Earlier this year, we learned that the federal government is going forward with its promise to re-vamp the federal pay equity system. As of yet, the federal government has not introduced any legislation. However, in the 2018 Budget Plan, the federal government has promised a proactive federal pay equity system in line with Ontario and Quebec’s: proactive pay equity. According to the 2018 Budget Plan, the new federal pay equity legislation would:

  • Apply to federal employers with 10 or more employees, with pay equity requirements built as much as possible into existing federal compliance regimes;
  • Establish a streamlined pay equity process for employers with fewer than 100 employees;
  • Set out specific timelines for implementation, and compulsory maintenance reviews;
  • Include job types such as seasonal, temporary, part-time and full-time positions;
  • Provide independent oversight;
  • Ensure that both wages and other benefits are evaluated in a gender neutral way;
  • Apply to the Federal Contractors Program on contracts equal to or greater than $1 million, and ensure a robust application of federal employment equity law; and
  • Repeal previous legislation such as the Public Sector Equitable Compensation Act which is inconsistent with the goal of pay equity.

While the information provided by the federal government is limited, it is probable that the federal government will implement pay equity legislation that would resemble a hybrid between Ontario and Quebec’s pay equity regimes. Most notably, the promise of an “independent oversight” will likely see the creation of a new regulatory body like the Pay Equity Commission in Ontario or the Commission des normes, de l’équité de la santé et de la sécurité du travail in Quebec, which have expansive powers to investigate and enforce their respective acts.

The proposed legislation will also alter the federal adjudicative landscape. For instance, the new pay equity legislation may do away with the transitionary provisions of the Public Sector Equitable Compensation Act, which entrusted the Public Sector Employment and Labour Board with jurisdiction to hear pay equity and wage discrimination complaints in federal public service. It is not yet clear how the jurisdiction of the Canadian Human Rights Tribunal will be affected.

The proposed legislation does not address some key concerns that exist currently, however. Notably, the Budget Plan 2018 does not indicate what comparative methodology of work value will be preferred. In Ontario, the law requires an employer to use a direct comparison method first, and only if that method is not feasible will an indirect or proportional value approach be permitted. In contrast, Quebec allows the employer to choose between the two methods, as long as the method respects the Act and its overall objective. As well, the Budget Plan does not indicate whether the employer’s ability to justify a wage gap will mirror the factors under the current Equal Wage Guidelines.

Federally regulated employers would do well to consider whether their pay practices are pay equity compliant in anticipation of what will likely be a tight deadline for compliance under the new legislation.  Furthermore, it makes good business sense to follow equitable compensation practices.  There is evidence that workplaces in which pay practices are transparent and equitable are generally more productive and harmonious.

We will keep you advised as new developments are announced in this area.

Written with the assistance of Stéphane Erickson & Lucas Rivet-Crothers

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