NOVEMBER 2020

SPOTLIGHT ON
PUBLIC POLICYCANADAPAY EQUITY ACTIn Canada, the federal Government has taken a giant step forward withthe enactment of the Pay Equity Act.1 This Act established a proactiveand groundbreaking pay equity regime within the federal public andprivate sectors. This will be the first time in Canada that federally regulated public and private entities with 10 or more employees will berequired to proactively ensure equal pay for work of equal value.

The legislation covers not just full-time, but also seasonal, casual,
temporary and part-time workers. It also provides for independent
oversight through the appointment of a Pay Equity Commissioner,housed within the Canadian Ministry for Human rights.
The Pay Equity legislation was passed on 13 December 2018 and is
not yet in force. Employers are required to set up a pay equity plan
within three years of becoming subject to the legislation.

KEY FEATURES OF THE 2018 PAY EQUITY ACTThe Act to Establish a Proactive Pay Equity Regime, passed inDecember 2018, requires federally regulated public and private
entities with 10 or more employees to proactively ensure equalpay for work of equal value.
Employers are required to set up a pay equity plan within threeyears of becoming subject to the legislation.

The law also requires that employees be given the opportunity
to review and provide input to the plan before it is finalized.
The plan is to be updated at least once every five years.
The Act provides for independent oversight through the appointment of a Pay Equity Commissioner, housed within theCanadian Ministry for Human rights.

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BACKGROUND
While proactive pay equity legislation has already existed in Ontario
and Quebec for several years, this is the first time that it will be adopted by the federal Government. Prior to the passing of this law, federal
pay equity was a complaint-based system, and it was not uncommon
for complainants to suffer decades of contentious, costly litigation
before a decision was made.2
The principle of equal pay for work of equal value is a fundamental
right enshrined in the Canadian Human Rights Act since 1977. 3
Since the publication of the first gender gap report by the World
Economic Forum in 2006, more women have entered the workforce,and their political participation and educational achievement levels
have increased – but gender wage inequality still persists. However,Canada has made significant improvements. In the Forum’s 2015
report, Canada was ranked eightieth in the world in terms of gender wage inequality.4 Its ranking improved to 49 in 2019. 5

While 10 to 15 per cent of the gender pay gap can be attributed todiscrimination, or unexplained factors, 6 part of the reason could also
be the way the pay equity regime used to be regulated. The former
Public Sector Equitable Compensation Act of 2009,7 now replaced by
the new legislation, was a source of frustration for many employees
primarily because its scope was limited, subjected pay equity to collective bargaining and used market forces as a factor for determining
the value of work, particularly women’s work in the public sector. 8Under the new law, amendments have also been made to the Parliamentary Employment and Staff Relations Act (PESRA), meaning thatparliamentary workplaces (e.g. house of commons, the parliament)
will also be covered. The law also complements the Employment
Equity Act of 1995,9 which “requires that employers remove barriers
to the workplace for women, indigenous people, members of racialized groups and people with disabilities.10”

OVERVIEW
Employers with 10 or more employees are required to set up a pay
equity plan within three years of becoming subject to the legislation.
The plan must include a list of all the job classes in the organization,
their value and their gender predominance (whether jobs are commonly done by women or men or are gender-neutral). Next, theymust indicate how the job classes are compensated. If there is a difference between the compensation paid to a predominantly female
job and a predominantly male job of similar value, employers will be
required to increase compensation in those jobs.
The gender wage gap, according to the Canadian Government, is recognized as the “difference between the total of what women earn (...)
compared with what men earn.11” Pay equity is defined as equal pay
for work of equal value, where jobs are evaluated on their skill, theireffort, their responsibilities and working conditions, and can be com-pared for their value in the workplace. While the legislation broadly
covers the methods of calculating pay gaps, the details will be set inregulations that are currently under development.
The law also requires that employees be given the opportunity toreview or provide input to the plan before it is finalized. The plan is
to be updated at least once every five years and employers must filean annual statement with the Pay Equity Commissioner to report on
key milestones. Moreover, employers that have 100 or more employees and any employer with unionized employees are required to forma pay equity committee to develop or update the pay equity plan.
The Act itself is expected to be reviewed 10 years after coming intoforce and every five years after that.

