to collect data in the form of “snapshots,” and to use these snapshots as the basis of the pay equity analysis. A snapshot is a point-in-time data set (e.g. gender predominance of a job class, compensation of a job class) that the Regulations deem to be representative of the workplace for a one-year period.
The last snapshot used to develop the updated pay equity plan is referred to as the “final set,” and is considered representative of the workplace for the period of time between the date that the preceding snapshot was taken, and the date that the updated plan is posted.
With the exception of the final set, snapshots must be collected for every March 31 for the public sector and for every day when each employer's fiscal year ends for the private sector. The exact date on which the final set is to be collected will be chosen by the employer or pay equity committee. However, once the final set date has been selected, the Regulations require that the updated plan be posted within one year following this date.
Step 2: Analyzing workplace information
The Regulations require that the employer or pay equity committee carry out a pay equity analysis of the data collected in each snapshot, to identify any changes that are likely to have impacted pay equity since (i) the posting date of the initial or most recently updated plan; or, (ii) the previous snapshot, whichever is more recent.
Below is an overview of the types of changes that would need to be identified in the analysis of workplace information.
Changes to job class structures
Changes that fall under the following categories would be considered in the analysis:
- (a) the creation or elimination of a gender-predominant job class; and
- (b) the merger of two or more gender-predominant job classes.
Changes to gender predominance
Changes that fall under any of the following categories are to be considered in the analysis:
- (a) a gender-predominant job class that became non-gender-predominant;
- (b) a male-predominant job class that became female predominant;
- (c) a female-predominant job class that became male-predominant; and,
- (d) a non-gender-predominant job class that became gender-predominant.
Changes to duties, responsibilities and working conditions of a job class
The Regulations set out requirements related to identifying changes in the duties, responsibilities and working conditions of a job class for the core public administration. In particular, the Regulations require that – prior to evaluating the potential impact of changes that could affect value of work – the core public administration pay equity committee must agree that the changes (a) are significant, (b) impact a substantial portion of the positions in a job class and (c) are non-temporary in nature.
Changes in compensation
For each snapshot, the employer or pay equity committee must determine the total compensation for each gender-predominant job class.
They must then identify changes in compensation, on a percentage of compensation basis, footnote 6 of a gender-predominant job class that were not made equally across all other gender-predominant job classes.
Step 3: Comparison of compensation
If the analysis of a snapshot reveals any change set out above, the Regulations require that the employer or pay equity committee conduct a comparison of compensation to identify and measure the size of any resulting pay equity gap.
In the case where new rates of pay applicable to any snapshot came into effect retroactively (e.g. due to retroactive implementation of a new collective agreement) within the same maintenance cycle, the new rates of pay would be used when analyzing the snapshot.
Phasing-in of adjustments made under the initial plan
Where an increase in compensation of a female-predominant job class resulting from the implementation of the initial pay equity plan is phased in over time and overlaps with the maintenance cycle, the employer or pay equity committee is required to calculate compensation as if all phased-in increases had been made.
Workplaces with multiple bargaining units
Where a workplace has multiple bargaining units, the Regulations also set out approaches to comparing compensation between job classes that are covered by a collective agreement that has not expired and job classes affected by a statutory freeze under the Federal Public Sector Labour Relations Act or the Canada Labour Code due to the expiry of their collective agreement.
In situations where the employer or pay equity committee determines that a comparison of compensation would be made between gender-predominant job classes with frozen rates of pay (i.e. subject to a statutory freeze) and ones that are not frozen, the Regulations set out steps to determine the compensation of the job class(es) covered by the statutory freeze. This is done by applying an adjustment factor equal to the average of all wage increases negotiated by all job classes (including gender-neutral ones).
The Regulations allow a pay equity committee to use a different method of comparing frozen and non-frozen compensation, provided that the alternative method meets a regulatory duty to negotiate reasonable measures to address the comparison between frozen and non-frozen rates of pay issues.
(6) Additional requirements when predetermined values of work are used
As per subsection 41(2) of the Act, when determining the value of work for predominantly female and male job classes, an employer or pay equity committee may choose to use values that have already been determined using a previously established gender-neutral job evaluation method. footnote 7 The methodology for establishing predetermined values will have to meet all the requirements set out in sections 42 and 43 of the Act (i.e. does not discriminate on the basis of gender; accounts for skills, responsibilities, and effort required for a job and the conditions under which the work in the job classes is performed, and is able to determine the value for all predominantly female and male job classes identified). In addition, the Regulations require that the pay equity plan clearly indicates whether predetermined job values were used as part of the determination of value of work and that the annual statement indicates that predetermined values were used to establish or develop that employer's plan.
Regulatory development
Consultation
In spring 2019, the Labour Program held several information sessions with stakeholders on the Act, at which the proposed regulatory items were broadly introduced. The first session, on April 16, 2019, was attended by over 20 organizations from different stakeholder groups. The following five sessions were more targeted, and provided information to the Canadian Bankers Association, Unifor, members of the Federally Regulated Employers – Transportation and Communications (FETCO) organization, separate federal agencies and parliamentary stakeholders.
Between May 31 and June 28, 2019, the Labour Program carried out two regulatory consultations. The first was an online survey to gather feedback from small employers to inform the development of a method to complete a pay equity plan in a business or organization where there are no predominantly male jobs. The second was a discussion paper soliciting the opinions of stakeholders on all proposed regulatory items. The online survey received 110 responses. The Labour Program received 37 written submissions in response to the discussion paper from employers, employer associations, unions and labour organizations, advocacy groups and subject matter experts.
In their written submissions, employers and labour organizations held divergent views on the scope and purpose of the proposed Regulations. Employers were generally of the opinion that the regulations should take a “light touch” approach by leaving it up to the parties completing the pay equity plans to determine the best course of action in most instances (for example how long a document should be posted). If requirements are prescribed, employers wanted them to be flexible. Labour organizations were generally of the opinion that the regulations should create prescriptive requirements for employers to follow to provide the best protections possible for employees.
More specifically, the key takeaways for each of the regulatory items are the following.
