PAY EQUITY ACT AND HOW IT WORKS

The Pay Equity Act of Ontario applies to the public sector and to private sector employers with more than ten employees.  Almost everybody.
 
The goal of the Pay Equity Act is to ensure that women who work doing jobs that are mostly done by women are not underpaid in comparison to men.  The Employment Standards Act insures that people receive equal pay for equal work.  Basically, that means that men and women doing substantially the same job should get the same pay.  The Pay Equity Act does something quite different.  It attempts to insure that women doing jobs that are comparable to jobs being performed by men in the company are paid on the same pay grid.  They do not have to be doing the same job.
 
For example, the work of a secretary may be of a similar value to the work of a shipper and so should be paid on the same basis.
 
The Pay Equity Act obliges all employers to compare female job classes in every establishment with male job classes in the same establishment.  The employer is supposed to use a gender-neutral comparison system to determine whether there is equity between the female job classes and the male job classes. It is the value of the jobs that is to be considered.  In valuing such jobs an employer should look at the level of skill, effort and responsibility required and working conditions involved in doing the work.
 
Female jobs are jobs mostly or traditionally done by women such as librarian, childcare worker or secretary.  However, the Act uses a fairly broad definition of female jobs and states that a “female job class” is a job class in which 60 per cent or more of the members are female.  Male jobs are jobs mostly or traditionally done by men such as truck driver, fire-fighter or shipper, and a “male job class” is  defined, in part, as  job class in which 70 percent or more of the members are male.
 
In creating pay equity between male and female jobs, an employer is specifically forbidden from reducing the compensation payable to any employee in order achieve pay equity with a similarly valued female job.  However, the Act does allow for gender neutral pay differences based on, for example, seniority and performance based compensation plans.  Basically, everyone doesn’t have to be paid the exact same amount, but an employer does have to have a plan showing that pay equity  is in place.
 
In unionized workplaces the Pay Equity Plan should have been negotiated between the union and the employer.  Once the union representatives have agreed to a plan, it is considered approved.  In non-unionized workplaces the Pay Equity Plan is based on criteria that is at the discretion of the employer, but if an employer wants to avoid breaching the act they will ensure that they have a fully thought out and reasoned plan.
 
In fact, many employers are supposed to have their Pay Equity Plan posted in an area where it can be seen by all employees.  The Act also requires  employers to provide any employee with a copy of the plan upon request and an employee cannot be punished for requesting this information.
 

Although the Pay Equity Act applies to almost every business in Ontario, it does not cover employees of the federal government, federal agencies or companies that are federally regulated, such as transportation or communication companies.  The pay equity requirements for companies such as these are found in the Canadian Human Rights Act and differ from the obligations under the Pay Equity Act.
 
If all this sounds new to you, you’re probably not alone.  Although the Pay Equity Act has been in place for years it appears that very few employers are aware of their specific obligations under the Act.  Now is the time to learn.  In recent months the Pay Equity Commission has begun to crack down on employers who are not meeting their obligations under the Act.  
 
So, if you’re an employer and you have more than 10 employees don’t be surprised if the Commission comes knocking.
 
As published in the Hamilton Spectator, August 25, 2003
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com