Canada: Pay Equity: New Time Limits, New Obligations, New Powers

The Act to amend the Pay Equity Act, billed by the Minister of Labour as legislation designed to "strengthen the Pay Equity Act" in response to the concerns expressed during consultations conducted before a parliamentary committee in February 2008, came into force on May 28, 2009. Following that extensive consultation process, it emerged that one out of two businesses subject to the Pay Equity Act had yet to complete or begin work on their pay equity plans and that many were having difficulty implementing the Act's provisions. The resulting amendments made to the Act relate mainly to the timeframe for achieving pay equity and the methods for ensuring that equity is maintained.

Extended Timeframe For Enterprises That Have Not Complied

Enterprises that have not yet taken the steps necessary to implement pay equity or completed their pay equity plans now have until December 31, 2010 to do so and to post the information resulting from the process. Enterprises that had not begun their work on pay equity when the legislation was introduced must use their 2009 data to complete the process. On the other hand, enterprises that had already started the process and had completed the job class identification stage are to complete the pay equity exercise using the same data that was used for the work already in progress, and may also continue to spread the required compensation adjustments over a period not to exceed four years.

However, enterprises that go over the December 31, 2010 deadline and are the subject of a complaint will have to pay the compensation adjustments, if any, that are owed to employees with interest at the legal rate together along with an additional indemnity.

Maintaining Pay Equity

Whereas before, enterprises merely had a general obligation to ensure that pay equity was maintained, and the methods to be used to achieve that result were not specified, enterprises will now be required to conduct a pay equity audit every five years and post the results, including a summary of the audit process, a list of the predominantly female job classes identified in the enterprise, a list of the predominantly male job classes used as comparators, and for each predominantly female job class, the percentage or amount of the compensation adjustments to be paid and the terms and conditions applicable to their payment. The Act also requires enterprises to keep the information used to discharge their obligations to maintain pay equity, along with the content of all postings, for a period of five years after the information was posted. However, the form of posting has been made more flexible, as the Act introduces the possibility of using an electronic or other method of communication capable of reaching and informing employees on a broad basis.

Enterprises that have completed an initial pay equity exercise will have until December 31, 2010 to conduct an audit for the purpose of ensuring that pay equity is being maintained within the enterprise.

Regardless of the size of the enterprise, a pay equity audit may be conducted by the enterprise alone, by a pay equity audit committee, or jointly with a certified association. Where a pay equity audit has been conducted by a committee or jointly with a certified association, a complaint may not be brought against the enterprise. It follows, of course, that a complaint may be made against an enterprise that decides to act alone.

Some New Rules

One important new rule is that all enterprises whose number of employees grows to ten or more during a calendar year will be subject to the Act and will have four years to complete an initial pay equity exercise.

Secondly, whereas the Act formerly did not contain any prescription rules relating to complaints and investigations, some have now been added. Among other things, where a complaint is filed against an enterprise that failed to complete a pay equity exercise within the prescribed time limit, the Commission de l'équité salariale (Pay Equity Commission), in determining the applicable compensation adjustments and amounts to be paid, may not go back more than five years. Where the Commission conducts an investigation on its own initiative regarding a completed pay equity exercise, it may not go back more than one year from the date the investigation was commenced.

A provision has also been added allowing a group of employers to seek recognition as the employer of a single enterprise for purposes of completing a pay equity plan or auditing the maintenance of one. Moreover, all enterprises will be required to submit a report on the implementation of the Act in their enterprise on a yearly basis.

Lastly, the amendments provide for the fines for offences under the Act to be increased, with the maximum fine payable for an employer whose enterprise employs 100 or more employees rising to $45,000 from $25,000.

Additional Power To The Pay Equity Commission

The Act now provides for a voluntary confidential conciliation process. It also provides that the Commission may intervene before the Commission des relations du travail (Labour Relations Board) on matters that call the Commission's jurisdiction into question or pertain to an interpretation of law, and on the request of the said Board, when an employee is not a union member or a complaint is filed against the certified association or a pay equity or audit committee member.

In this connection, it would not be surprising if the Commission were to take a more proactive approach as it will have additional financial means available to assist it in fulfilling its role of informing and accompanying employees and employers through the pay equity process. Its current annual budget of $5.4 million will increase by $1.5 million this year and $2.5 million in 2010-2011.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at

Voted best law firm in Canada two years in a row.
2008 and 2009 International Legal Alliance Summit & Awards.

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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