(1) Requirements around posting of documents in the workplace
The proposed Regulations require employers to make posting available in either electronic or printed forms. While some stakeholders (mostly employers) were in agreement with this proposition while giving preference to electronic postings, others (mostly employees) wanted to require both. The proposed Regulations would not specifically require a printed form but rather leave it to the employer or committee to choose what format is appropriate for their organizations, as long as the posting is easily accessible.
(2) Time limits to submit applications and notices with the Pay Equity Commissioner
The then-proposed time limits were chosen in light of the feedback received from stakeholders. They were often selected because they represented a fair compromise between stakeholders that wished to see short time limits and others who preferred longer time limits. In general, employee stakeholders wanted shorter deadlines to expedite the process to ensure that pay equity is achieved quickly and that businesses do not linger and or default on their obligations. In contrast, employer stakeholders wanted to have the most time possible to submit applications and post notices in order to have the most flexibility possible. At the time, the proposed Regulations would have offered flexibility while still encouraging parties to move the pay equity process forward.
(3) Mathematical factor for comparing compensation
Both employee and employer stakeholders generally raised concerns that the use of a mathematical factor could overcomplicate the process. However, the factor formulae for the equal average and the equal line methods are necessary to successfully complete the pay equity process in a manner that achieves the intent of sections 49 and 50 of the Act. Therefore, they were designed in the simplest way possible to ensure the desired outcomes.
(4) Steps to follow when regression lines cross under the equal line method
Some stakeholders proposed only increasing the compensation of the female job classes that fall below the regression line, regardless of whether the lines cross or not. Other stakeholders suggested referring back to the equal line method in situations where the regression lines cross. Finally, several stakeholders proposed the use of the segmented line approach to deal with crossed lines under the equal line method. Ultimately, a combination of the segmented line approach, the sum of differences approach and the equal average method was selected as helping to achieve the desired outcomes while also providing flexibility for pay equity committees or employers to choose from various options.
(5) Method for developing a pay equity plan when there are no predominantly male job classes
In general, the feedback received indicated that the proposed Regulations should strike a balance between guidance and flexibility if such a circumstance should arise. That is why the proposed Regulations would provide two options to choose from in such a circumstance: the proxy method and typical job classes method. Some stakeholders asked for the typical job classes method given that they are familiar with it since it is used in Quebec's pay equity regime. However, those stakeholders also voiced their opinions that offering only two fictional job classes did not offer enough flexibility to employers and committees to successfully represent their organizational depth. Therefore, the proposed Regulations would offer the use of three fictional job classes.
(6) Process for updating pay equity plans (maintenance)
The proposed Regulations would include a list of the types of changes that could have an impact on pay equity, and thus, would warrant re-examination at maintenance. That list is broadly consistent with what stakeholders proposed as potential changes that could likely affect pay equity in one's organization. Further, during consultations, the Labour Program canvassed stakeholders as to whether wage increases that are phased in over time but overlap with the maintenance cycle should be captured as part of that maintenance cycle. A vast majority of stakeholders were of the opinion that the employer or pay equity committee would be required to calculate compensation as if all phased-in increases had already been paid. The proposed Regulations would be consistent with that view. In addition, the stakeholders flagged the issue of collective bargaining and including some type of measure to ensure that wage comparisons are done using wages from the same collective bargaining round. The proposed Regulations would include procedures — applicable to both plan development and maintenance — that would prevent comparisons of compensation from being made across bargaining rounds.
Consequently, as detailed above, the proposed Regulations would strike a fair balance by proposing requirements only where it is considered necessary for the purposes of ensuring that employers and pay equity committees are able to complete requirements set out in the Act and within the legislated time limits, and also ensure that the process of developing or revising a pay equity plan is transparent to the employees to whom that plan relates.
Lastly, from September 2019 to January 2020, and again in May 2020, two pay equity compensation comparison experts specializing in mathematical and statistical approaches to comparing compensation were engaged. Specifically, feedback was gathered on the development of compensation adjustment factor formulae for the equal average method and equal line method (item 3) and on ways to address situations where the female and male regression lines cross under the equal line method (item 4).
Prepublication in the Canada Gazette , Part I
Proposed Pay Equity Regulations were prepublished in Part I of the Canada Gazette on November 14, 2020, for a 60-day comment period. A total of 34 submissions were received from organizations representing employers, unions, advocacy groups and pay equity experts. The submissions provided both broad comments on the implementation of the federal pay equity regime and feedback on specific proposed regulatory provisions.
Generally, stakeholders noted the complexity of the proposed Regulations and expressed a desire for more clarity concerning the intention and application of certain provisions. Employer representatives emphasized a need for flexibility with respect to developing their respective pay equity plans in various federally regulated industries with evolving workplace realities. Employee representatives emphasized the need for clearer language in the proposed Regulations and strong measures to ensure employers update pay equity plans in a timely and transparent manner. Advocacy organizations noted the importance of ensuring the timely development of pay equity plans and effectively meeting the purpose of the Act.
In response to this feedback, numerous amendments have been made to the Regulations, including improving the clarity of the Regulations; enabling greater flexibility in the pay equity process, where such flexibility would not delay the pay equity process; and ensuring transparency when developing and updating pay equity plans.
The following summarizes the key comments and the Labour Program responses.
(1) Requirements around posting of documents in the workplace
(a) Notices of employer obligations (proposed regulations: sections 7, 8, 40 and 41; final regulations: sections 7, 8, 36 and 37)
Both employee representatives and advocacy organizations wanted the Regulations to impose a fixed time limit on employers to post a notice of their obligations under the Act. This would ensure employees can actively participate in the process of establishing and updating the pay equity plan. The proposed Regulations required that an employer post these notices “as soon as feasible” after they became subject to the Act when establishing their plan, and “as soon as feasible” after the last snapshot was taken.
In consideration of this feedback, and to provide clarity for employers, the Regulations require employers to post notices of their obligations to establish a pay equity plan “within 60 days” of becoming subject to the Act and keep it posted until the final pay equity plan has been posted. The Regulations also require employers to post notices of their obligations to update a pay equity plan before the first snapshot is taken and to keep it posted until the final updated pay equity plan is posted.
The Regulations also allow the notice to be taken down if the Commissioner approves an application to establish multiple pay equity plans, so as to allow those employers to post a notice setting out their new obligations to establish multiple plans.
