Canada: New Framework Regulation: Ontario Capping Salary & Performance Pay For Broader Public Sector Organizations

Last Updated: September 9 2016
Article by Jacquie Dagher

Most Read Contributor in Canada, September 2016

On September 6, 2016, the Ontario Government introduced Regulation 304/16: Executive Compensation Framework (the "Framework") under the Broader Public Sector Executive Compensation Act, 2014 ("BPSECA") for broader public sector executive compensation. The Framework sets out requirements that all designated employers must follow for establishing and posting executive compensation programs. It also caps salary and performance-related payments for designated executives. As discussed below, the Framework becomes effective with respect to a designated employer when the designated employer posts a compliant executive compensation program on its website which must be no later than September 5, 2017.

The Government has also published an Executive Compensation Framework Guide (the "Guide") which provides designated employers with further information and guidance on the requirement established by the Framework.

Designated Employers and Executives

The Framework applies to designated employers and designated executives under the BPSECA. Designated employers include public hospitals, universities, colleges, schools boards, all community care access corporations, independent Electricity System Operator and Ontario Power Generation, Ornge, and other prescribed public bodies.

Designated executives are employees or office holders who are entitled to receive or could potentially receive cash compensation of $100,000 or more in a calendar year, including the head of a designated employer regardless of title (such as a CEO, or president), vice-president, chief administration officer, chief operating officer, chief financial officer, holder of any other executive position, the director of education or a supervisory officer of a school board.

Restrictions on Compensation

The Framework provides that a designated employer shall not provide an element of compensation, other than salary and performance-related pay, to a designated executive unless the element is also generally provided, in the same manner and relative amount, to non-executive managers. Non-executive managers are defined in the regulation as employees and office holders who exercise managerial functions and who directly report to one or more designated executives.

The Framework strictly prohibits the following types of compensation, unless required for the performance of the executive's job or for critical business reasons:

  • signing bonuses;
  • retention bonuses;
  • cash housing allowances;
  • insured benefits that are not generally provided to non-executive managers; and
  • payments or other benefits in lieu of perquisites.

It also caps the following elements of compensation:

  • termination payments that equal more than 24 times the average monthly salary of the designated executive;
  • termination or severance payments that are payable in the event of termination for cause;
  • paid administrative leave may only be provided to the head of a college or university or another designated executive who is part of or will return to the faculty at a college or university;
  • paid administrative leave cannot be accrued at a rate that exceeds 10.4 paid weeks per year; and
  • administrative leave may not be paid out in lieu of time off.

Written Executive Compensation Program

Designated employers are required to establish a written executive compensation program setting out the compensation that may be provided to its designated executives. The program must include information on the compensation philosophy, salary and performance-related pay caps, comparative analysis details and other elements of compensation.

The Framework regulation caps salary and performance-related payments for designated executives at no more than the 50th percentile of at least eight appropriate comparators. The process for determining maximum salary and performance-related pay involves selecting appropriate comparators and conducting a comparative analysis. For each designated executive position or class of designated executive positions, comparable positions must be selected for analysis from at least eight different organizations. The regulation sets out criteria to assist with the selection of comparator organizations and comparable positions. Comparators can also be from the private sector and/or outside of Canada if there is a demonstrable need to use comparator organizations from outside the Canadian public sector or broader public sector. In all cases, at least one Canadian public sector or broader public sector comparator organization must be included in the comparative analysis.

Approval from the Minister responsible for the administration of BPSECA (President of the Treasury Board) must be sought before comparator organizations from outside the Canadian public sector or broader public sector can be used. There is a process in place to obtain approval. To seek approval, designated employers must submit a business case completed on the "Request For Approval To Use Private Sector and/or International Comparators form" (available from the Treasury Board Secretariat) to their overseeing ministry setting out the reasons why the designated employer cannot be compared solely to organizations in the Canadian public sector or broader public sector. Overseeing ministries will be responsible for reviewing the application with the Centre for Public Sector Labour Relations and Compensation at the Treasury Board Secretariat. The decision to approve will be made by the President of the Treasury Board.

Public Consultations

When implementing a new executive compensation program, designated employers must ensure compliance with any existing government approval mechanisms for executive compensation and must consult the public on the manner in which executive compensation elements are determined.

Designated employers are required to post draft executive compensation programs on their website for a minimum of 30 days to allow a reasonable opportunity for members of the public to comment on the manner in which the designated employer determines the compensation it provides to designated executives. Designated employers are also required to establish a process for collecting feedback for consideration when finalizing executive compensation programs and retaining such feedback until the conclusion of the compensation program and two subsequent programs in the event that it is requested by the overseeing Ministry or the Treasury Board Secretariat.

Effective Date and Going Forward

The Framework becomes effective when the designated employer posts a compliant executive compensation program to its website, no later than September 5, 2017. The existing freeze on salaries for executives under the Broader Public Sector Accountability Act, 2010 remains in effect until the designated employer posts its final executive compensation program to its website.

The Guide indicates that once the Framework is in place, designated employers may need to provide salary increases to executives based on either the initial calculation of caps or the recalculation of caps. In all other cases, the average rate of increase in salary for designated executives in a given year must not exceed the average rate of increase in salary for non-executive managers in that year.

Under BPSECA, once the Framework is in effect for a designated employer, newly hired designated executives and existing employees who change designated executive positions will be subject to the terms of the Framework. After the third anniversary of the posting of a designated employer's first compensation program under the Framework, all compensation elements for all designated executives must fall within the limits permitted by the Framework. There is therefore a three-year grand-parenting period for designated executives hired prior to the effective date into a role.


Designated employers are required to submit reports attesting that the compensation for their designated executives complies with the Framework. The BPSECA includes audit and penalty provisions that may be used to ensure compliance with the Framework. A failure to comply could therefore lead to penalties.

What Designated Employers Should Do Now

If you are a designated employer, you should consider the following steps:

  1. Identify the designated executive positions that will be subject to the terms of the Framework, and who the non-executive managers are for the purposes of assessing.
  2. Identify and carefully consider who your appropriate comparators should be. Seek approval if comparators outside of the Canadian public sector or broader public sector are required.
  3. Begin developing an executive compensation program in compliance with the Framework.
  4. Post a draft executive compensation program on your website for a minimum of 30 days to allow a reasonable opportunity for members of the public to comment.
  5. Collect feedback from the public for consideration in the final executive compensation program and retain such feedback.
  6. Post a compliant executive compensation program to your website by no later than September 5, 2017.

About BLG

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.