Critical Pay Equity Case has Dramatic Implications for Employers in Proxy System

On February 7, 2019, a judicial review hearing of a critical pay equity decision commenced in Toronto.  In this case, the Ontario Nurses Association (ONA) is challenging the 2016 findings of the Pay Equity Hearings Tribunal (PEHT).  Specially, the ONA is seeking a declaration that employers who have achieved pay equity in the proxy system must continue to refer back to the wage rates of the proxy comparator in order to maintain pay equity.  The outcome of this decision could have devastating consequences for not-for-profit organizations in the broader public sector, particularly developmental services, that are not funded to meet existing pay equity obligations, let alone the significant pay equity liability that would most likely arise if ongoing comparison to proxy organizations (typically hospitals) is deemed to be required.

In Ontario Nurses’ Association v Participating Nursing Homes, 2016 CanLII 2675, the PEHT had concluded that after having achieved pay equity, an employer does not have an ongoing obligation to maintain it by referring to job rate information from the proxy comparator named in their proxy order. The employer can instead base pay equity on comparisons between job classes within its own establishment.  However, in light of recent Supreme Court decisions related to pay equity legislation in Quebec, the PEHT’s decision has been challenged by the ONA.


Background – What is the proxy method?

Ontario’s Pay Equity Act (the “Act”) seeks to address the gender pay gap through redress in compensation for work performed by employees in female job classes. The Act requires employers to pay equal wages for work of equal value, regardless of the gender of the employee. In order to determine pay adjustments, employers use one of three methods of comparison between job classes: the job-to-job method, the proportional value method, or the proxy method. The proxy method of comparison allows organizations in the broader public sector, which are mostly female-dominated, to obtain and apply information from another public sector organization (also known as a “proxy employer”.)  Under the Act, employers have an obligation not only to achieve pay equity, but to maintain it.


Tribunal Decision

In 1994, the ONA agreed to a pay equity plan with a group of employers that operated more than 140 nursing homes across the province (also known as “Participating Nursing Homes”). Since the nursing home employees were almost exclusively female, the proxy method of comparison was used to determine a pay equity plan with reference to male job classes.   The Participating Nursing Homes achieved pay equity in 2006.  However, the ONA later asserted that pay equity had not been maintained and that changed circumstances, such as job duties and responsibilities, rendered the pay equity plans inappropriate and filed a Pay Equity Complaint which was heard in 2016.

In the hearing related to the Complaint, the ONA claimed that rather than a one-time comparison with the proxy employer, the Act required ongoing comparisons between the key female job classes of the employer and similar job classes of the proxy employer in the maintenance phase.  The PEHT disagreed with the ONA and summarized pay equity maintenance obligations as follows:

Generally speaking, maintenance requires the on-going monitoring of any changes in either the compensation or the value (the amalgam of skill, effort, responsibilities and working conditions) of female job classes and the male job classes (including deemed male job classes) used for comparison purposes.  In the case of proxy plans, however, maintenance does not require the monitoring of changes to the value or compensation of the female job classes in the proxy establishment….Instead, what is required is monitoring of the compensation and value relationship of the non-key female job classes and the key female job class as compared to the compensation/value relationship…that has already been determined to provide for pay equity.


Supreme Court of Canada Decisions on the Quebec Pay Equity Act

In May 2018, the Supreme Court of Canada (SCC) released two decisions with regards to pay equity legislation in Quebec. In Quebec (Attorney General) v Alliance du personnel professional et technique de la santé et des services sociaux, 2018 SCC 17, the SCC found that certain sections of the Quebec Pay Equity Act were unconstitutional. These sections allowed employers in Quebec to conduct a pay equity maintenance audit every five years. Even if the audit revealed a period of pay inequity during the past five years, only adjustments going forward were payable. The SCC found that equal pay had been delayed between the audits, resulting in a discriminatory impact on women, and therefore breaching section 15 equality rights under the Charter.

In Centrale des syndicats du Québec v Quebec (Attorney General), 2018 SCC 18, another section of the Quebec Pay Equity Act was considered, which allowed up to 6 years for implementation of a pay equity scheme for employers with no male comparator job classifications. While it was clear that the six-year implementation period allowed for a delay in equal pay, the SCC found that the advantages of the delay outweighed the harm. The SCC concluded that the delay allowed the employer to meaningfully address systemic pay discrimination and develop an effective remedy.

In Centrale des syndicats du Québec, Justice Abella stated:

…since women in workplaces without male comparators may suffer more acutely from the effects of pay inequity precisely because of the absence of men in their workplaces, these categories single out for inferior treatment the group of women whose pay, has arguably, been most markedly impacted by their gender. [para 29]


Judicial Review in Ontario

In light of the SCC decisions related to the Quebec Pay Equity Act, the ONA filed for judicial review of the PEHT decision in late 2018. In its application, the ONA claimed that the proxy method of comparison was unconstitutional because it failed to redress systemic gender discrimination. After the initial comparison to the proxy employer, the employer was not obligated to access male comparator information in the pay equity maintenance process. This resulted in the lack of a gender-based comparison to identify gaps in compensation. Women in female-dominated sectors were left with no means of pay equity maintenance and no remedy, contrary to the purpose of the Ontario Pay Equity Act and section 15 equality rights in the Charter.


What’s at stake for employers using the proxy method in Ontario?

The Supreme Court confirmed that pay equity regimes must be constitutionally compliant. In Quebec Attorney General), the SCC stated that although the provisions in the Quebec Pay Equity Act attempted to address systemic discrimination, in reality, they codified the “denial to women of benefits routinely enjoyed by men – namely, the compensation tied to the value of their work.” [para 38] The ONA’s argument is analogous to the SCC decision, where it claims that since the initial proxy comparison in 1994, a substantial pay gap has re-emerged for female job classes because there has been no ongoing reference with male job classes in the proxy employer.

If the Divisional Court finds in the favour of the ONA, employers using the proxy method may be required to access male comparator information from the proxy employer on an ongoing basis and ensure that they maintain pay equity in tandem with the proxy employer, rather than just internally. There is a chance, however, that the Divisional Court may agree with the PEHT and determine that it is possible to maintain pay equity without continuously resorting to the compensation practices in the proxy employer.

PooranLaw is following the judicial review closely and will keep you informed as it develops. If you have any questions or wish to discuss the implications for your organization, please contact Cheryl Wiles Pooran at

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