(b) Notices of approval to develop or update pay equity plans without a pay equity committee (proposed regulations: section 13 and subsection 44(1); final regulations: section 9 and subsection 38(1))
Employee representatives recommended that when the Commissioner approves an employer's application to establish or update a pay equity plan without a committee, that the employer be required to post a notice of the Commissioner's approval within a specified period of time. The proposed Regulations required that an employer post these notices “as soon as feasible” after the Commissioner's approval was granted. Employee representatives were concerned that the absence of a specific time limit for posting this notice might lead to delays in informing employees about the pay equity process. In consideration of this feedback, and in order to provide clarity to employers, the Regulations require employers to post these notices “within 60 days” of the Commissioner's approval.
(2) Time limits to submit notices and applications to the Commissioner
The proposed Regulations set time limits for submitting certain notices and applications to the Commissioner. The changes described below remove all-time limit requirements for notices and applications to the Commissioner. The removal of these time limits will not delay the pay equity process as workplace parties will still have to establish their plans within the three-year deadline set out in the Act.
(a) Notice to voluntarily establish a pay equity committee (proposed regulations: sections 9, 10, 42 and 43; final regulations: N/A)
Experts in pay equity raised concerns that a 60-day time limit for an employer to submit a notice advising the Commissioner that they have voluntarily established a pay equity committee may be interpreted to mean that the employer only has 60 days to establish that committee after they post their notice of obligations. This would mean that in instances where it takes longer than those 60 days, the validity of that committee could be called into question. As the intent of the provisions was not to restrict employers from voluntarily establishing pay equity committees, the Regulations do not establish such a time limit.
(b) Application to establish multiple pay equity plans (proposed regulations: sections 11 and 12; final regulations: N/A)
Pay equity experts and employer representatives advised that given the complexity of determining if workplace parties would apply for multiple plans in addition to the time it would take to make the application, the 12-month time limit would be overly restrictive. As the Act does not give the Commissioner the authority to extend the time limit for applications, if an application is not submitted within 12 months, that workplace would be unable to establish multiple plans no matter their circumstances. Conversely, employee representatives expressed concern that the existing time limit was too long and that it could lead to delays in the pay equity process.
The risks flagged by employee stakeholders are mitigated by the fact that an application to establish multiple pay equity plans does not stop the clock on the pay equity plan process. Regardless of when the application for multiple plans is submitted, the pay equity plan or plans must be posted within three years of becoming subject to the Act.
In consideration of the benefit of preserving the flexibility for complex workplaces to establish multiple plans, along with the protective measures set out in the Act, the Regulations do not set a time limit for workplace parties to make an application to establish multiple plans.
(c) Application for longer phase-in of compensation increases (proposed regulations: section 37; final regulations: N/A)
Similar to the concerns shared in relation to time limits for establishing multiple plans, pay equity experts advised that imposing a time limit to apply to the Commissioner for a longer phase-in period would unduly restrict employers from applying if they experience extreme financial hardship after the plan has been posted and the payment of increases has begun. Employee representatives and pay equity experts also noted that the proposed time limit could lead to instances where an employer delays paying increases because they are waiting for a decision from the Commissioner on their application. Employee representatives recommended making the time limit earlier than what was proposed to ensure this did not happen.
As a result of these concerns, the Regulations have been amended to remove this time limit to ensure that this application can be used whenever an employer's financial circumstances warrant such an extension, as determined by the Commissioner. Any potential for abuse of this provision with the removal of the time limit is mitigated by the Commissioner's discretion to approve such applications only if he or she is of the opinion that the employer has demonstrated extreme financial hardship.
(3) Mathematical factor and comparing compensation
(a) Equal average factor formula (proposed regulations: section 15; final regulations: section 11)
Employee representatives and pay equity experts recommended that an alternate factor formula be available to enable proportional pay increases for female predominant job classes further from the male average in a band when using the equal average methodology. They believed this would require different factors being generated for each female job class owed an increase.
This change could not be pursued as the formula could not be amended to both generate different factors and still guarantee that the results of applying the increases would meet the requirement set out in the Act that the male and female average are equal once increases are applied. Additionally, although the current factor formula will only generate one factor for all eligible female job classes, the factor already provides for female job classes furthest away from the average male compensation in a band would receive a larger increase than female job classes closer to that male average. This is because the factor, when multiplied by the larger difference in compensation, will result in a larger dollar per hour increase.
(b) Equal line factor formula (proposed regulations: section 16; final regulations: section 12)
Stakeholders advised that the factor formula for determining pay increases when using the equal line method was very complex thereby making it difficult for small employers to complete their pay equity plans and for employees to meaningfully participate in the process.
In response to this feedback, the description of the equal line factor formula has been revised to make it easier to use. The substance of the formula has not changed, but it has been expressed in a way that it is more easily accessible. The Commissioner will also provide guidance materials to support employers and pay equity committees in using the formula.
(c) Comparing job classes (proposed regulations: sections 15 and 16; final regulations: sections 11 and 12)
Employer representatives and pay equity experts raised concerns that using the highest salary rate for positions in a job class to calculate the compensation for a job class would distort the compensation data, making compensation in a job class artificially high. They advised that this was likely to happen where certain positions — “high outliers” — within a job class received much higher compensation as a result of performance-based compensation policies. Conversely, employee representatives also recommended that high outliers amongst female job classes also be excluded to ensure that these outliers did not skew the comparisons and result in lower increases being paid to other female job classes.
This change could not be pursued because the Act requires that all male and female job classes be used to compare compensation and determine if pay equity gaps exist. However, with respect to the concerns raised about performance-based-pay creating high outliers, it is worth noting that the Act requires the exclusion of certain categories of compensation from the calculation of job class compensation, such as merit-based compensation plans that are based on a system of formal performance ratings. These exclusions will reduce the incidence of highly compensated outliers and their potential to distort job class compensation.
(d) Definition of “band” (proposed regulations: section 1; final regulations: section 1)
Employee representatives raised concerns that by not defining the width of a band for the equal average method, the size of the bands may be manipulated in order to minimize pay increases to female predominant job classes. They recommended that the term “band” be defined in the Regulations to have a specific width or scope.
