Pay Equity Commissioner decision may mean larger pay equity committees

The federal Pay Equity Commissioner recently held that a bargaining agent may unilaterally determine the number of representatives it appoints to a workplace pay equity committee. The employer cannot control the overall headcount of that committee. 

The decision in Public Service Alliance of Canada v Bank of Canada¹  is concerning to the extent it raises the possibility of larger, and potentially unwieldy, pay equity committees and skewed representation within such a committee. These are the committees responsible for undertaking the work necessary to create the workplace’s pay equity plan.

The composition of pay equity committees

The Pay Equity Act (the Act) aims to achieve pay equity in federally regulated workplaces – i.e. elimination of systemic, gender-based discrimination in employee compensation. Employers are required to create a “pay equity plan” (a Plan) describing the steps it will take to achieve pay equity. 

Unionized employers and employers with 100 or more employees must also “make all reasonable efforts” to establish a pay equity committee (a Committee), comprised of employee and employer representatives, to create the Plan. The Committee creates a pay equity plan that is intended to identify any systemic, gender-based compensation differentials so the employer can remedy these pay gaps.

The Act has strict rules in section 19 about a Committee's composition. The dispute in Bank of Canada centered on section 19(1)(d), in relation to the appointment of union representatives on a Committee:

19 (1) A pay equity committee is to be composed of at least three members and must also meet the following requirements:

at least two-thirds of the members must represent the employees to whom the pay equity plan relates;

at least 50% of the members must be women;

at least one member must be a person selected by the employer to represent it;

if some or all of the employees to whom the pay equity plan relates are unionized employees, there must be at least the same number of members to represent those employees as there are bargaining agents, with each bargaining agent selecting at least one person to be a member and to represent employees who are members of any bargaining unit represented by that bargaining agent; and

if some or all of the employees to whom the pay equity plan relates are non-unionized employees, at least one member must be a person selected by those employees to represent them.

(emphasis added)

Unlimited union appointments to a pay equity committee

In Bank of Canada, the Public Service Alliance of Canada (PSAC) and the Bank of Canada (the Bank) had differing interpretations of section 19(1)(d):

• The Bank believed it had the authority to determine the number of representatives that would sit on the Committee, and PSAC’s role was to appoint the allocated number of representatives. As PSAC represents only 3% of the Bank’s workforce, the Bank wanted to allocate PSAC one representative (and one alternate) out of five total employee representatives on its Committee (i.e. 20% of the employee seats).
• PSAC’s view was the Act entitles each workplace party to select the number of representatives it considers appropriate to join the Committee. It argued the Committee does not fall under the exclusive legal control of the employer or any other party. PSAC wanted to appoint four representatives to the Committee, meaning it would have 50% of the employee seats unless the Bank increased the number of overall Committee members.

The Pay Equity Commissioner sided with PSAC. The commissioner looked to the wording of the Act as a whole, and noted Parliament saw fit to set out various maximums elsewhere in the Act (e.g. maximum time periods; maximum penalties) but elected not to do so in regard to Committee member numbers. As a result, there is no legislated maximum number of representatives that a bargaining agent can appoint to a Committee. An employer is responsible for establishing a Committee, but cannot set a maximum on its headcount.

The commissioner recognized that this interpretation of the Act could result in a Committee becoming non-functional if Committee numbers are too large, or are dominated by a single bargaining agent representing a minority of workers subject to a Plan. 

However, the commissioner noted there are dispute resolution mechanisms available under the Act should dysfunction arise. For example, under the Act, all Committee members that represent employees (whether appointed by bargaining agents or selected as representatives of the non-unionized employees) have, as a group, one vote while the employer representatives have, as a group, one vote, and the employer representative(s’) vote prevails if the employee representatives on a Committee cannot unanimously agree on their vote. There are also dispute resolution mechanisms available where a Committee reaches impasses in its work, and even options for an employer to apply for authorization to create a pay equity plan without a Committee.

A troubling outcome for employers

In our view, the Bank of Canada decision does not sufficiently consider the employer’s role with respect to the pay equity committee.  Section 16 of the Act specifies it is the employer that is required to “establish” the pay equity committee. Further, section 19(3) provides that if the “employer is unable” to do so in accordance with the composition requirement, the employer may apply to the commissioner for authorization to create a plan without a Committee. 

In light of the Committee establishment clearly being the employer’s responsibility, many employers have held they can determine the overall size of the Committee, and simply must ensure the Committee meets the basic composition requirements at section 19 the Act. It is questionable that the legislation was intended to lead to what is arguably an absurd result – that is, a workplace party being entitled to decide how many representatives it wishes to have on a Committee, without limitation or the ability of the employer, which is the party actually responsible for establishing the Committee, to institute any controls on its size. In our view, the commissioner’s decision is problematic for this reason.

Takeaways

Establishing a pay equity plan through a Committee can be a time-consuming process. Employers likely want to do what they can to ensure there is a well-functioning Committee in place to create the plan. This may involve proactively working with bargaining agents and non-unionized employees to obtain consensus on the Committee’s maximum size. This can then also be set out in the Committee’s terms of reference, which can outline various issues related to the structure and functioning of the Committee, and help prevent disputes. Should the Committee be unable to perform its work, there are mechanisms in the Act on which employers can rely, and we encourage employers to seek legal advice should such an issue arise.