Pay Equity Act comes into force this summer for federally regulated employers

August 12, 2021 | Thomas V. Duke, Annie Redmond

The Government of Canada has announced that the Pay Equity Act will come into effect on August 31, 2021. Employers in federally regulated industries will have three years to identify and correct pay disparities within their workplaces.

This pay equity legislation seeks to eliminate the wage gap between men and women in the workplace, aiming for equal pay for work of equal value. Achieving pay equity involves providing the same pay for jobs that are traditionally held by women and jobs that are traditionally held by men.

The Pay Equity Act

The legislation introduces a new proactive pay equity regime for federally regulated workplaces with ten or more employees. Employers will need to examine their compensation practices to ensure that they are providing equal pay to men and women doing work of equal value.

A Pay Equity Commissioner will be responsible for the administration, enforcement and education surrounding the legislation. They will also be responsible for dealing with any complaints of discriminatory practice related to pay equity under section 11 of the Canadian Human Rights Act. If employers are not in compliance, the Pay Equity Commissioner can levy fines reaching $30,000 for employers with up to 99 staff, and $50,000 for employers with over 99 staff.

Pay Equity Plan

Under the legislation, employers must establish and maintain a pay equity plan. The pay equity plan must be established within three years of becoming subject to the Pay Equity Act.

As part of this plan, employers must:

  • identify the different job classes made up of positions in their workplace;
  • determine whether job classes are predominantly male, female, or gender neutral;
  • determine the value of work for each job class;
  • calculate the compensation of each job class; and
  • compare the compensation between the job classes doing work of equal or comparable value.

Once the pay equity plan is established, employers will have to increase the compensation of any predominantly female job classes that are receiving less pay than their male counterparts. In addition, employers must update their pay equity plan every five years to ensure that they are maintaining pay equity.

Moving forward

If the new legislation applies to your workplace, there are some proactive steps you can take in preparation for August 31:

  • Review the current compensation practices in place;
  • Speak with HR to start developing a pay equity plan; and
  • If your workplace has 100+ employees, start taking steps to establish a pay equity committee.

If your organization is unsure of what obligations apply, or how to meet them, we encourage you to speak with a member of our team.


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