The definition of “band” in the Regulations is the same as the definition in the Act. Changes to the definition in the Regulations could not be made because they would introduce inconsistency between the Act and the Regulations that could lead to the results generated using the equal average method in the Act being invalidated when applying the equal average factor formula (section 15). A different definition would also result in different criteria being used by workplaces that compare compensation using the methods set out in the Act and workplaces without male predominant job classes that compare compensation using the method set out in the Regulations. This would run contrary to the intention of ensuring that the proxy and typical job classes methods remain as similar as possible to the process set out in the Act.
(4) Method for developing a pay equity plan when there are no predominantly male job classes
(a) Salary information shared by a proxy employer (proposed regulations: subsection 23(2); final regulations: subsection 19(2))
Employee stakeholders and pay equity experts flagged that it was not clear whether salary information for male predominant job classes provided by another “proxy” employer would be subject to the same exclusions as those made when calculating the salary of female predominant job classes of the borrowing employer. This lack of clarity could lead to an inflated salary being shared and the inappropriate comparison of compensation between male and female predominant job classes.
In consideration of this feedback, the Regulations clarify that proxy employers may only share salary rates if the required exclusions under the Act have been applied.
(b) Criteria to determine the value of work (proposed regulations: section 25; final regulations: section 21)
Employee stakeholders recommended the criteria for valuing work be further defined to ensure they are interpreted and applied consistently across all federal workplaces.
The value of work criteria set out in the Regulations mirror those that are set out in the Act to value the work done by male and female predominant job classes. Given that the Act uses the same criteria and does not define them, it was determined that defining these criteria in the Regulations results in different criteria being used by workplaces that value work under the Act and workplaces without male predominant job classes that value work under the Regulations. This would run contrary to the intention of ensuring that the proxy and typical job classes methods remain as similar as possible to the process set out in the Act. As such, this recommendation was not pursued.
(c) Typical job classes (proposed regulations: section 27 and schedule; final regulations: section 23 and schedule)
Employee representatives and pay equity experts recommended that additional types of job class (professional or para-technical) be added to the list of “typical job classes” set out in the Schedule to the Regulations. These changes were recommended in order to create male comparators for specific types of female predominant job classes in workplaces that use the typical job classes method.
The policy intent behind developing the typical job classes comparators is to prevent discriminatory pay practices by enabling the comparison of compensation where there are no predominantly male job classes in a workplace. The typical job classes comparators set out in the schedule were designed to be used together to provide a range of values of work and compensation when using the equal average or equal line method set out in the Regulations. As such, it was decided that additional job classes were not needed to provide comparators for particular female job classes.
(d) Definition of “full-time” work (proposed regulations: subsection 27(7); final regulations: subsection 23(7))
Employee representatives and pay equity experts noted the determination for full-time work: 30 or more hours of work over a period of one week might not align with how full-time work is defined in some workplaces. Concerns were raised that this definition would lead to the typical job class comparators being assigned different hours of work than the female job classes they were being compared to. Various alternative durations were proposed.
Changes were not proposed because the current definition is consistent with definitions in other federal regulations, and is also the definition used by Statistics Canada.
The Regulations require employers and pay equity committees to calculate the typical job classes' compensation as full-time work in order to ensure that benefits with monetary value and other forms of flexible pay earned by full-time employees in that workplace are included in those calculations. With respect to the concerns raised about the use of typical job classes and assigning different hours of work, it should be noted that the compensation of job classes is calculated and then expressed as dollars per hour, allowing for consistent comparisons across job classes with different working hours. Further, because the Regulations also require that the compensation for the typical job classes be calculated as if the work done in those job classes was performed in the employer's operations, typical job classes would be assigned hours of work in line with the employer's operations.
(e) Including the name of the proxy employer in the pay equity plan (proposed regulations: section 34; final regulations: section 30)
Feedback from pay equity experts suggested that the requirement to name the proxy employer in a pay equity plan may deter employers from volunteering to share this data. This feedback was considered. However, it was determined that providing the name of the proxy employer in the plan was required to ensure transparency for employees covered by that plan; allowing them to effectively evaluate and comment on the draft pay equity plan.
(5) Steps to follow when regression lines cross under the equal line method
Process for resolving crossed regression lines (proposed regulations: sections 18–20); final regulations: sections 14–17)
Employee representatives commented that the process to follow when regression lines cross is overly complex. They specifically singled out being required to use a modified version of the equal line methodology as a first step and having to understand the new sum of differences method as particularly challenging. They also raised concerns that the factor calculated as part of the sum of differences method was both unnecessary and also likely to result in smaller increases in compensation for female job classes than what other methods would generate.
The proposed Regulations were specifically designed to resolve crossed regression lines, and do so when appropriately applied. As a result no changes were made to these provisions of the Regulations. The Commissioner will provide guidance to assist parties once the Act and Regulations are brought into force. As employers and pay equity committees are not required to use the sum of differences method and given its utility as a method that will work in all workplaces, no changes were made to the method. Additionally, it was determined that using the modified equal line method was an important requirement as it prioritizes the equal line method over other alternative methods.
(6) Process for updating pay equity plans (maintenance)
(a) Timing for taking snapshots (proposed regulations: section 45; final regulations: section 39)
Employer representatives expressed concern that the annual snapshot approach for collecting workplace information was unduly burdensome given that it is unlikely that changes that could impact pay equity would occur annually. They recommended that the snapshot approach be made voluntary or provide workplaces with greater flexibility to determine the regularity with which snapshots would be taken.
Pay equity experts also raised concerns that being required to collect snapshots of workplace information on specific days may be burdensome, and noted that a complaint could be made against the employer if it were not collected on those days despite any extenuating circumstances. For example, a complaint could be made against the employer if workplace information was not collected on the prescribed day even if their workplace was closed that day.
The snapshot approach was developed to ensure the regular assessment of pay equity and to identify emerging pay gaps in a timely way. As a result, the recommendation to make the snapshot approach voluntary and provide greater flexibility to determine the regularity with which snapshots would be taken were not pursued. However, the Regulations require employers or pay equity committees to collect workplace information “in respect of” the specific days as opposed to “on” the specific date. This amendment will prevent any undue burden on employers and pay equity committees by allowing the workplace information to be collected on any day while still ensuring that the workplace data collected represents the workplace on the prescribed days. Other changes were also made to the text of the Regulations to more clearly set out the steps to follow to take snapshots, analyze the workplace information collected in the snapshots and compare compensation for each snapshot.
