The clock is ticking: Federal employers to post pay equity plans by September 3, 2024

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Canada | Publication | May 26, 2023

As many federally regulated employers are aware, the Pay Equity Act (the Act), which came into force in 2021, requires that all federally regulated employers with 10 or more employees prepare and post a pay equity plan by September 3, 2024. For those employers that are unionized, or have 100 or more employees, the pay equity plan must be established by a committee, composed of various workplace representatives, as prescribed in the Act.

Without repeating our previous overview of the Act and its specific requirements, which can be found here, we want to share some updates and practical recommendations that may assist federally regulated employers whether far along in their pay equity journey or just getting started.

Updates

Over the last year, the Pay Equity Unit of the Canadian Human Rights Commission (the Commission) has published a number of “Interpretations, Policies and Guidelines” (IPGs) and other guidance documents addressing various aspects of this new pay equity regime.

As the legislation remains relatively new, and not the subject of judicial interpretation (yet), these guidance materials are helpful in addressing how the legislation is likely to be interpreted. Keep in mind, however, that neither these IPGs, nor the Commission’s other guidance documents, constitute law. In other words, they are not legally binding, and so for legal advice about a particular issue or requirement under the Act, we continue to recommend consulting legal counsel.

Also over the last year, we have seen some employers submit applications to the pay equity commissioner (the Commissioner) for authorization to establish multiple pay equity plans. As many readers will know, the default in the Act is one plan for all of the employer’s employees, regardless of internal divisions or bargaining unit structures.

This said, the Act provides that the Commissioner may authorize the establishment of multiple plans provided (i) there will be enough predominantly male job classes to make a comparison of compensation for each of the proposed pay equity plans; and (ii) the Commissioner determines it is appropriate in the circumstances.

Thus far, there are few decisions of the Commissioner in which multiple plans have been authorized. It does appear, however, from those decisions made that the Commissioner is taking a narrow view of the circumstances in which multiple plans will be appropriate. As further decisions are released, including one involving the public sector (and which is opposed by various unions), and potentially make their way through the courts pursuant to a judicial review process, we expect to see further trends develop.

Pathways to compliance

It’s not too late!

If your organization has not started preparing a pay equity plan, or putting together a pay equity committee (if required), it’s not too late to get started. But we do recommend starting this process sooner rather than later. Even though the deadline for posting a final pay equity play is over a year away, it may take some time to gather the necessary information (i.e., job data, job descriptions, compensation information, etc.), and particularly if a committee is involved, it can take longer than anticipated to form the committee according to the Act’s requirements, as well as to schedule time to meet and make necessary decisions about the establishment of the plan.

Note as well that even though the plan does not need to be posted in its final form until September 3, 2024, with any increases in compensation payable the following day (or phased in, in some prescribed circumstances) an employer must first post a draft version of the plan for 60 days to allow employees to provide written comments on the plan.

If seeking authorization for multiple plans, apply ASAP

The deadline for posting a final pay equity plan will not be extended as a result of an application for authorization to establish multiple plans, or another type of application to the Commissioner to deviate from a presumption in the Act (e.g., apply to establish a pay equity plan without a committee).

That means if such an application is filed, even if it takes weeks or months to obtain a decision (which it may), the September 3 deadline for posting the final version of the plan will remain in place. This makes it important to submit any such applications as soon as possible, and also to continue to take whatever steps can be taken in the meantime (e.g., gathering compensation information, preparing preliminary reviews of job data, etc.) to ensure the ultimate deadline for a plan (or plans, if more than one is approved) will be met.

Start the committee off on the right foot

If you are part of an organization that must establish a pay equity committee to prepare the pay equity plan, consider how the employer will assist the non-unionized employees with the process of selecting a representative for the committee. The representative must be selected by these non-unionized employees through a vote. Bargaining agents will select their committee representatives while the employer will select its representatives for the committee.

It is a best practice to lay the ground rules for the committee early on. This will often involve preparing terms of reference on which all committee members are aligned, as well as ensuring all committee members agree to terms relating to confidentiality of information disclosed to the committee and certain of its deliberations. The committee may also want to address at the outset, and in its terms of reference, whether any external assistance will be obtained for the committee, and if so, the nature of it and which party will be responsible for the associated costs. Addressing dispute resolution, roles of various committee members, as well as timelines for meetings, is also best done at the outset.

Keep in mind that the Act does provide avenues to seek the Commissioner’s assistance, or prepare a plan without a committee, in certain circumstances. Legal advice is recommended if an employer is looking to explore these options.

Engage resources to help

The pay equity process can appear daunting, but it doesn’t have to be. There are many resources now available on the Commission’s Pay Equity Unit website, and of course, we as legal counsel can be contacted with any questions related to pay equity compliance under the Act, and for advice on best practices and interpreting the various requirements and provisions in the Act.