Canada Looks to Close Gender Pay Gap, Introduces Pay Equity Legislation for Federal Employers

On October 29, 2018, the Government of Canada introduced Bill C-86, Budget Implementation Act, 2018, No. 2 (Bill C-86) in the House of Commons, which proposes new pay equity legislation, the Pay Equity Act (Act). If passed, the Act will apply to federally regulated employers with 10 or more employees.

The Act’s intended purpose is to “establish a proactive process for the achievement of pay equity by the redressing of the systemic gender-based discrimination experienced by employees who occupy positions in predominantly female job classes”.

Under the proposed legislation, federally regulated employers will be required to evaluate their compensation practices to ensure that they are providing equal pay for work of equal value.

Within three years from the date on which they become subject to the Act, federally regulated employers will be required to establish a pay equity plan. In establishing a pay equity plan, employers will be expected to:

  • Identify job classes within their workplace
  • Determine the gender predominance of the identified job classes
  • Determine the value of work performed by each job class
  • Identify the level of compensation associated with each job class
  • Compare the compensation associated with predominantly female job classes with the compensation associated with predominantly male job classes of similar value
  • Identify predominantly female job classes that require an increase in compensation and set out a date on which the increase in compensation is payable.

Pay equity plans are also to be reviewed and updated at least once every five years.

The Act will also require employers with 100 or more employees (or employers with less than 100 employees if some of those employees are unionized) to establish a pay equity committee to develop and update the pay equity plan.

In addition to imposing the above obligations on employers, the proposed legislation also establishes a Pay Equity Commissioner post within the Canadian Human Rights Commission.

If the Act is passed, the Pay Equity Commissioner will be responsible for administering and enforcing the Act by, among other things, conducting compliance audits, facilitating the resolution of disputes, conducting investigations, making orders and imposing administrative monetary penalties for violations of the Act.

In the interim, federally regulated employers would do well to review their current compensation practices and monitor the progression of Bill C-86.

For further information, please contact:

Alysha Sharma                          416-863-2451
Andrea York                              416-863-5263

or any other member of our Employment & Labour group.

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We would be pleased to provide additional details or advice about specific situations if desired.

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