Introduction to Pay Equity

What is Pay Equity?

Pay equity is a fundamental human right. It is also known as equal pay for work of equal value. Its goal is to stop discrimination related to the under-valuation of work traditionally performed by women.

Pay Equity is Different from Employment Equity

Pay equity is a human right found in section 11 of the Canadian Human Rights Act. This term refers to the concept of "equal pay for work of equal value", and allows for different jobs within an establishment.

Pay equity is not the same thing as "equal pay", which refers to the simpler concept of "equal pay for equal work". Equal pay only permits similar jobs to be compared within an establishment, and does not address every aspect of gender-based wage discrimination.

Pay equity addresses gender-based wage discrimination, while employment equity is aimed at removing employment barriers for members of four designated groups: women, aboriginal people, members of visible minorities and people with disabilities.

Federal Pay Equity Laws

Federal pay equity laws require that women and men within the same establishment be paid the same for work of equal value. In Canada, pay equity provisions for federally-regulated employers are found in three laws:

The Canadian Human Rights Act (CHRA) applies to federally-regulated employers regardless of size. According to section 11, it is discriminatory for an employer to "establish or maintain differences in wages between male and female employees employed in the same establishment who are performing work of equal value."

The Equal Wages Guidelines, 1986 provide guidance on the application of the pay equity provisions of the CHRA. The Guidelines elaborate on the four factors used to assess the value of work: skill, effort, responsibility and working conditions. They also provide criteria for examining whether different jobs are part of the same establishment; set out a scale to determine if jobs are male or female-dominant; and outline reasonable factors that may justify wage differences.

The pay equity provisions in section 249 of Part III of the Canada Labour Code (CLC) give Labour Program inspectors the authority to examine wage records and gather information related to pay equity. If an inspector has reasonable grounds to believe that there is gender-based wage discrimination in an establishment, he or she may notify the Canadian Human Rights Commission (CHRC), which can then initiate an investigation.

For full texts of pay equity legislation and guidelines, please refer to the Department of Justice Laws Web Site

An Employer's Responsibility

Employers are responsible for ensuring that no gender-based wage discrimination exists in their establishments. To achieve and maintain pay equity, compensation systems (including salary administration, job evaluation and benefits plans) should be reviewed periodically to determine if there are any unjustifiable gender-based differences in pay. If there is, steps should be taken to correct any inequity and to ensure that it does not reoccur.

For unionized workplaces, the Labour Program recommends that employers make all reasonable efforts to involve unions representing their employees in the pay equity process.

Key Concepts in Pay Equity

Wages

"Wages" consist of all forms of remuneration. This definition includes salary, commissions, vacation pay, severance pay and bonuses. It also includes employer contributions to pension funds or plans, long-term disability plans and all forms of health insurance plans. In addition, reasonable value for housing, payments in kind and any other advantage received directly or indirectly from the employer are included in the definition. The CHRA prohibits the reduction of wages to correct gender-based pay inequities.

Job Evaluation

The Canadian Human Rights Act requires that four factors be taken into account when measuring the relative value of work: skill, effort, responsibility and working conditions. For pay equity purposes, a job evaluation tool must be gender-neutral.

Reasonable Factors

Differences in wages between men and women performing work of equal value within the same establishment are permitted if they are due to one of the "reasonable factors" set out in the Equal Wages Guidelines, 1986. These factors include differences in performance ratings, seniority, demotion, rehabilitation or temporary training assignments, internal labour shortages, regional rates of pay, and red-circling for the re-evaluation, reclassification or downgrading of a position.

Establishment

Federal pay equity laws require that employees in predominantly-male and predominantly-female jobs within the same establishment be paid the same for work of equal value. The Guidelines state that:

"employees of an establishment include, notwithstanding any collective agreement applicable to any employees of the establishment, all employees of the employer subject to a common personnel and wage policy, whether or not such policy is administered centrally."

The scope of an establishment may be greater than a single bargaining unit, cover several geographical locations and include both unionized and non-unionized employees. Employers are not permitted to maintain separate establishments for the purpose of establishing or maintaining differences in wages that would otherwise be prohibited.

Occupational Group

An occupational group is a collection of jobs used for the purpose of comparing the value of those jobs. Although the Guidelines refer to an "occupational group," they do not provide a definition of this term. Occupational groups must be identified in a manner that enables meaningful comparisons. The selection of jobs that are grouped together is therefore a key decision in achieving pay equity.

An occupational group may include similar jobs that are distinguished only by the degree of difficulty in the duties of the job.

Gender Predominance

The Guidelines set out the criteria for determining the gender-predominance of an occupational group. The sliding scale definition of gender predominance is:

  • 70% if the occupational group has less than 100 employees;
  • 60% if the group has more than 100 but less than 500; and
  • 55% if the group has 500 or more.

Occupational groups are gender-neutral if the percentages represented by the predominant gender are less than those defined in the Guidelines. A gender-neutral occupational group cannot be used to make a pay equity comparison.

Education and Promotion

Promoting the importance of pay equity, and educating workplace partners on their roles and responsibilities is the first step in working towards a federally regulated sector that is free of gender-based wage discrimination. The Pay Equity Program can provide you with educational materials that are intended to help you understand the laws and issues related to pay equity.

The program can also offer educational seminars to interested employers, employer organizations, groups of employees and unions. Should you be interested, please contact us to discuss the scheduling and development of a seminar tailored specifically to the needs of your group.

This section provides links to other sites providing information related to pay equity in Canadian jurisdiction.