On May 10, the Supreme Court of Canada (the "SCC") upheld the decisions of the Quebec Court of Appeal and the Quebec Superior Court declaring ss. 76.3, 76.5 and s. 103.1 para. 2 of the Pay Equity Act (the "Act") invalid on the ground that these provisions are discriminatory and thus contrary to s. 15(1) of the Canadian Charter of Rights and Freedoms (the "Charter"). According to the SCC, rather than ending systemic wage discrimination the impugned provisions "place barriers along the path to equal pay for women".
How did the SCC arrive at this conclusion and what will be the impact of this decision on employers with a business in Quebec?
In 1996, the Quebec government adopted the Pay Equity Act to address systemic wage discrimination against women. The Act imposed ongoing obligations on employers to measure and correct pay inequities in predominantly female jobs.
More specifically, under ss. 40 to 43 of the Act, now repealed, employers had a continuous obligation to maintain pay equity and adjust compensation accordingly.
In 2009, faced with the widespread non-compliance of employers with the Act, the Quebec government amended employer obligations under the Act. Among these amendments, the government (i) abolished the continuous obligation to maintain pay equity, (ii) required pay equity audits every five years, and (iii) prevented retroactive remedies for the period between audits.
Following these changes, a group of unions challenged the new ss. 76.3, 76.5 and s. 103.1 para. 2 of the Act.
Under s. 76.3 of the Act, the employer audit posting is not required to include the date on which any pay inequity emerged.
Under s. 76.5 of the Act, adjustments in compensation apply from the date the audit results are posted. Incidentally, the Commission des normes, de l'équité, de la santé et de la sécurité du travail cannot assess compensation adjustments prior to the posting date (s. 103.1 para. 2). Redress can be applied prior to the posting only where there is evidence that the employer acted in bad faith or in a discriminatory or arbitrary manner.
In 2014, the Quebec Superior Court concluded that ss. 76.5 and 76.3 of the Act were discriminatory and violated s. 15(1) of the Charter. The declaration of invalidity was suspended for a one-year period.
In 2016, the Quebec Court of Appeal upheld the Superior Court's decision invalidating ss. 76.3 and 76.5 of the Act. Further, the Court of Appeal found that s. 103.1 para. 2 also violated s. 15(1) of the Charter.
A majority of the SCC concluded that the provisions under review violate s. 15(1) of the Charter and perpetuate the historical disadvantage of women with respect to compensation. The SCC explained that the sections under review effectively have a discriminatory impact since the pay inequities that emerge during the five year periods between audits go uncorrected until the next audit. Therefore, only adjustment payments going forward are payable. This therefore has the effect of making the employer's pay equity obligation an "episodic, partial obligation".
According to the SCC, under the current scheme, employers must post the results of the audit, but not the date on which the iniquity occurred, which prevents employees from knowing when adjustment payments ought to have been made. Employees are therefore deprived of the evidence required for proving the employer's bad faith, which is the only way of obtaining retroactive adjustment payments.
Any inequities that emerge before the next audit will therefore not be redressed, except where the claimants can prove the employer's intentional discrimination.
Ultimately, and still according to the SCC, employers have therefore been granted a certain amnesty for any possible discrimination between audit periods.
Consequences of the decision
The Quebec government has one year to amend the Act based on the SCC decision. It will certainly be interesting to see what amendments will be made to the Act, which will clearly result in heavier pay equity obligations for employers.
Indeed, employers with businesses in Quebec will likely have to closely monitor any changes in their compensation structure so that they will be able to identify the moment the inequity re-emerges within their business.
We will inform you of any developments concerning changes to the Act.
Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, 2018 SCC 17.