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Aug 10, 2021

Update for Federally-Regulated Employers: Pay Equity Act Comes Into Effect on August 31, 2021

By Daria (Dasha) Peregoudova and Bardia Jalayer

According to the most recent data from Employment and Social Development Canada, women are still paid 89 cents for every dollar a man earns. To address this at the federal level, on August 31, 2021, the long-anticipated federal Pay Equity Act (the “PEA”) will come into effect for federally regulated private and public sector employers with 10 or more employees. The PEA seeks to proactively achieve pay equity through “redressing the systemic gender-based discrimination in the compensation practices and systems of employers that is experienced by employees who occupy positions in predominantly female job classes so that they receive equal compensation for work of equal value.”

Pay equity does not necessarily mean equal pay for doing the same job, but rather compares the pay of workers in different jobs of similar value within the same organization. Affected employers will have to evaluate their compensation practices to ensure that men and women are being provided equal pay for doing work of equal value through the establishment of a pay equity plan within three years of the PEA taking effect (August 31, 2024), and thereafter updated every five years to ensure the proactive purpose of the PEA is maintained.

In developing a plan, the employers must (1) identify the different job classes made up of positions in their workplace; (2) determine whether each job class is predominantly male, predominantly female or gender neutral; (3) determine the value of work of each predominantly female or male job class; (4) calculate the compensation of each predominantly female or male job class, and (5) compare the compensation between predominantly female and male job classes doing work of equal or comparable value. Once this plan is established, employers will have to increase the compensation for all predominantly female job classes that are receiving less pay than their male counterparts.

Pay Equity Commissioner and Pay Equity Unit

A Pay Equity Commissioner (“PEC”) will be responsible for the administration, enforcement and education surrounding the PEA. The PEC will sit on the Canadian Human Rights Commission, and be responsible for dealing with any complaints of discriminatory practice related to pay equity under section 11 of the Canadian Human Rights Act. The PEC will be supported by a Pay Equity Unit.

Provincial employers are already subject to the provincial Ontario Pay Equity Act, which was discussed in a November 2019 Aird & Berlis article.

Please don’t hesitate to contact a member of the Aird & Berlis Workplace Law Group with any questions. 

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