The Federal Pay Equity Act: Here’s What Employers Should Know

  • Equality & Diversity
The Federal Pay Equity Act: Here’s What Employers Should Know
Olivia Cicchini

Olivia Cicchini, Employment Law Expert

(Last updated )

Rather than focus on the concept of equal pay for equal work, the new federal Pay Equity Act (the “Act”) centers around the concept of “pay equity.”

The Act was first established in December 2018. It is set to finally come into force on August 31, 2021.

When the Act comes into effect, it will create new obligations for federally regulated employers to ensure roles that are predominantly done by women are not under paid.

What is pay equity?

Pay equity is providing equal pay for work of equal value. This means that employers must compensate workers in traditionally female roles at least the same as workers in traditionally male jobs if they are of comparable value.

Pay equity compares jobs typically done by women with other jobs usually done by men. Examples of typical female roles are childcare workers, secretaries, and librarians. Typical male jobs often consist of firefighters, truck drivers, and physical labourers. Each job is evaluated on the level of skill, effort, responsibility, and the associated working conditions.

What are the new requirements under the Act?

The Act aims to introduce a new pay equity regime for all federally regulated workplaces in Canada that have 10 or more employees.

Under this new Act, employers will need to be proactive in examining their compensation practices. They must ensure they are providing the same pay to men and women doing work of equal value.

To do this, the Act requires employers to create a “pay equity plan” within three years of becoming subject to the Act (August 31, 2024).

What should employers keep in mind while creating a pay equity plan?

The main feature of the Act is that it places a requirement on employers to create, and continually update, a pay equity plan.

When developing a plan, employers must:

  • Identify the different job classes made up of positions in their workplace
  • Determine if each job class is predominantly male, female, or gender neutral
  • Determine the value of work of each predominantly female or male job class by considering the skill, effort and duties associated with the work in question
  • Calculate the compensation of each predominately female or male job class
  • Compare the compensation between predominantly female and male job classes doing work of equal value
  • Identify and remedy any wage gaps for predominantly female job classes

Once the pay equity plan has been finalized, the employer will have to increase the pay of any predominantly female job class that is receiving less pay than their male coworkers.

The plan will have to be updated every five years to ensure the employer is maintaining pay equity and closing any new pay gaps.

Am I required to set up a pay equity committee?

Federally regulated employers with over 100 employees, or a unionized workforce, must set up a pay equity committee. The committee will develop and maintain the pay equity plan.

The Act states that when putting this committee together, it is required that there are at least 3 members with at least half identifying as female.

Do you need help complying with the new federal Pay Equity Act?

Our experts can help you develop company policies as well as with any other HRhealth and safety, or employment advice you need. See how we have helped other small and medium businesses get their business compliant with provincial legislation.

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