FAQ – Federal Pay Equity Act

Pay equity is a fundamental human right. Pay equity is essential because it addresses the undervaluation of women’s work, which contributes to Canada’s significant gender wage gap. Canada’s Pay Equity Act came into effect on August 31, 2021. We compiled this Frequently Asked Questions (FAQ) as a reference to help members of joint pay equity committees during their mandate.

When does the federal Pay Equity Act take effect?

The legislation took effect August 31, 2021.

To whom does the Act apply?

The Act applies to the core federal public service, separate agencies and Crown Corporations such as the Public Health Agency of Canada or the National Capital Commission, businesses created to perform work on behalf of the Government of Canada, the RCMP, Parliamentary institutions such as the Parliamentary Protective Service and federally regulated private sector employers (e.g. airports, ports, couriers etc.).  

What does the legislation intend to accomplish?

The purpose of the Act is to identify and eliminate gender-based pay discrimination rooted in an employer’s compensation system, which results in jobs held by women being paid less than jobs held by men when these jobs are of equivalent value to the employer. 

What is a “notice”?

A notice is a document which employers must post in an area accessible to employees, setting out their obligations under the Act, including the requirement for unionized workplaces with more than 10 employees to strike joint union-employer pay equity committees. These committees will be mandated to develop and implement pay equity plans.

What is the composition of pay equity committees?

The Act requires that pay equity committees meet the following requirements:

  • they must be composed of at least three members; 
  • at least 2/3 of the committee membership must be composed of employee representatives; 
  • at least 50% of the committee must be composed of women;
  • the committee must include at least one employer representative.
What happens if an employer is unable to strike a committee which meets all the above requirements?

Employers may request from the Pay Equity Commissioner authorization to develop a pay equity plan using a committee which does not meet all the composition requirements established by the Act.

How are committee members selected?

In unionized workplaces, the bargaining agent gets a seat on the committee, and determines who will be the representative.  At least 50% of the members on the committee must be women. If there are non-unionized employees in the workplace, they select one member to represent them by a majority of votes.

Do employees get paid for the work they perform on the committee?

Yes, at their regular rate of pay. The Act requires that employers pay employees selected to participate on pay equity committees for the time spent in job evaluation and pay equity training and for the time spent participating in the committee’s activities. The law also requires that employers make their premises and equipment available to employees for work on this file, and that they allow employees to take time from work to select their representatives on the committee.

Who is responsible for providing the committee with the information necessary for it to perform its work?

The employer is responsible for providing to the committee the information necessary for it to complete its mandate. This will include job positions and descriptions including current employees and gender, organizational charts, compensation information and the job evaluation plan. However, the committee may decide to develop or select its own job evaluation plan and to gather its own job data using questionnaires. All the information made available to or developed by the committee is confidential.

What happens if at any time during the process the committee is unable to complete its work?

If an employer decides that a pay equity committee is unable to complete its mandate, the employer may apply to the Pay Equity Commissioner for authorization to complete the pay equity plan without a committee. If the Pay Equity Commissioner authorizes the employer to proceed without a committee, the employer must post a notice to employees advising them that they are proceeding without a committee.

How many pay equity plans must an employer prepare?

The Act requires that employers prepare one pay equity plan for all their employees. However, an employer or a bargaining agent may apply to the Pay Equity Commissioner for authorization to complete multiple pay equity plans within the same establishment. For example, with approval, two pay equity plans may be developed, one for unrepresented employees and another for unionized employees. If one of the parties files a request for multiple plans, both the employer and bargaining agent have the right to respond to the request by providing comments and communicating concerns to the Commissioner.

What is a “job class”?

A job class is a group of jobs sharing similar duties and responsibilities, requiring similar qualifications, and falling within the same range of salary rates or paid the same hourly rate. For example, an accounting clerk, an accounts receivable clerk and an accounts payable clerk, all paid the same hourly rate, would most likely be considered a single job class. The creation of job classes is an important part of the pay equity committee’s mandate and the decision as to the extent to which duties and qualifications are indeed similar rests with the committee. 

What is a predominantly female job class?

