The Pay Equity Act (“Act”) and its Regulations came into force on August 31, 2021. As we discussed in our earlier bulletin, the Act requires federal sector employers with more than 10 employees to develop a pay equity plan within three years (i.e. by September 3, 2024) that identifies and corrects gender-based wage gaps for incumbents of predominantly female job classes.
Top Five Immediate Steps and Strategic Considerations
Over the course of the next three years, federal sector employers are required to perform various tasks as part of the pay equity process. For those employers who are required to develop their pay equity plans in committee, some of these tasks may need to be undertaken prior to setting up the committee structure. We have set out below our list of the top five immediate steps and strategic considerations for employers as they work towards compliance with the new requirements.
Develop a project plan.
There is a lot to be done in the next three years. To get started, employers should identify an internal project team for the pay equity process. This team should include key stakeholders from Human Resources, Compensation, Legal and Labour Relations, if applicable. As part of this plan, employers should consider whether it is appropriate to develop privilege protocols for the team, including policies and procedures on document management.
To help keep the project team organized and on track, consider developing project plans outlining key responsibilities, decision points and expected timelines for the pay equity plan exercise.
Evaluate the data and identify potential gaps or issues.
Employers should assess their existing employee data, including any information they may have regarding job classes, gender predominance of those job classes (current, historical and stereotypical), existing job evaluations scores, and detailed compensation.
After collecting this information, employers should identify any issues in their data that may need to be resolved in order to complete the pay equity plan exercise. Given the complexity of this exercise, employers may wish to consider engaging external consultants under privilege (i.e. retained by internal or external legal counsel to provide legal advice to the employer) to analyze the data.
Evaluate the need and opportunity for multiple plans.
Under the Act, employers are by default required to establish a single pay equity plan for all their employees, including executives, professionals, administrative staff, technical staff, managers, etc. In order to establish multiple plans, organizations must apply to and obtain approval from the Pay Equity Commissioner. As such, employers should consider whether multiple pay equity plans may be preferable and assess whether any anticipated multiple pay equity plan strategy meets the requirements of the Act.
Post a notice by November 1, 2021.
Employers who are required under the Act to establish pay equity plan(s) as of the coming into force of the Act are required to post a notice of their obligations to do so by November 1, 2021.
The content of the notice will depend on the type of employer:
- Employers required to form a committee(s): Employers who have 100+ employees or unionized employees are required to form pay equity committees. These employers are required to set out, in the notice, their obligations to 1) establish a pay equity plan and 2) make all reasonable efforts to establish a pay equity committee for that purpose. These notices must also set out the legislative requirements for the pay equity committee’s membership, inform any non-unionized employees of their right to designate committee members to represent them, and inform any unionized employees that their bargaining agent will select the committee members who will represent the employees in that bargaining unit.
- Employers not required to form a committee but who voluntarily elect to do so: Employers who have less than 100+ employees and who are not unionized may voluntarily establish a pay equity committee. If they decide to do so, they must set out, in their notice, their obligations to establish a pay equity plan and the requirements for the committee’s membership. They must also inform employees of their right to designate committee members to represent them.
- Employers not required to form a committee and who do not voluntarily elect to do so: Employers who have less than 100 employees, who are not unionized and who do not chose to voluntarily establish a pay equity committee still have an obligation to post a notice. The content of the required notice is limited to setting out the employer’s obligation to establish a pay equity plan.
- Group of employers or employers who are authorized to proceed with multiple pay equity plans: In addition to the general requirements noted above, if employers are part of a group of employers, each must indicate that it is part of a group of employers in its notice to employees. Similarly, if an employer is authorized by the Pay Equity Commissioner to establish multiple pay equity plans, the employer should post a notice setting out its obligations to establish multiple plans. If an employer has not determined by the November 1, 2021 posting deadline whether it will (i) be part of a group of employers or (ii) establish multiple pay equity plans, then it should proceed as a single employer with a single pay equity plan, and can post an amended notice when the determination is subsequently made.
Employers must post the notice in either print or electronic format. They must ensure that the notice is accessible to all employees, including in a form that is accessible to employees with disabilities.
Employers must also indicate the date of the posting, and keep the notice posted until the final version of the pay equity plan is posted, or a new version of the notice is required (e.g. if employers obtain authorization from the Pay Equity Commissioner to establish multiple pay equity plans or join a group of employers).
In conjunction with this notice, employers should develop a broader communication plan to keep employees informed about the pay equity process.
Develop your pay equity committee structure.
Whether required or voluntary, pay equity committee(s) should be structured in light of legislative, geographic, business, and other strategic considerations. Employers should start to identify management representatives and consider the process they will use for electing non-unionized employee representative(s).
Before establishing the committee(s), employers may also wish to develop terms of reference for the committee to guide the process and create confidentiality agreements to protect confidential information that is shared in developing the pay equity plan.
Begin the Process Now
The pay equity process will be a time-consuming one, as it requires employers to collect and analyze complex and sensitive employee data in a process that may involve various stakeholders, including some that may be external to their organization. Accordingly, time is of the essence in getting the process under way in a strategic and efficient fashion.
If you have questions or require support in these initial steps, please contact the authors or your regular Fasken lawyer.