Federally-regulated employers are at various stages of their respective journeys towards compliance with the new federal Pay Equity Act (the “Act”).[1]
Many employers – particularly non-unionized employers – were able to finalize and post their initial pay equity plans by September 3, 2024. Others have applied for and been granted extensions by the Pay Equity Commissioner (see our bulletin for more information on the criteria for an extension). However, even for employers able to post their initial pay equity plan(s), the road to pay equity compliance has only just begun: the Act requires employers to not only achieve pay equity, but also to maintain it.
In this update, we review upcoming compliance deadlines and other go-forward obligations under the Act. Note, the Act does not generally apply to provincially-regulated employers.
- Annual Reporting to the Commissioner
The Act contemplates annual reporting by employers to the Commissioner. For most employers, the first report will be due by no later than June 30, 2025 (and every year thereafter).[2] Among other things, the annual statement will include:
- basic information about the employer and the pay equity plan;
- the number of predominantly female job classes identified in the plan for which an increase in compensation must be provided;
- details regarding the amount of the increases provided to each applicable job class;
- both the total number of employees who receive increases under the plan and the number of whom are women; and
- when those increases are payable (including whether retroactive lump sums with interest were paid).[3]
The Canadian Human Rights Commission (“CHRC”) is currently consulting on a draft form of this annual report and we expect to see a finalized version with associated guidance for employers in early 2025.
- Maintenance Obligations
The Act requires employers to take steps to ensure pay equity is maintained by preparing updated pay equity plans no later than five years from the date of the last posted plan. For employers that posted their initial plan by September 3, 2024, this means that their first “maintenance” plan will be due by no later than September 3, 2029. That said, the work for employers starts much sooner, starting with a required notice and annual collections of workplace information.
- Notice of the Maintenance Exercise
The Act requires employers to post a notice for employees setting out their obligation to conduct pay equity maintenance. For most private sector employers, this notice must be posted before the last day of its fiscal year immediately following the posting of its initial pay equity plan. Much like the initial notice that employers posted back in 2021, this maintenance notice must include information on the composition of the maintenance pay equity committee (i.e. for employers with 100+ employees or unionized employees).[4] The notice must remain posted until the final version of the revised pay equity plan is posted.[5]
- Annual Collection of Workforce Information
In order to facilitate the maintenance exercise, employers must also collect annual “snapshots”, reflecting information that is necessary to identify changes relevant to the pay equity plan maintenance exercise. For most private sector employers, this data must reflect their workplaces as they were on the last day of each fiscal year (except in the last year prior to updating the pay equity plan, during which the employer or the committee, as applicable, may select an alternate date for the snapshot).[6] The obligation to collect annual snapshots begins as soon as the initial pay equity exercise has been complete and will continue indefinitely, for successive rounds of pay equity maintenance.
- Update and Post a New Pay Equity Plan
The Act requires employers to update their initial pay equity plans no later than five years after they are posted and to make any retroactive wage adjustments that may be owing.[7]
Similar to the development and implementation of the initial pay equity plan, employers (in a pay equity committee, where applicable) will be required to proactively examine their compensation practices and identify wage gaps for predominantly female job classes using prescribed methodologies. However, unlike the first exercise, the maintenance exercise is not only forward-looking, but also retroactive to the date of the prior pay equity plan. Employers are therefore encouraged to get out ahead of any potential wage gaps that may otherwise inadvertently arise through proactive compensation practice management.
- Notice of the Maintenance Exercise
We will continue to monitor the guidance from the CHRC as it becomes available. Of course, if you have questions or need assistance at any stage in your organization’s pay equity process, please contact the authors or your regular Fasken lawyer.
[1] The new regime requires federally-regulated employers with more than 10 employees to develop a pay equity plan within three years (i.e. by September 3, 2024 for most organizations; see further our earlier bulletin for more information about these new obligations).
[2] Pay Equity Act, s. 89(3)-(4).
[3] Pay Equity Act, s. 89(1) and Pay Equity Regulations, s. 53(1).
[4] Pay Equity Act, s. 65(1)-(2).
[5] Pay Equity Regulations, s. 36(2)
[6] Pay Equity Regulations, s. 39(1)-(2).
[7] Pay Equity Act, s. 64 and 83(1).