(b) Group of job classes at maintenance (proposed regulations: sections 48 and 49; final regulations: sections 42 and 43)
Employee representatives stated that the group of job classes provisions in the proposed regulations were too complicated to understand. The Regulations have been amended to clarify the rules for determining when a group of jobs can continue to be used during the maintenance review process, as well as how to determine which female job class is the representative job class in that group at each snapshot.
(c) Collective bargaining timing in workplaces with multiple bargaining units (proposed regulations: sections 14, 47 and 51; final regulations: sections 10, 41 and 45)
Employee stakeholders, advocacy groups and pay equity experts identified the provisions related to collective bargaining timing as hard to understand. In addition to uncertainty about how to follow the steps for applying the prescribed approaches (i.e. the historical analysis approach and administrative rate approach), it was unclear to some stakeholders if these provisions only applied to job classes made up of unionized employees because the term “active” rates of pay could be misinterpreted to include non-unionized employees.
These same groups of stakeholders also raised concerns that the historical analysis approach risked preventing workplaces from addressing existing pay equity gaps because it used rates of pay from a previous year. They also noted that this method could potentially introduce gaps in pay when job classes whose rates of pay were calculated using the historical analysis approach are compared to job classes made up of non-unionized employees with current rates of pay. Finally, they also stated a preference for the use of actual rates of pay in place of rates of pay calculated using the Regulations.
To address concerns the provisions have been amended to clarify that “non-frozen” rates of pay only applies to positions held by unionized employees. The historical analysis approach has also been removed and the administrative rate approach has been made the default approach. If a pay equity committee chooses not to use the administrative rate approach, they would still be able to use a method of their own choosing provided that it minimizes, to the extent possible, the differences in compensation that result from the compensation associated with a frozen job class.
Additionally, the Regulations will also require that rates of pay bargained within the same maintenance period be used in all instances, where applicable. This last change will ensure that when snapshots are analyzed, and job classes with frozen rates of pay are identified, employers and pay equity committees will be required to use rates of pay that are bargained in the same maintenance period and retroactive to that snapshot period instead of calculating a rate of pay using the administrative rate method. New rates of pay bargained after posting of the plan will not be retroactive to a preceding maintenance period.
(7) Additional requirements when predetermined values of work are used (proposed regulations: subsection 24(2); final regulations: subsection 20(2), sections 31 and 53)
Employee representatives and pay equity advocacy groups expressed concern that when predetermined values of work are used to establish or update a pay equity plan, that pay equity plan could perpetuate discriminatory pay practices. The Act allows for employers and pay equity committees to use predetermined values of work if the method used to determine those values meets the legislated criteria, namely that it does not discriminate on the basis of gender and that it can determine the relative value of the work currently performed by all gender predominant job classed. This flexibility will reduce the amount of time and resources an employer or pay equity committee spend to determine the value of work if they can use values of work they already have that meet the requirements of the Act.
To ensure that employees are aware that predetermined values of work were used in their pay equity plan, the Regulations require that this be indicated in the pay equity plan. Additionally, the Regulations require that the use of predetermined values be reported in annual statements submitted to the Commissioner. These changes will ensure transparency in the pay equity plan process and provide information on the use of predetermined values to the Commissioner to allow him or her to track the use of predetermined values by workplaces and assess its impact on pay equity or the administration and enforcement of the Act.
Modern treaty obligations and Indigenous engagement and consultation
The Act will not automatically apply to First Nations band councils as employers. Also referred to in the Act as “Indigenous governing bodies” they will be excluded from the application of the Act until a date the Governor in Council may, by order, specify. The Regulations will therefore not affect these employers. The Labour Program will be conducting a separate collaborative engagement process with Indigenous partners to collect their views on the Act itself and see how it can be tailored to ensure positive results in an Indigenous context.
However, Indigenous-owned federally regulated private-sector businesses will be subject to the Act upon its coming into force. Stakeholders representing Indigenous-owned federally regulated businesses have been involved throughout the consultation process.
Instrument choice
The Labour Program looked at two separate options to ensure pay equity is achieved and maintained in federally regulated workplaces: (1) status quo; or (2) a legislative and regulatory framework.
As evidence and history has shown, ensuring that pay equity as a human right is respected is difficult when using the existing complaint-based system under the CHRA. In some cases, women are simply not aware that they are being underpaid compared to men doing work of equal value or that their work is undervalued. In other cases, they are afraid or discouraged by the idea of launching a human rights complaint against their employer. This process can be daunting, administratively burdensome and resource-intensive for all parties involved. A complaint-based process is not effective in ensuring that pay equity as a human right is respected. Providing non-regulatory tools would help raise awareness, and provide best practices in the hopes that employers will start using proactive pay equity measures. However, such measures would not be enforceable and would fail to meet the recommendations made by the Bilson Committee and ESPE.
A legislative and regulatory framework was considered the only instrument that would effectively ensure that proactive pay equity, as a right, is respected in the federal jurisdiction and adequately respond to the recommendations made by both the Bilson Committee and ESPE.
With that in mind, the Act was drafted, and drafted in such a way to allow the Governor in Council to make regulations on specific items.
Regulatory analysis
Rationale
The Regulations prescribe key elements and procedural details required to ensure that employers, bargaining agents and employees are able to fulfill their duties and obligations under the Act.
The rationale for each of the regulatory items described above is as follows:
- (1) Posting requirements: The Regulations ensure that key documents are accessible to all employees, and that certain documents are posted at a certain time and remain posted for the amount of time necessary to ensure the pay equity process remains participatory and transparent in nature.
- (2) Mathematical factors for comparing compensation: The Regulations allow an employer or the pay equity committee to complete the comparison of compensation using the methods set out in the Act and determine the increases owed to individual job classes.
- (3) Steps to follow when regression lines cross: The Regulations provide an employer and a pay equity committee with clear steps to follow to complete their pay equity plan when they use the equal line method to compare compensation and the female and male regression lines cross.
- (4) Method for developing a pay equity plan when there are no predominantly male job classes: The Regulations allow an employer or pay equity committee without a male comparator to establish a pay equity plan and achieve pay equity in their workplace.
