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February 2021

Federal Pay Equity – Are you ready?

The federal government’s new Pay Equity Act is expected to come into force this year. If you are a federally regulated employer, you will have to comply with the requirements within three years of its coming into force.

According to Statistic Canada, women earned $0.86 for every dollar earned by a man in 2016. In 2020, a woman earned $0.89 for every dollar earned by a man, which only narrowed the gap by $0.03.

The pandemic also appears to be having an impact in this regard. A study carried out by the University of British Columbia shows that the COVID-19 crisis is resulting in more women staying home and defaulting to the traditional domestic role, while men are more likely to remain in the workforce, thereby contributing to greater disparity in the pre-pandemic wage gap. Statistics Canada confirms this trend, which indicates that the labour force participation rate among core-aged women (25 to 54 years of age) has decreased since the start of the pandemic, and that women have experienced heavier employment losses and remain further from their pre-pandemic employment levels than men.

Pay Equity Act at a glance

Canada’s first federal proactive pay equity legislation received royal assent on December 13, 2018, and is anticipated to come into force in 2021 for federally regulated employers with 10 or more employees. The new Act is intended to help address systemic gender discrimination in compensation practices and pay systems. Compliance with the Act will contribute to reducing the historical gap and addressing the negative impact the pandemic is having.

The Canada Gazette posted an update on November 14, 2020, providing context and detailed requirements of the Act; however, the Pay Equity Commissioner has not yet confirmed the final regulations. Once the Act comes into force, federally regulated employers will be required to develop and submit a pay equity plan within three years of that date. The proposed regulations require employers with 100 or more non-unionized employees or 10 or more unionized employees to form a pay equity committee comprised of employer and employee representatives.

What steps should you take to be ready?

If your organization will be subject to the Act, we suggest that you perform a diagnostic to assess your readiness for the development of their pay equity plans while we wait for confirmation of the final regulations and for the Act to take effect. Prior to moving forward with compliance requirements, there are several steps you can take in advance to prepare:

  • Analyze the impact of distinct plans. You may have to request that the Pay Equity Commissioner approve the establishment of more than one pay equity plan.
  • Identify your job evaluation methodology. An objective job evaluation system implemented in advance will simplify the role the job evaluation committee’s role.
  • Assess potential gaps. Preparing your analysis in advance, in accordance with pay equity practices of job value and comparison methodologies, will allow you to identify pay gaps and propose solutions to correct the gaps in advance.
How can Normandin Beaudry help?

Normandin Beaudry’s experts have the experience, industry knowledge and tools to support organizations with their diagnostic and a proposed approach that will ensure compliance with the defined requirements and methodologies of the Act:

However, pay equity compliance on its own will not ensure your organization is offering fair pay to all employees. Normandin Beaudry can also support you with a diagnostic that goes beyond legislation requirements and considers additional minority groups.

If you would like to learn more about how NB can support you with federal pay equity compliance or fair pay practices in general, please contact us.