Effective January 1, 2026, employers in Ontario will be required to comply with new pay transparency rules relating to their publicly advertised job postings. These changes to the Ontario Employment Standards Act, 2000 (ESA) were introduced under the Working for Workers Four Act, 2024 and Ontario Regulation 476/24, Rules and Exemptions Re Job Postings. While many employers may be aware of the new rules, now is the time to start preparing for the broader implications of these changes. Below, we've set out an overview of what is coming and important considerations for how to prepare.
New Requirements Relating to Public Job Postings, Applications, and Interviews
The new pay transparency rules apply only to "publicly advertised job postings," defined as an external job posting that an employer or a person acting on behalf of an employer advertises to the general public in any manner. Publicly advertised job postings do not include (a) a general recruitment campaign that does not advertise a specific position; (b) a general help wanted sign that does not advertise a specific position; (c) a posting for a position that is restricted to existing employees of the employer; or (d) a posting for a position for which the work is to be performed (i) outside Ontario, or (ii) in and outside Ontario, but where the work performed outside Ontario is not a continuation of work performed in Ontario. Employers with fewer than 25 employees in Ontario on the day the job is posted publicly are exempt from these new rules.
The new rules applicable to publicly advertised job postings are as follows:
- Compensation Information. Employers must include information about the expected compensation for the position (or range of expected compensation) in any publicly advertised job posting. If a posting includes a range of expected compensation, the range cannot exceed $50,000. For example, a range of $100,000 to $150,000 would be permissible; a range of $100,000 to $200,000 would not. Moreover, the requirement to include compensation information does not apply to job postings where the expected compensation is more than $200,000 annually, or where the high end of the expected range of compensation is more than $200,000 annually.
Notably, the new legislation does not account for the complexity involved in determining the range of expected compensation for employees with variable earnings. "Compensation," as the term is used in the new legislation, is defined to mean "wages" which is defined under the ESA to include almost all forms of monetary remuneration for work, including salary, hourly wages, commissions, and non-discretionary bonuses. For salespersons earning commissions (and in particular, uncapped commissions) or other employees earning various forms of incentive compensation, the disparity between the highest and lowest ends of the expected compensation range could easily exceed $50,000. It may also be difficult to predict whether the high end of an employee's compensation range will exceed $200,000. In those instances, we recommend that employers look at the historical compensation numbers for employees in the same role to best predict compensation ranges and err on the side of compliance where it is possible (but unlikely) that the range will exceed the $200,000 threshold.
- Prohibition on Requiring "Canadian Experience." Employers will be prohibited from including any requirements related to "Canadian experience" in publicly advertised job postings or in any associated job application forms.
- Existing Vacancy. Employers will be required to include a statement in every publicly advertised job posting disclosing "whether the posting is for an existing vacancy or not."
- Artificial Intelligence. Employers that use AI to screen, select, or assess job applicants will be required to include a statement in their publicly advertised job postings disclosing the use of AI for such purposes.
- Record Retention. Employers will be required to retain copies of all publicly advertised job postings and any associated application forms for a minimum of three years after the posting is removed.
- Duty to Inform Applicants. Employers who interview an applicant for a publicly advertised job will need to advise the applicant of whether a hiring decision has been made within 45 days of the applicant's interview (or the last interview if there are multiple).
How to Prepare for Pay Transparency
Although the new pay transparency rules are not overly complex, the obligation to disclose compensation information publicly will present practical challenges for many employers. Employers may be concerned that their compensation ranges fall below those of competitor companies for similar roles, or that the disclosure of expected compensation for new hires could cause discontent among current employees whose earnings are at or below the low end of the expected compensation range for new hires. To ensure compliance and address these challenges, we recommend that employers take the following steps:
1. Consider compensation strategy. Before publicly disclosing compensation ranges, employers should consider their overall strategy for attracting, retaining, and motivating their current and prospective employees. For some companies, this may mean setting compensation levels at or near the top end of the range in the employer's industry. Other companies may prefer to pay employees at average market rates and to instead prioritize other benefits like generous vacation policies, comprehensive benefit programs, or remote or hybrid work options.
2. Evaluate market competitiveness. Once the overall strategy is clear, employers should review any available salary data for their specific markets to determine where their current compensation ranges fall in relation to their competitors and whether any adjustments are needed to align with the organization's compensation strategy.
3. Audit compensation practices. Employers will also need to consider the impact on current employees, some of whom may be earning at or below the lower end of the compensation ranges that will be disclosed. To ensure fair and consistent pay practices, employers should consider conducting an internal pay audit. As part of this audit, employers will want to ensure that current job titles, levels and descriptions are accurate and up to date. Compensation between and within different job groups should then be reviewed and compared to identify possible gaps. Where any pay adjustments are needed, a communication strategy will need to be put in place to explain and implement the changes.
4. Train and educate your team. Your HR team and people managers will need to be trained on both actual compliance with the new rules, and on best practices and risk mitigation strategies for internal pay discussions that will likely result from the changes. As part of this training, managers should be able to explain how compensation decisions are made, focusing on objective factors like qualifications, responsibilities, skill, or experience.
5. Update job posting templates, hiring practices and record retention policies. Lastly, employers will need to work with their HR teams to review current recruitment and hiring practices and identify areas of non-compliance. Specifically, in addition to adding compensation ranges, employers should be updating their job posting templates to ensure that (a) there are no references to "Canadian experience"; (b) postings disclose the use of AI in screening, selecting or assessing job applicants, if applicable; and (c) postings identify whether the position is for an existing vacancy the employer is seeking to fill. Employers should also consider setting automatic calendar reminders to notify any candidates they interview of whether the position has been filled within 45 days of the candidate's final interview. Lastly, employers should update their record retention policies to ensure all publicly advertised job postings and any associated application forms are kept for a minimum of three years.
Although the new pay transparency rules may present some upfront challenges, embracing a culture of compensation transparency can contribute to employee satisfaction and productivity, foster trust and engagement at the workplace, and help to attract and retain top talent. Taking steps now to prepare for these changes is crucial to mitigating risk and ensuring a successful implementation.
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.