- (5) Pay equity plan maintenance process: The Regulations provide the steps to follow to update a pay equity plan and determine if pay equity gaps arose since the posting of the most recent version of a pay equity plan, and thus ensure that pay equity is maintained and employees are compensated appropriately. Additionally, the Regulations provide a process for employers with multiple bargaining units to compare job classes covered by different collective agreements which are at different stages of the bargaining process and, thus, correct for the problems that arise when comparing job classes with active rates of pay to job classes with frozen rates of pay (i.e. differences in compensation due to reasons other than pay equity) that could lead to inequitable increases being paid to predominantly female job classes.
- (6) Additional requirements when predetermined values of work are used: The Regulations ensure that employees will know when predetermined values were used to establish or develop a pay equity plan, and also allow the Commissioner to track and analyze the impact of the use of predetermined values on the achievement and maintenance of pay equity.
Benefits and costs
The Regulations ensure that employers and pay equity committees are able to complete requirements set out in the Act and within the legislated time limits, and also ensure that the process of developing or revising a pay equity plan is transparent to the employees to whom that plan relates. Most of the costs borne by employers to meet their requirements under the new regime stem from the legislation itself.
The costs and cost savings presented herein apply only to the Regulations and do not include costs attributable to the Act. Various elements of the Regulations will either create new costs for businesses, provide net cost savings or be cost neutral.
The costs to businesses and organizations introduced by the Regulations fall into two categories: costs to carry out the activities stemming from regulatory requirements and payouts to employees (i.e. increases in compensation or lump sum payments). In general, for each activity under a given regulatory requirement, the cost is determined by multiplying
- the estimated number of hours of work it would take to understand the Regulations and then carry out the prescribed tasks in each activity in each workplace;
- the average hourly wage of an employee; and
- the estimated number of businesses or organization to be impacted by the Regulations.
Where necessary and where data is available, the costs are further broken down by the size of the business or organization: small (10–99 employees), medium (100–499 employees) and large (500+ employees).
Although the Act requires employers to increase employees' compensation or to pay lump sum amounts when either or both are owed, all payouts made using either the equal average or equal line methods set out in the Act will be determined using mathematical factors set out in these Regulations. This is also the case for employers or pay equity committees who use the proposed proxy and typical job class methods when there are no comparators, or the proposed segmented line method used when regression lines cross, as a mathematical factor set out in the Regulations will be used to determine the amount of the increases owed. Additionally, the sum of differences method to address crossed regression lines will also lead to payouts when it is used. Therefore, the cost of all payouts required under the Act is attributable to the Regulations. To determine the cost of payouts, the approach was to multiply together:
- the number of employees expected to receive either increases in compensation or retroactive lump sum amounts, whichever applied; and
- an estimate of the annual payout per employee.
Sources of information for costing
For the FRPS, the number of employers and employees were derived from the 2015 Federal Jurisdiction Workplace Survey (FJWS).
Employee counts from the 2015 FJWS were projected to 2019 using a growth rate derived from the Survey of Employment, Payroll, and Hours from 2015 to 2019.
Wage rate estimates were obtained from the 2019 Labour Force Survey. To calculate present value (PV), a discount rate of 7% was used, as recommended by the Canadian Cost-Benefit Analysis Guide for the evaluation of regulations, projects, programs or other government initiatives.
The costs of payouts to be made through the proxy and typical job class regulations, as well as the maintenance regulations, were based on results published by the Quebec Minister of Labour adjusted to reflect the unique nature of the FRPS and federal workplaces. Quebec results were used given the similarities between that province's proxy and typical job class methods, as well as the similarities between that province's approach to maintaining pay equity plans, and what is set out in the Regulations.
Information solicited from human resources firms with experience completing pay equity plans for businesses in Ontario and Quebec was used to estimate such matters as the number of employers likely to take a certain action (e.g. apply to be recognized as a single employer), encounter certain situations (e.g. female job classes being above the male regression line) and the number of hours it would likely take to complete certain processes (e.g. gather workplace information to analyze).
Finally, the costing assumes that employers will implement all tasks related to the establishment of a pay equity plan during the third year after the coming into force of the Act. The costing also assumes that tasks related to the maintenance stages will take place in the eighth year.
For the PSC, the baseline scenario is such that there will be no incremental costs associated with the Regulations and that all costs related to the pay equity exercise (i.e. administrative costs; any wage adjustments needed) are attributable to the Act.
More specifically, in the baseline scenario, the PSC would complete the pay equity exercise even in the absence of prescribed mathematical factor formulae by following subsection 48(2) of the Act, which allows for the completion of a pay equity process in cases where neither the equal average nor equal line methods can be used (i.e. through the use of an alternative method for comparison of compensation). It is also assumed that under this scenario, the PSC would use a wage comparison method that is similar to the methods set out in the Act.
Four key drivers underlie the baseline scenario: (1) constraints imposed by the Act to ensure certain outcomes of wage comparison factors even without regulations (i.e. requirements in sections 49 and 50 that averages or lines must coincide, as the case may be); (2) existing expertise with respect to wage comparison formulae; (3) heightened sensitivity to reputational risk in the public sector context due to highly unionized environments and past pay equity litigation under the CHRA model; and, (4) the Government of Canada's commitment to protecting human rights.
Changes following prepublication in Part I of the Canada Gazette
Several changes have been made in the cost-benefit analysis since its prepublication in Part I of the Canada Gazette . The adjustments are primarily the result of the following three factors:
- Changes made to the Regulations described above, such as the removal of all regulatory requirements related to the submission of applications and notices to the Commissioner, led to minor changes in enforcement costs and removed any administrative burden placed on employers;
- Change in the present value base year from 2020 to 2021 to reflect that the Act will come into force in 2021 resulted in an increase in estimated costs; and
- Changes to input data to refine wage information and the distribution of employees by size of employer reduced the total cost attributed to pay equity payouts.
These factors have resulted in the following differences since prepublication to the overall cost to FRPS employers for each requirement over 10 years and for the total amount of the payouts to employees:
- –$51,451 for the posting of documents in the workplace;
- –$49,329 for the mathematical factor for comparing compensation;
- –$28,224 for the steps to follow when regression lines cross;
- –$6,955 for the method for developing a pay equity plan when there are no predominantly male job classes;
- –$146,727 for the process for updating the pay equity plans (maintenance); and
- –$323,471,068 in payouts.
