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What are the “exceptions” to the equal pay provisions of the Employment Standards Act

The Ministry of Labour has updated its Policy Statement on Equal Pay for Equal work which can be found on its website and which forms the foundation of this article.

equal payCompanies across Ontario pay individuals differently on the basis of employment status: part time, full time, causal, temporary etc. However, Bill 148 states that employees doing the same work must be paid the same irrespective of employment status. This is going to his the bottom line of a lot of business in Ontario.

On April 1, 2018, the Ontario Employment Standards Act, 2000 (“ESA”) was amended by Bill 148 to include an obligation for “equal pay for equal work” irrespective of an individual’s “employment status” (there had already been an obligation for equal pay on the basis of sex).

The Ministry of Labour has updated its Policy Statement on “Equal Pay for Equal work” which can be found here and which forms the foundation of this article: https://www.ontario.ca/document/your-guide-employment-standards-act-0/equal-pay-equal-work These amendments mean an employer can no longer pay an individual less money because of his/her employment status which includes:

  • A difference in the number of hours worked (i.e. full time vs. part time);
  • A difference in the “term” of employment such as permanent, temporary, seasonal or casual.
  • So long as the individuals are performing the same kind of work at the same level and skill in similar working conditions.

Essentially, the Ministry of Labour says that employees doing the same work should be paid the same irrespective of their status or term and irrespective of whether they are full or part time. Further, the ESA now provides protections against reprisal for individuals who seek to enforce their rights for equal pay for equal work. Finally, the ESA prevents employers from lowering wages to seek compliance with these provisions.

However, the ESA provides for exceptions to the general rule of equal pay for equal work as follows:

Seniority system

The ESA allows employers to pay employees doing the same work differently on the basis of a seniority system based on service. Employees who have been at an employer for a longer amount of time can be paid more money based on their length of service.

Merit system

A merit system provides for compensation on how well an employee performs his/her job. The ESA provides that an employer could offer sales employees, irrespective of sex/employment status, a salary increase if they hit their quarterly targets.

A system that measures earnings by quantity or quality of production

Employers can pay individuals differently, irrespective of employment status, if the employee is paid on a system of quantity or quality (i.e. a pay scaled that increases with productivity).

Any other factor other than sex or employment status

The Ministry of Labour has left it open for employers to use other factors to justify differences in pay so long as they are not based on sex or employment status.

Collective agreements

The ESA provides that if a collective agreement came into force before April 1, 2018, and it permits a difference in the rate of pay based on employment status, the provision in the collective agreement prevails over the ESA. However, these provisions will cease to prevail and must comply with the ESA on the earlier of the date the collective agreement expires or January 1, 2020. This means unions and employers can no longer justify differences in wage rates in collective agreements on the basis of employment status.

The legislation

This legislation will require all employers to review their wages rates and scales to figure out compliance or in responding to complaints from individual employees (i.e., part-time workers seeking the wage rates of full-time workers). Further, the outcome of the June 7, 2018, provincial election may derail this legislation if the Liberals lose to the Progressive Conservatives.

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Simon Heath, BA, MIR, LLB, Heath Law

Employment Lawyer and principal at Heath Law, Employment Lawyers
Simon Heath, BA, MIR, LLB, is the Principal of Heath Law, Employment Lawyers in Mississauga, Ontario. Simon represents both public and private-sector employers and employees (unionized and non-unionized) at all stages of the employment relationship with a focus in the areas of employment law, labour law and human rights law; these representations are made at all levels of courts and all administrative tribunals. Read more
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