Labour and Employment Law Blog

Important new legislative changes impacting federally regulated employers will come into effect in 2021: the Pay Equity Act and a minimum wage requirement. Details on both these measures and how that will affect employers are examined below. 

Pay Equity Act

The federal Pay Equity Act comes into effect on August 31, 2021. The Act applies to federally regulated employers who have 10 or more employees. Federally regulated employers fall under the Canada Labour Code and include organizations such as airlines, banks, telecommunication, marine shipping, and interprovincial travel. The purpose of the Act is to, “achieve pay equity through proactive means by redressing the systemic gender-based discrimination in the compensation practices and systems of employers that is experienced by employees who occupy positions in predominantly female job classes so that they receive equal compensation for work of equal value”.

Employers with workforces of 10 or more employees will need to examine their compensation practices and establish and implement a pay equity plan within three years (by August 31, 2024). Employers with workforces of 100 or more employees will need to establish a pay equity committee. Employers with unionized workforces with 10 to 99 employees will also need to establish a committee. In the short term, by November 1, 2021, these employers must post a notice to employees setting out their obligations to establish a pay equity plan and to make all reasonable efforts to establish a pay equity committee.

Under the Act, the steps leading to the establishment of a pay equity plan include:

• Identify the job classes in the workplace;
• Determine the gender predominance of each job class or if gender neutral;
• Determine the value of the work in each female or male job class;
• Calculate the compensation associated with each job class;
• Compare the compensation of each predominantly female or male job class doing work of equal or comparable value; and
• Identify predominantly female job classes requiring an increase in compensation.

The employer must then draft and post a pay equity plan and provide employees with an opportunity to comment. The employer must implement the pay equity plan within three years and implement the pay increases for the predominantly female job classes that are comparatively underpaid. In subsequent years, the employer will be required to file annual statements and update the pay equity plan every five years.

A Pay Equity Commissioner is responsible for administration, enforcement and education with respect to the Act. The Commissioner may issue fines for non-compliance of up to $30,000 for employers with fewer than 100 employees and up to $50,000 for employers with 100 or more employees.

Pay equity plans are complex; employers are encouraged to start planning now for the development and implementation of their plans.

Federal Minimum Wage

A new minimum wage of $15 per hour comes into effect for federally regulated employers on December 29, 2021. Previously, the minimum wage was that under the applicable employment standards legislation for the province in which the employer operates. With this change that was part of the Budget Implementation Act, 2021, No. 1, federally regulated employers will have to pay the greater of $15 per hour or the applicable provincial minimum wage. For employers operating in provinces where the minimum wage is $15 or higher, this change will not have an impact. However, federally regulated employers operating in provinces with a minimum wage of less than $15 should plan and budget for this increase. They may also wish to consider if a wage increase for lower paid employees will create inequities within their pay plan.

Please contact a member of our Labour, Employment & Human Rights Group with any questions you may have on these developments.