As the requirement related to the submission of applications and notices to the Commissioner was removed since prepublication, the total cost of that requirement has also been removed.
The full costing of the Regulations can be found in the Pay Equity Regulations cost-benefit analysis, including a summary of the changes made to this analysis since prepublication. A full copy of the cost-benefit analysis will be made available upon request to ESDC.PayEquity-EquiteSalariale.EDSC@labour-travail.gc.ca.
Costs
The following breaks down the costs imposed by the Regulations along the six core requirements:
- (1) Requirements for posting of documents in the workplace;
- (2) A mathematical factor for comparing compensation;
- (3) Steps to follow when regression lines cross;
- (4) A method for developing a pay equity plan when there are no predominantly male job classes (proxy);
- (5) A process for updating the pay equity plans (maintenance); and
- (6) Additional requirements when predetermined values of work are used.
All the costs and benefits are expressed in 2021 present value base year, and 2019 price year, and cover a 10-year period (2021–2030).
(1) Requirements for posting of documents in the workplace
The costs for the FRPS that arise from this requirement stem from preparing postings in braille, in large print, or any other form that makes the document accessible. As the work of reformatting can be done in-house except braille, the cost of having braille formats printed was also calculated. Costing assumes that the number of employers who need to post accessible documents would remain the same both at establishment and maintenance stages.
The costs are estimated at approximately $143,121 ($20,377 annualized) for medium and large businesses as a whole and organizations, and $223,990 ($31,891 annualized) for small businesses and organizations in the federally regulated private sector for a total cost of $367,111.
There are no anticipated costs for the PSC arising from this requirement because it is expected that PSC employers would adopt measures similar to the Regulations (i.e. accessibility, timing, and duration of posting) by proceeding to post all required materials in the necessary formats to ensure that all those to whom the plans apply can access the information. The rationale for this is that existing Treasury Board policies and directives on accessibility and duty to accommodate in the workplace already require the public sector to do exactly what the Regulations require. For example, the Policy on Communications and Federal Identity requires those subject to the Policy, including part of the core public administration, to be responsible for enabling communications with the public about policies, programs, services and initiatives, meeting the requirements of the Standard on Web Accessibility, and providing published information on request that is substantially equal for persons with disabilities. As a result of such policies and directives, the PSC is already accustomed to ensuring that employees receive pertinent information in formats that they can access; therefore, it is assumed that the PSC would also follow similar procedures with any relevant pay equity information.
(2) A mathematical factor for comparing compensation
The costs for the FRPS related to this requirement arise from reading and understanding the regulatory requirement and then applying the math factor formula as needed at both establishment and maintenance stages.
The total costs are estimated at approximately $69,234 ($9,857 annualized) for medium and large businesses and organizations as a whole and $172,078 ($24,500 annualized) for small businesses and organizations in the federally regulated private sector, for a total cost of $241,313.
There are no anticipated costs for the PSC arising from this requirement because it is anticipated that the PSC would take a similar approach as the one prescribed in the Regulations, as per the rationale set out above.
(3) Steps to follow when regression lines cross
The costs for the FRPS related to this requirement arise from understanding and applying the crossed-regression line regulations as needed at both establishment and maintenance stages. The total costs are estimated at approximately $53,523 ($7,620 annualized) for medium and large businesses and organizations as a whole and $86,039 ($12,250 annualized) for small businesses and organizations in the federally regulated private sector for a total cost of $139,562.
There are no costs for the PSC arising from this requirement because it is anticipated that the PSC would develop and apply a similar method were it not prescribed in the Regulations. More specifically, if any method for the comparison of compensation adopted under subsection 48(2) of the Act were to result in crossed regression lines, it is assumed that the PSC would develop and apply an approach similar to what would be prescribed in the Regulations (i.e. equal average, segmented line, or sum of differences), given the four key drivers mentioned above.
(4) The method for developing a pay equity plan when there are no predominantly male job classes
The costs for the FRPS that arise from the requirement prescribing a method to be used to develop a pay equity plan when there are no predominantly male job classes stem from following the prescribed steps to determine the value of work and calculate and compare compensation using either the proxy method or the typical job classes method. Additionally, when using the proxy method, there will be costs of finding a proxy employer and obtaining the necessary information from them. Costs are calculated for the establishment stage of the pay equity plan only as this process will not be followed when updating a pay equity plan. Proposed regulations for maintenance will be introduced at a later date. As large businesses and organizations are expected to have male-predominant job classes to use as comparators, costing for these Regulations were done only for small and medium-sized businesses and organizations.
The total present value costs for the 10-year period after implementation are estimated at approximately $6,971 ($993 annualized) for medium-sized businesses and organizations as a whole and $68,907 ($9,811 annualized) for small businesses and organizations in the federally regulated private sector for a total cost of $75,878.
Given the size of the PSC and the expectation that only a limited number (i.e. less than 1%) of small PSC employers would need a proxy approach, associated costs are expected to be small and are not calculated for the purposes of this exercise.
(5) Pay equity plan maintenance process
The costs for the FRPS that arise from this requirement stem from taking annual snapshots and analyzing each snapshot to determine if retroactive lump sums or increases in compensation are owed to employees. In the FRPS, costing assumes that the Act requires employers to take one “snapshot” to determine retroactive payment and increases in compensation moving forward. Consequently, costs were estimated for taking three additional snapshots (for a total of four annual snapshots in the five-year period before an updated plan must be posted) and analyzing those snapshots after the last snapshot is taken.
The total present value costs for the 10-year period after implementation are estimated at approximately $554,955 ($79,013 annualized) for medium and large businesses and organizations as a whole and $1,384,679 ($197,147 annualized) for small businesses and organizations in the federally regulated private sector for a total cost of $1,939,634.
