Home | News | Human Resources | Pay Equity

Pay Equity

Each of the provinces has different legislation that covers principles of “equal pay”. In some cases, the principle covered is “equal pay for equal work” and in other cases the principle covered is “equal pay for work of equal value”. In the future we will write an article on the difference between these two concepts. And we will cover what applies in different provinces and in the context of federal, or federally regulated, workplaces. This article focuses on the Pay Equity legislation in Ontario.

What is Pay Equity and Why it is Important?

What is Pay Equity?

Pay Equity is defined as equal pay for work of equal value.  The Pay Equity Act requires that jobs be evaluated and work mostly or traditionally done by women be compared to work mostly or traditionally done by men. The value of a job is based on the levels of skill, effort, responsibility and working conditions involved in doing the work. If jobs are of comparable value, then female jobs must be paid at least the same as male jobs. The purpose of the legislation is to redress historic gender discrimination in the compensation or pay of employees in female jobs in Ontario.

Who Is Covered?

The Pay Equity Act applies to any public sector employer (and their bargaining agents, if any) that is not federally regulated, or a private sector employer with 10 or more employees in Ontario that is not federally regulated. Full time and part time employees are covered by the Act, including employees who work on a seasonal basis.  Students working during vacations only are not covered. While a new employer may not have to post a Pay Equity plan, they still compare male and female job classes and pay female job classes at least as much where they are found to be of equal value to male job classes.

Employers Obligation

Developing a Pay Equity Plan is the first step in meeting an employer’s obligations under the Act. Employers are required to post notice in the workplace when an employer becomes subject to the Act. It is important to note that if a union is in the workplace, they are entitled to be involved in the Plan development.

Each organization must carry out the following activities:

  • Determine Job classes and gender domination
  • Determine the gender neutral system used or to be used such as factors of skill, effort, responsibility and working conditions
  • Conduct a comparison of job classes and their job rates (salary)

The plan will identify male and female dominated jobs- and those that are of equal value and outline the steps that will be taken to meet the minimum requirements and show that pay equity has been achieved. The plan also provides a payment schedule to adjust the underpaid wages of female job classes, if this is found to be the case, to bring female dominated positions (those of equal value) in line with their male counterparts – achieving Pay Equity.

There are statutory exemptions to Pay Equity:

  1. A gender neutral seniority system
  2. Merit pay plans based on formal, gender neutral performance ratings
  3. Quantity or quality of work
  4. Red circling
  5. Other factors not based on the sex of the employee

Employers need not make pay equity adjustments where the pay differences between male and female job classes is the result of one of these five factors.

Risk of Non-compliance

If an organization does not have a Pay Equity Plan in place or has not maintained its current one, it can be exposed to potentially serious financial liability.  An anonymous complaint may prompt a directive from the Pay Equity Office (the agency responsible for enforcing Pay Equity) for the organization to comply forthwith with their Pay Equity obligations.  There is no statute of limitations under the Pay Equity Act and any salary/pay adjustments owed by the employer are retroactive to the date of contravention. Simply put, you could owe past and current employees additional pay. In the case of a not-for-profit, this financial obligation can extend directly to the Board of Directors.

Maintaining Pay Equity

If an organization has a Pay Equity Plan they are required to maintain it.  Pay equity is not a one-time effort.  Due to changes in the workplace the Act requires an employer to achieve and maintain Pay Equity. Unionized employers with more than 10 employees are required to establish a pay equity committee. Employers are also required to review (every five years) and monitor all elements involved in the pay equity process, including changes related to the gender of job classes, the value of job classes, the compensation adjustments, the wage differences between compared jobs, and the effect of organizational changes on compensations practices. An organization should review its plan every five years, but also when the following changes occur as they could impact pay equity:

  • Restructuring in the organization (merger, acquisition, amalgamation, etc.)
  • New or vanishing job classes and/or new male comparators for a female job class
  • Significant changes in the value of the work performed for female or male job classes
  • Certification of a bargaining agent after a deemed-approved plan

More Information and Resources

Pay Equity Video from Canadian Human Rights Commission

Let’s connect to find out how ASSOCIUM can help your organization with employee benefits, human resources consulting and group purchasing solutions.

Scroll to Top