A job class which is currently composed of at least 60% women, or which has historically been composed of at least 60 % women, or which is stereotypically viewed as performing work associated with women (e.g., a nurse).

What is a predominantly male job class?

A job class which is currently composed of at least 60% men, or which has historically been composed of at least 60% men, or which is stereotypically viewed as performing work associated with men (e.g., crane operator).

A job class that does not meet any of these criteria may be considered gender neutral.

How is the relative value of male and female jobs determined? 

The Act requires that the relative value of a job be determined based on the following criteria:

  • the skills required to perform the work;
  • the effort required to perform the work;
  • the responsibility associated with the work;
  • the working conditions to which the person performing the work is exposed.

Skills, effort, responsibility and working conditions are referred to as “factors,” which form the basis of the job evaluation plans that will be used to determine the relative value of male and female-dominated job classes within the pay equity plan. 

How is the compensation paid to individual job classes determined?

In determining compensation, committees must consider several factors including hourly rates of pay and the value of employee benefits. The calculation of the compensation associated with a job class is discussed in detail in sections 44, 45 and 46 of the Act.

Does the Act prescribe methods that may be used to compare the value of male and female jobs in order to identify and quantify pay gaps? 

The legislation identifies the following two methods which may be used to measure pay gaps:

  • Equal average method - involves comparing the average compensation paid to female dominated jobs to the average compensation paid to male dominated jobs of equivalent value.  
  • Equal line method – involves comparing the compensation paid to female dominated jobs to the compensation paid to male dominated jobs of equivalent value using a regression line.

These two methods are discussed at some length under paragraphs 49 and 50 of the Act as well as in the Regulations. In special circumstances, and on application from either party, the Pay Equity Commissioner may authorize the use of an alternative method.

How does a pay equity committee make decisions?

Generally, decisions will be made by consensus; however, a vote on a given issue may also help to move the process forward. The employer and the employee side of the committee each holds one vote. If the employee side is unable to achieve unanimity (100% agreement) on a given question, the Act allows the employer to make the final decision. In the event of a deadlock, the matter may be referred to the Pay Equity Commissioner for resolution.

What happens on completion of the plan?

Once the committee or the employer has completed a pay equity plan, the results must be posted in a location or through a method accessible to all employees to which the plan applies. This initial posting must include all relevant information pertaining to the plan including, but not limited to:

  • the number of pay equity plans established in respect of the employer’s employees;
  • the number of employees affected by the plan;
  • an indication of whether the plan was developed by the employer or by a pay equity committee;
  • the list of job classes forming part of the plan, including their gender dominance;
  • the method used to measure the relative value of job classes and the results of the evaluations;
  • a description of the method used to calculate pay gaps;
  • the list of female job classes for which pay equity adjustments are payable;
  • the amount payable for each female job class deemed under-paid.
What if I have questions after having read the posting?

The Act gives employees to whom the plan applies the right to ask questions or provide comments on the pay equity plan. Employees have 60 days from the date of posting to submit comments and questions to either the employer or to the pay equity committee. The employer or the committee is required to consider all employee comments before preparing the final version of the plan.

When must the final version of the plan be posted?

Employers have a maximum of three years from the date they become subject to the Act to post the results of their completed pay equity plans. For most employers, the deadline for the posting of the final pay equity plan will be August 31, 2024.

What is a pay equity maintenance plan?

A pay equity maintenance plan is the result of a process intended to identify and account for any changes which have occurred within the employer’s establishment that may have an impact on the initial pay equity plan, to ensure that the employer’s compensation program remains free of gender bias. Examples of changes include the creation of new male or female dominated job classes, changes in the pay of existing male or female dominated job classes and changes in the gender dominance of existing job classes. Pay equity maintenance plans must be completed at intervals of every five years following the posting of the initial plan and may be developed either by the employer or by committee.

What is the Pay Equity Commission?

The Pay Equity Commission is an administrative body that is part of the Canadian Human Rights Commission. It is headed by the Pay Equity Commissioner whose mandate is to:

  • ensure the administration and enforcement of the Pay Equity Act;
  • assist employees, employers and others in understanding their rights and obligations under the Act;
  • facilitate the resolution of disputes relating to pay equity.  

 

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October 13, 2021