Federal Pay Equity Law Coming into Force August 31st

At long last, the federal Pay Equity Act will come into force on August 31, 2021. The Act was first introduced on October 29, 2018, as part of Bill C-86, the Budget Implementation Act, 2018, No. 2, and received royal assent in December 2018.

The Act aims to bring about a dramatic shift in how pay equity is protected and will require all federally regulated employers to develop a pay equity plan within three years of becoming subject to the Act. Employers will also be required to pay employees if they are found to have been undercompensated throughout their employment. This is a welcome change for many who say that women in federally regulated workplaces have simply had to wait too long for these protections. Despite this, however, many women will have to continue to wait, as payouts are expected to be delayed until 2024.

The Act aims to ensure that women and men in federally regulated workplaces receive equal pay for work of equal value, since on average, women continue to earn approximately 89 cents per hour for every dollar earned by a male counterpart (among both full-time and part-time positions). The Federal government’s Pay Equity Division will continue to play a key role in the development of tools and educational resources and materials, dispute resolution, and the enforcement and compliance of measures.

Who does this Act apply to?

It’s important to keep in mind that this legislation applies to federally regulated employers only (think airlines, postal services, military, trans-border trucking, railway).  It does not apply to provincially regulated employers (such as Developmental Services organizations, social services providers, long-term care and retirement homes, and the vast majority of employers in Ontario).  Nevertheless, what happens at the federal letter may impact provincial pay equity, particularly given the uncertain state of pay equity obligations for employers who achieved pay equity through the proxy method.  It may be that the Pay Equity Hearings Tribunal will be compelled to create a new procedure for employers in this situation to maintain pay equity, and such procedure may be informed by goings on at the federal level.

What the Act Requires

 Once the legislation comes into force, employers with 10 or more federally regulated employees will be required to:

  • establish a pay equity plan within three years of becoming subject to the Act that examines differences in compensation between positions of equal value that are mostly held by women and those mostly held by men;
  • eliminate differences in compensation identified in the plan (within three to five years, depending on the size of the employer and the total amount of the wage adjustments due);
  • revise and update the pay equity plan at a minimum of every five years to ensure that no gaps have been reintroduced and to close them if they have;
  • post a notice by November 1, 2021 informing their employees that they will establish a pay equity plan;

More information and resources can be found here

Guidance and Resources

Finally, the Pay Equity Division will be regularly developing and providing guides and resources to assist and support employers, employees, and unions as they learn more about their obligations under the Act including information documents, backgrounders, an online dispute resolution platform, and a downloadable tool that will assist small and medium-sized employers to customize and develop a Pay Equity Plan.

PooranLaw will continue to monitor legal developments related to the Pay Equity Act. In the meantime, if you require legal assistance in determining how these new rules apply to you or your federally regulated organization, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.

Note: This article provides general information only and does not constitute, and should not be relied upon as, legal advice or opinion. PooranLaw Professional Corporation holds the copyright to this article and the article and its contents may not be copied or reproduced in any form, in whole or in part, without the express permission of PooranLaw Professional Corporation.