Canada: Employers Subject to Quebec's Pay Equity Act Must Comply by December 31, 2010

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Labour & Employment, November 2010

In 1996, the Province of Quebec enacted the Pay Equity Act (the Act) in order to redress differences in compensation often suffered by persons occupying positions in predominantly female job classes due to systemic gender discrimination. The Act was amended in May 2009 (the Amendment) in order to assist and enforce the province's efforts to ensure equitable pay structures exist in the workplace in Quebec. As a result, employers subject to the Act must implement or update their pay equity plans by December 31, 2010 in order to be in compliance with the Act.

Who is Affected by the Act?

The Act applies to all employers of provincial jurisdiction in the private, public and parapublic sectors, employing 10 or more employees. The Amendment broadens the scope of the Act to affect more employers than were previously subject to the Act. Now, if a business grows to 10 or more employees, it becomes subject to the Act as of January 1 of the following year. It will then have four years to complete its initial pay equity exercise. Once an employer is subject to the Act, its requirements will continue to apply to the employer even if its number of employees drops to fewer than 10.

What Does This Amendment Mean For Employers?

Employers must assess their status under the Act as well as the status of their pay equity plans in order to determine the steps to be taken leading up to the December 31, 2010 deadline. An employer who fails to comply with this deadline may become the subject of a complaint filed with the Pay Equity Commission subjecting it, among other things, to pay any salary adjustments that are owed to its employees with interest at the legal rate as well as an additional indemnity and potential fines and investigations.

What Steps Must Employers Take?

Employers at different stages of the pay equity process will have obligations unique to their particular situation. The following is a brief overview of the most common situations in which employers may currently find themselves.

Employers Who Have Not Begun the Pay Equity Process

  • Employers who have not completed a preliminary pay equity exercise as of March 12, 2009, must do so before December 31, 2010, in order to be in compliance with the Act.
  • The steps which employers must follow to implement pay equity programs vary, based on factors such as the number of employees working for the employer. All employers at this stage, however, will need to identify predominantly female job categories and predominantly male job categories and calculate salary adjustments.
  • Employers in this category must conduct their pay equity exercises using salary data from February 1, 2009. If there are salary adjustments to be made, they will be payable retroactively to the date when the exercise should have initially been completed (by March 12, 2009), with interest at the legal rate.
  • These employers will not be eligible to make such payments in instalments because they have not taken measures to be in compliance with the Act.
  • If pay equity exercises are not completed on January 1, 2010, and a complaint is filed with the Commission, employers will have to pay an additional indemnity along with the interest and any amounts that are already due.

Employers Who Have Begun the Pay Equity Process

  • For employers who had not finished their pay equity exercises by March 12, 2009, but had completed the identification of predominantly female and male job categories by February 1, 2009, pay equity exercises must be completed by December 31, 2010.
  • These employers must use the same data that was used to identify their job categories. If there are any salary adjustments to be made, they will be payable retroactively to the date when the exercise should have initially been completed (by March 12, 2009), with interest at the legal rate.
  • These employers may be eligible to make salary adjustment payments in instalments over four years.
  • If pay exercises are not completed on January 1, 2010, and a complaint is filed with the Commission, in addition to the payment of interest and an additional indemnity, these employers can lose their right to pay in instalments.
  • Once their pay equity exercises have been completed, these employers must conduct a pay equity audit no later than December 31, 2011. Should this audit reveal that adjustments must be paid, the payments will be retroactive with interest at the legal rate from December 31, 2010.

Employers Who Have Completed the Initial Pay Equity Process

  • Employers who completed their pay equity exercises before March 12, 2009, must conduct a pay equity audit before December 31, 2010. Any salary adjustments that must be made as a result of the audit are to be paid by December 31, 2010, and will be subject to interest at the legal rate as of this date.

Other Features of the Amendment

Employers should be aware that the Amendment also:

  • Clarifies employers' obligations with respect to maintaining pay equity under the Act. For example, once their pay equity plans have been implemented, employers must conduct a pay equity audit every five years and must post the results.
  • Modifies the ways in which employers are to keep employees informed about the pay equity process.
  • Requires employers to maintain records and keep information relating to the payment of salary adjustments.
  • Increases the fines payable by employers who, upon investigation, are found to be in contravention of the Act.
  • Updates reporting requirements on the implementation of the Act which must be respected by employers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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