INDEPENDENT OVERSIGHT
This is the first time that a federal Pay Equity Commissioner has been
appointed to work within the Canadian Human Rights Commission.
The Pay Equity Commissioner’s mandate is “to promote women’sequality by ensuring that federal public and private sector organizations value work done by women in the same way they value work
done by men.12”
The Commissioner, supported by the Pay Equity Division, administers
and enforces the Pay Equity Act by:•

Providing tools and guidance to employers, employees
and their representatives.

•Ensuring compliance.

•Resolving disputes.

Once the Act and regulations are in force, several compliance tools
will be at the disposal of the Commissioner to promote compliance,
including investigatory and auditing powers, binding orders, and administrative monetary penalties. The Commissioner also has the power
to issue authorizations, for example to exempt an employer from therequirement to establish a pay equity committee under certain circumstances.
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The Canadian Human Rights Commission
The Canadian Human Rights Commission operates independently of the Government. Representing public interests, it works to protect
the core principle of equal opportunity and promote an inclusive society free from discrimination. The Commission’s mandate is topromote human rights through research and policy development, protect human rights through a fair and effective complaints process,and audit employers under federal jurisdiction for compliance with employment equity.13CONCLUSION
The new federal pay equity law comes as part of the gender-focused“Equality and Growth: A Strong Middle Class” budget, which wastabled by the Canadian Government on 27 February 2018.14 With theonus now on employers to take proactive steps to ensure pay equity,

independent oversight and the necessary resources to carry out themandate, the country is hopeful to see transformative changes in its
goal to eliminate the gender wage gap.

ENDNOTES
1. Pay Equity Act, 2018. https://laws-lois.justice.gc.ca/eng/acts/P-4.2/page-1.html
2. House of Commons. ESPE Committee Report.
www.ourcommons.ca/DocumentViewer/en/42-1/ESPE/report-1/page-27

8. House of Chambers. ESPE Committee Meeting. April 18, 2016.
www.ourcommons.ca/DocumentViewer/en/42-1/ESPE/meeting-5/evidence
9. Employment Equity Act. 1995. https://laws-lois.justice.gc.ca/eng/acts/E-5.401/index.html

3. Canadian Human Rights Act. 1985. https://laws-lois.justice.gc.ca/eng/acts/h-6/

10. Ibid.

4. World Economic Forum. 2015. The Global Gender Gap Report.
http://www3.weforum.org/docs/GGGR2015/cover.pdf

11. House of Commons. ESPE Committee Report.
www.ourcommons.ca/DocumentViewer/en/42-1/ESPE/report-1/page-27

5. World Economic Forum. 2019. The Global Gender Gap Report.
http://www3.weforum.org/docs/WEF_GGGR_2020.pdf

12. Canadian Human Rights Commission. Pay Equity.
https://www.chrc-ccdp.gc.ca/eng/content/pay-equity

6. Canadian Women’s Foundation. 2018. Fact sheet. The Gender Wage Gap in Canada.
www.canadianwomen.org/wp-content/uploads/2018/08/Gender-Wage-Gap-Fact-Sheet_July2018_FINAL.pdf13. Canadian Human Rights Commission. About Us. https://www.chrc-ccdp.gc.ca/eng/content/about-us

7. Public Sector Equitable Compensation Act. 2009. https://laws-lois.justice.gc.ca/eng/acts/P-31.65/

Funded by:

14. Government of Canada. Budget 2018. Equality and Growth for a Strong Middle Class.
https://www.canada.ca/en/department-finance/news/2018/02/budget-2018-equality-andgrowth-for-a-strong-middle-class.html

weps.org@WEPrinciples

weps@unwomen.org@Empower_Women

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DISCLAIMER: The views expressed in this publication are those of the authors and do not necessarily represent the views of the European Union, UN Women, International Labour Organization or the United Nations
and their Member States.