Bill C-86, the Budget Implementation Act, 2018, No. 2 (“Bill C-86”) will enact the Pay Equity Act, if passed (the “PEA” or the “Act”), which will apply to all federal public and private sector employers with 10 or more employees. The PEA will also apply to parliamentary workplaces and will be implemented through amendments to the Parliamentary Employment and Staff Relations Act. While employers with fewer than 10 employees will not be covered by the PEA, they will continue to be covered under the Canadian Human Rights Act.
Very broadly, the PEA aims to reduce the gender wage gap caused by the undervaluation of work traditionally performed by women. How? By implementing two new schemes.
(1) Mandatory Pay Equity Plans
The Act will require employers to undertake a structured pay equity analysis for their compensation practices to ensure that they are providing equal pay for work of equal value. Upon becoming subject to the Act, federal workplaces will have 3 years to develop a pay equity plan, which must address each of the following:
- Identify job classes in their workplace
- Determine the gender predominance of job classes
- Evaluate the value of work of job classes
- Determine the compensation associated with each job class
- Compare the compensation of female and male-predominant job classes of similar value
- Set out the results of the comparison
- Identify which job classes require a compensation increase and when the increases are due
- Provide information on the available dispute resolution procedures.
The pay equity measures proposed under the PEA will differ in certain respects for small employers (10-99 employees) and for large employers (100 employees or more). Specifically, large employers and those with unionized employees must establish joint committees to develop a pay equity plan, whereas small employers with no unionized employees may develop a pay equity plan themselves.
Employers will have 5 years to implement the required increases in compensation. Employers will also need to review their plans every 5 years to identify and close any pay gaps that emerge. To ensure sufficient oversight of these pay equity measures, employers will need to submit a short annual statement.
(2) Pay Equity Commissioner and Unit
The Act also proposes a Pay Equity Commissioner (“Commissioner”) to be appointed by the Governor-in-council to the Canadian Human Rights Commission. The Commissioner will administer and enforce the Act and could apply administrative monetary penalties to non-compliant workplaces. Additionally, a Pay Equity Unit will be created to assist the Commissioner. The Commissioner will also preside over the Pay Equity Division of the Canadian Human Rights Commission to address complaints of discriminatory pay equity-related practices in federally regulated workplaces with fewer than 10 employees.
In light of Bill C-86, federal employers should review their current compensation structures and continue to watch for further developments as the Bill C-86 winds it way through the legislative processes.
By Courtney Laidlaw, Associate – Turnpenney Milne LLP