Canada Update: Impacts of the new Pay Equity Act on the public service and federally regulated companies

On August 31, 2021, the Pay Equity Act, which applies to the federal public service and to federally regulated companies with ten (10) or more employees, will come into force. Adopted in December 2018, it has taken over two years for the regulatory framework necessary for its deployment to be put in place. As a result, impacted federally regulated employers will need to ensure that they are aware of and understand their new obligations in this area. Here is a preview of what is to come.

Pay equity plan

By November 1, 2021, employers must post a notice to their employees regarding the establishment of a pay equity plan. If the business has 100 or more employees or if the employees are unionized, a pay equity committee must be established.

A pay equity plan must then be established and implemented within three years. To meet this requirement, employers will need to:

• identify the different job classes in their workplace;

• determine the gender predominance of each job class;

• determine the value of the work in each job class;

• calculate the compensation associated with each job class;

• identify differences in compensation between jobs of equal value.

Once this exercise is completed, the employer must post the draft pay equity plan with a notice informing employees that they have 60 days to provide comments.

During the third year of the plan’s implementation, the employer will be required to post the final pay equity plan and a notice of the resulting pay increases.

Increases in employee compensation

If the salary adjustments exceed 1% of the company’s annual payroll, it will be possible to phase in the increases over different periods depending on the size of the company:

• 10 to 99 employees: increases phased in over a maximum of five years after posting the plan;

• 100 or more employees: increases phased in over a maximum of three years after posting the plan.

Annual statement

Following the initial three-year period for implementing the pay equity plan, employers will be required to submit an annual statement to the Pay Equity Commissioner regarding their plan and maintenance activities.

Updates to the pay equity plan

At least every five years, employers will have to review and update their pay equity plans.

Conclusion

Developing and implementing a pay equity plan can be a complex exercise. The establishment and composition of a pay equity committee, if any, must also be carefully considered.

In a unionized environment, the alignment of the collective agreement with the new obligations arising from the legislation will also be the subject of complex discussions.

If you have any questions regarding the application of the new federal legislation, please do not hesitate to contact us or a consultant specializing in this area.

By Marie-Hélène Jetté & Philippe Bélisle, Langlois, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact canada@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.