Are you ready for pay transparency?

On January 1, 2019, Ontario’s “Pay Transparency Act” comes into force. Ontario is the first province to introduce pay transparency legislation and it certainly will not be the last. The spirit of the Act can be viewed as an extension of the “Equal Pay for Equal Work” requirements in the Ontario Employment Standards Act, 2000 that came into effect on April 1, 2018, whereby employees performing similar work must be paid equally, regardless of their employment status (i.e. full-time, part-time, casual, temporary, or seasonal).

The impact of this legislation will vary from company to company. Dr. Catherine Connelly, Professor and Canada Research Chair of Organizational Behaviour at the DeGroote School of Business at McMaster University, believes, “Pay transparency can have a negative or positive effect on the trust levels between employers and employees, depending on how it’s handled. If every employee is included in the pay transparency (and if the pay is indeed fair), then the employer has demonstrated its integrity and employees will trust them. This has the potential to be very positive. But, if some employees learn that they have been underpaid compared to their coworkers, trust will likely be irreparably broken. Companies need to fix inequities and then ensure that pay transparency is implemented carefully.”

As such, we advise you to begin making the necessary plans to manage the January 1, 2019 change. we have listed below the areas of work that require your attention:

note that Compliance Officers have the authority to enter a workplace without a warrant to conduct a compliance audit or investigate a possible contravention of the Act; they can also impose penalties. Maria Gergin, Senior Associate at Borden Ladner Gervais (BLG) indicates, “the impact of a non-compliance to the Pay Transparency Act could be wider than only those penalties. So, an Ontario employer who does not remedy its gender pay gaps faces not only the potential for public scrutiny of its compensation practices, but also monetary penalties. Therefore, there are a number of good reasons for Ontario employers to begin to audit their pay practices, correct inequalities, and, of course, consult with advisors in preparing to comply with their reporting obligations.” It’s also worth pointing out that employers cannot intimidate, dismiss, or penalize employees for making enquiries about their compensation.

As the regulations related to the Act have yet to be drafted, there is limited guidance on what compensation is to be tracked and reported. We expect companies will need to continue to invest in pay compliance related work as it’s an essential part of managing relevant total rewards.

The Act intends to close the wage gap between men and women. Making pay distinctions based on gender is already prohibited by the Employment Standards Act and the Pay Equity Act, and the Pay Transparency Act will ensure compensation levels will be based on job requirements and the candidate’s qualifications.

For those who wish to learn more about how organizations plan to prepare for the enforcement of the bill, we will be organizing round-tables in the fall in Toronto and Ottawa. If you would like to participate, please contact us.