There are no anticipated costs for the PSC arising from this requirement because it is anticipated that, in the absence of the Regulations, PSC employers would gather workplace data from annual snapshots over the five-year maintenance period, similar to what would be prescribed in the Regulations, mainly for technical reasons. Given the highly unionized workforce with frequently changing pay structures due to collective agreements with differing effective dates, multiple snapshots over the five-year period would help give a more accurate picture of any retroactive liabilities. The annual snapshot approach also offers greater accuracy compared to a single-snapshot approach in determining when compensation gaps emerged over the five-year maintenance phase, which would result in a more accurate determination of any retroactive adjustments owed (i.e. minimize financial and reputational risk of overpayments or underpayments to employees).
(6) Additional requirements when predetermined values of work are used
For the FRPS and PSC, there are no incremental costs associated with including information about the use of predetermined job values in a pay equity plan or in the annual statement because the time it would take to add this information to the pay equity plan and annual statement is negligible. For the PSC in particular, it is expected that PSC employers using predetermined values of work would likely still indicate that such values were used in their pay equity plans to comply with paragraph 51(h) of the Act, which states that pay equity plans must describe “the method of valuation that was used.” This would be seen as a transparency measure to ensure the employees have sufficient information to understand how the values of work of job classes were determined.
Payouts (increases in compensation and lump sum amounts)
For reasons stated above, the cost of all payout required under the Act, for both establishment and maintenance stages, is attributable to the Regulations for the FRPS. In the 10-year period after the Act comes into force, employers subject to the Act from the day it comes into force will only begin to pay increases in compensation at the beginning of year four. As it is assumed that pay equity is achieved once these increases are paid, annual payouts — both increases in compensation and lump sum amounts — for years 5 through 10 were calculated so as to maintain pay equity.
In 2021 present value terms, total payouts over the 10-year period are estimated to be $1.626B for all businesses and organizations in the FRPS, with small businesses and organizations paying out approximately $0.047B, and medium and large businesses and organizations paying out approximately $1.579B of that amount. Also in present value terms, annual payouts will amount to approximately $9.8M to $10.3M each year for small businesses and organizations and approximately $324M to $337M each year for medium and large businesses and organizations.
For the PSC, the cost of all payouts are attributable to the Act because it is assumed that employers and pay equity committees would take a similar approach under subsection 48(2) to that prescribed in the Regulations, especially the mathematical factor requirement from which most, if not all, payouts would stem.
Cost-savings
For both the FRPS and PSC, the benefits of the proposed Regulations generally are attributable to the clarity and transparency they will provide in workplaces implementing the Act. In the PSC, providing clarity and certainty around key elements of the pay equity plan development and maintenance processes found in the Act is estimated to result in cost savings of approximately $2M over 10 years in present value terms.
For the FRPS, by contrast, most of the cost savings stemming from increased clarity and transparency cannot be easily quantified but are nonetheless substantial. For example, increased transparency is expected to bolster employee confidence that their right to pay equity is being respected that will, in turn, contribute to a sense of empowerment in the workplace. This could have positive impacts on the workplace and overall economy, including increased productivity and higher retention rates as employees choose to continue to work for their employer, which would reduce how much time and resources an employer has to spend on hiring and training new employees.
However, by allowing FRPS employers to complete and maintain their pay equity plans, in present value terms, the Regulations are likely to save these employers and the respective unions or individual employees at least an estimated $30M in savings over 10 years in legal fees that would have been spent under the CHRA complaint-based approach. These estimates are conservative as they do not account for productivity lost by management and employees for time spent participating in litigation.
Costs to the Government
The federal government as regulator will incur the costs necessary to implement and enforce the Regulations, including creating and making available online tools and resources for stakeholders. In present value terms, it is estimated that the total costs over a 10-year period would be $22,423. In addition, there would be some enforcement costs for the Regulations regarding the FRPS as per the table below.
Table 1: Summary of enforcement resource requirements
Regulatory Requirements Enforcement Needs Description Enforcement Resource Requirements 1. Method for developing a pay equity plan when there are no predominantly male job classes (proxy) In the event that a notice of dispute or objection, or a complaint is filed with the Commissioner, the Commissioner would contact the parties to help them settle the matter. If the parties cannot reach an agreement, the Commissioner would order a settlement. Negligible. Expect very few objections or complaints. There are few organizations (less than 200) in the FRPS and PSC that will have no predominately male job class. 2. Posting of documents in the workplace In the event that a complaint is filed with the Commissioner about a document not being posted as per this requirement, the Commissioner would contact the parties to help them settle the matter. If the parties cannot agree, the Commissioner would order the employer to comply. Negligible. Expect very few complaints. 3. Process for updating the pay equity plans (maintenance) In the event that a notice of dispute or objection, or a complaint is filed with the Commissioner, the Commissioner would contact the parties to help them settle the matter. If the parties cannot agree, the Commissioner would settle the matter and direct the parties accordingly. Negligible to minor. Expect few complaints. Note: only expect complaints to begin in year 9 when employers are updating their plan. 4. Mathematical factor for comparing compensation In the event that a notice of objection or complaint is filed with the Commissioner, the Commissioner would contact the parties to help them settle the matter. If the parties cannot agree, the Commissioner would order a settlement. Negligible. Expect few objections and complaints, because applications of the mathematical factor is a straightforward and non-controversial step to pay equity (PE) plan completion. Compliance issues will rather centre on not having done a PE outright, which is rather non-compliance with the Act. 5. Steps to follow when regression lines cross In the event that a matter of dispute or objection, or a complaint is filed with the Commissioner, the Commissioner would contact the parties to help them settle the matter. If the parties cannot reach an agreement, the Commissioner would order a settlement. Negligible. Expect few objections or complaints, because applications of the cross-regression line formulae is a non-controversial step to PE plan completion. Compliance issues will rather centre on not having done a PE outright, which is rather non-compliance with the Act. 6. Additional requirements when predetermined values of work are used In the event that a complaint is filed with the Commissioner about a plan that did not indicate that predetermined values of work were used when such values were used, the Commissioner would order the employer to include this information in the plan. If the Commissioner became aware that an annual statement did not indicate that predetermined values were used when such values were used, the Commissioner would order the employer to include this information in their annual statement. Negligible. Expect very few objections or complaints. Cost-benefit statement
- Number of years: 10
- Base price year for costing: 2019
- Present value base year: 2021
- Discount rate: 7%
Table d2 note(s)
Table d2 note *By the end of year 3, pay equity plans are to be completed.
Year 4 is the first year when pay adjustments start.
