Pay equity legislation 

Pay Equity Legislation was enacted to address compensation inequities due to systemic gender discrimination against predominantly female job classes. The legislation’s goal of “equal pay for work of equal value” remains applicable to all public and private sector employers in the province of Ontario with 10 or more employees. In the last 18 months there has been increased effort by the Pay Equity Commission to ensure that all applicable organizations are compliant with the legislation.

For organizations with operations in Ontario

• If you have more than 10 employees, you are required to comply.
• Job evaluation is a fundamental requirement for compliance and must consider the composite of skill, effort, responsibility, and working conditions; evaluations must be up to date, reflecting the jobs in your organization today.
• Pay equity officers have significant powers and can issue pay equity orders — requiring organizations to comply within short timelines.
• All elements of compensation are included in the comparison between male and female job classes — including incentives, perquisites, pensions, and health benefits.
• Retroactive adjustments (including interest) can go back to the date on which you hired your 10th employee or the date on which the legislation was enacted — regardless of Canada Revenue Agency (CRA) rules requiring seven-year maintenance of financial records.

While the purpose of the legislation is to close the pay gap between predominantly female jobs with male comparator jobs of similar value to the organization, the fundamentals of pay equity legislation make for good compensation management, including base salary structures, equitable incentive opportunities (both short- and long-term), and sound salary administration practices.

The best approach is a proactive one, so if a pay equity officer comes knocking, your organization is well positioned to demonstrate compliance.

To ensure that your organization is prepared to respond to a request from the Commission, consider the seven questions below:

1 – Have jobs been grouped into job classes based on the criteria outlined in the Ontario Pay Equity Legislation?

• Do they have similar duties?
• Do they require similar qualifications?
• Are they filled by similar recruiting procedures?
• Do they have the same compensation schedule, salary grade, or range of salary rates?

2 – Is there up-to-date job documentation

• Does it capture the key information - job requirements, responsibilities, skills, effort and conditions under which the job is performed?
• Does the documentation align to the methodology used to evaluate jobs?

3 – Has the gender predominance of each job class been determined using the criteria established by the Ontario Pay Equity Commission?

• Current incumbency (60% female = female, 70% male = male, all others = neutral).
• Historical incumbency.
• Stereotypical incumbency.

4 – Have jobs been evaluated using a gender neutral job evaluation system?

• Does the system take into account the skills, effort, responsibility, and working conditions of job classes?
• Have the evaluation outcomes or scores for each of these factors been documented?
• Is the assessment of job value reasonable and defensible (e.g. weighting of factors)?
• Is the system applicable to all jobs in the organization?
• Have the evaluations been kept up-to-date and documented?
• Have bands or grades been created based on the job evaluation outcomes?

5 – Is compensation administered in a way that aligns with the outcomes of the job evaluation?

• Does your organization utilize salary structures to manage pay?
• Is there a range spread (minimum to maximum) which is consistent or defensible across all levels?
• Is there a rational progression between midpoints?
• Are all employees paid within the range?

6 – Does the incentive program provide equal earning opportunity for employees in the same job band/grade?

• Are incentive targets the same for all employees in a job band/grade?
  • If not, is there an offset in other forms of compensation?
• Is the incentive program supported by a documented performance management program?

7 – Are all employees eligible for the same or similar benefits and pension?

• Are part-time employees eligible for benefits and pension?

If you answered No to Any of the above statements, you may not be compliant with pay equity requirements in Ontario.

Quebec Pay Equity Legislation was first introduced in 1996 to address compensation inequities due to systemic gender discrimination against predominantly female job classes. The legislation’s goal of “equal pay for work of equal value” remains applicable to all public and private sector employers in the province of Quebec with 10 or more employees.

More than ten years later and with less than 50% of organizations compliant, the Quebec government enacted some modifications to the law to reinforce compliance – the resulting Bill 25 was adopted in 2009.

For organizations with operations in Quebec

• The legislation is applicable to all public and private sector employers in the province of Quebec with 10 or more employees.
• The majority of organizations were required to complete a Pay Equity Exercise/Audit in 2010.
• All organizations have an obligation to revisit pay equity every five years – making 2015 an “audit year” for many organizations.
• Two postings are required as part of the Pay Equity Audit:
  • Initial posting: Once the process of evaluating the maintenance of pay equity is completed, organizations must inform their employees of their pay equity status through a 60-day posting, giving employees time to review and ask questions.
  • Final posting: No later than 30 days after the end of the first posting, a second 60-day posting is required. It would include questions from employees and must indicate whether modifications are needed.
• Every year organizations must complete an online form: the “Declaration en matière d’équité salariale (DEMES)”.
  • The data from this declaration is used to track organizations that may have not yet completed either their first Pay Equity Exercise or a Pay Equity Audit.
  • Lack of compliance for doing so may result in a fine between $1,000 and $45,000.
  • A clicSÉQUR number is required, which likely resides with finance (check with your finance department before creating a new one).

While the purpose of the legislation is to close the pay gap between predominantly female jobs with male comparator jobs of similar value to the organization, the fundamentals of pay equity legislation make for good compensation management, including: base salary structures, equitable incentive opportunities (both short- and long-term) and sound salary administration practices.

The best approach is a proactive one, so if a pay equity officer comes knocking, your organization is well positioned to demonstrate compliance.

To ensure that your organization is prepared to respond to a request from the Commission, consider the six questions below:

1 – Have you identified the changes within the organization since the last pay equity exercise?

2 – Has the gender predominance of each job class been determined using the criteria established by the Quebec Pay Equity Commission?

• Current incumbency.
• Historical incumbency.
• Stereotypical incumbency.
• Relative representation.

3 – Have jobs been evaluated using a gender neutral job evaluation system?

• Does the system take into account the skills, effort, responsibility, and working conditions of job classes?
• Is the assessment of job value reasonable and defensible (e.g. weighing of factors)?
• Is the system applicable to all jobs covered by Pay Equity Legislation in your organization?
• Have the evaluations been kept up to date and documented?
• Have bands or grades been created based on the job evaluation outcomes?

4 – Have you tested to see if there are any salary gaps between female and male predominant jobs?

Items to be taken into consideration:

• Is compensation administered in a way that aligns with the outcomes of the job evaluation?
• Does your organization utilize salary structures to manage pay?
• Is there a range spread (minimum to maximum) which is consistent or defensible across all levels?
• Is there a rational progression between midpoints?
• Are all employees paid within the range?
• Does the incentive program provide equal earning opportunity for employees?
• Are all employees eligible for the same or similar benefits and pension?

5 – Have you posted the results of the Pay Equity Audit? (see What you need to know section)

6 – Have you completed the annual declaration in terms of pay equity? (see What you need to know section)

If you answered No to Any of the above statements, you may not be compliant with pay equity requirements in Quebec.

From Mercer’s Pay Equity Risk Assessment, a quick and cost-effective solution for understanding current compliance status and potential risks, to Mercer’s Pay Equity Audit, an in-depth analysis of your employee data with respect to achieving and maintaining pay equity, our team of experts offer a continuum of solutions to effectively address your organization’s needs by:

• Providing an overview of legislative requirements and how your organization stacks up; identifying potential risks.
• Helping to build a business case for compliance and assisting in communicating pay equity requirements to leadership.
• Reviewing total compensation data for all employees in the province to conduct job-to-job comparisons and identify potential wage gaps.
• Helping to implement and communicate wage adjustments for those employees affected.
• Providing a go-forward strategy for maintaining pay equity compliance once it is achieved.