The Pay Equity Act and its accompanying Pay Equity Regulations require employers in federally regulated workplaces with ten or more employees to proactively review their compensation practices to ensure equal pay for work of equal value, particularly for employees in predominantly female job classes.

This initiative is overseen by the Pay Equity Commissioner, part of the Canadian Human Rights Commission (CHRC). While the Act mandates that employers or pay equity committees establish and regularly update their pay equity plans, the Regulations lack clarity on how to amend these plans in workplaces without predominantly male job classes. Additionally, the Regulations do not align well with the Canada Labour Code concerning minimum wages for federally regulated workplaces, complicating the calculation of hourly pay rates for various job classes. Although annual statements on pay equity implementation are required, they do not specify increases to hourly pay for predominantly female job classes, hindering the assessment of the gender wage gap’s impact. There has also been ambiguity regarding deadlines for posting notices of obligations, potentially leading to unintentional violations. Furthermore, the absence of provisions for an Administrative Monetary Penalties (AMPs) system limits the Commissioner’s ability to address non-compliance effectively.

The Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments) aim to resolve these issues and strengthen the pay equity framework’s implementation.

The Act also mandates that pay equity plans be updated at least every five years to identify and rectify any pay gaps. Employers are to follow a three-step process for updating these plans, which includes data collection, workplace analysis, and compensation comparison; however, the original Regulations did not clarify how to update plans for workplaces without predominantly male job classes. To establish pay equity plans in such workplaces, employers may use the proxy method or the typical job class method, which involves creating three fictional male job classes and setting their minimum pay rates based on provincial minimum wages.

Employers are required to submit annual statements detailing their pay equity plans, which should include specific information about compensation increases for predominantly female job classes. However, prior to the amendments, the Regulations did not mandate that employers specify what portion of these increases was due to hourly wage hikes. The Act allows groups of employers to submit a joint pay equity plan, provided certain conditions are met.

A key focus of the new Regulations is the establishment of a system of Administrative Monetary Penalties (AMPs) to promote compliance with the pay equity regime. The Act empowers the Commissioner to impose penalties on employers who violate pay equity provisions, with the penalty structure categorized based on the violation’s severity, workplace size, and compliance history.

Canada (SOR/2024-101) June 5, 2024