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Disclaimer: This Guide gives an overview of the minimum requirements of the Pay Equity Act as interpreted by the Pay Equity Office. The interpretations are drawn from our own experiences and by applying the key rulings of the Pay Equity Hearings Tribunal and the courts and is current to the date of publication.
The 1993 amendment to the Act contained provisions for proportional value and proxy methods. Unlike job-to-job and proportional value where comparisons are made within the organization, the proxy comparison method allows organizations in the broader public sector, which have mostly female job classes, to obtain and apply pay equity information from another public sector organization.
In 1996, the government repealed the proxy comparison method with the passing of Bill 26, Savings and Restructuring Act, Schedule J. However, a legal challenge was brought against this legislation, and the Ontario Supreme Court decided that repealing the proxy method violated the Charter of Rights and Freedoms. The court declared that Schedule J had no force or effect, reinstating the proxy method in the Pay Equity Act as though it had never been repealed.
What is the impact of the repeal and re-instatement of proxy on pay equity adjustments?
The Act requires that pay equity adjustments be made to the job rate of female job classes on an annual basis, using a minimum of 1% of the previous year's payroll, until pay equity is achieved. These adjustments accumulate annually, so that an additional 1% of payroll is paid out each year. Employers should examine their proxy pay equity plans to determine whether any additional retroactive adjustments are required for the period from 1994 to 1996 in order to meet the minimum of 1% of payroll for adjustments required by the Act.
Which organizations can use the proxy method?
Only organizations that are part of the public sector as defined in the Appendix in the Schedule to the Act and and had employees on July 1, 1993 are eligible to use the proxy method [21.12 (1)–(2)]. Proxy Orders are issued by Review Officers who verify that the employer is a public sector employer and that pay equity cannot be achieved using either job-to-job or proportional value methods of comparison. Whether an organization is considered part of the public sector depends on the source and purpose of funding and services provided as specified by the Appendix in the Schedule to the Act.
To apply for an Order to use the proxy method, an organization must notify the Commission by completing and submitting a Notice of Inability to Achieve form. Only employers who have received an Order can proceed with proxy comparisons.
How does the proxy method work?
The proxy method allows eligible organizations called "seeking employers" [21.11 (1)] to go to another public sector employer to complete pay equity job comparisons. Seeking employers borrow job and pay equity adjusted job rate information about similar female job classes from this "proxy employer". The seeking employer compares its female job classes to the proxy female job classes using a proportional value method of comparison. Then, as a result of the job comparisons, the seeking employer determines pay equity adjustments that enable the organization to achieve pay equity [21.15].
The proxy comparison method applies to all female job classes in the seeking employer's establishment [21.14 (1)], even if some female job classes could be compared using the job-to-job or proportional value comparison methods.
When must proxy pay equity be implemented and achieved by?
Public sector employers using the proxy method of comparison should have posted their pay equity plans by January 1, 1994. Proxy adjustments began January 1, 1994 and continue every year until pay equity is achieved. Employers must spend a minimum of 1% of the previous year's payroll for pay equity adjustments every year until pay equity has been achieved [21.22].
Implementing and Achieving Pay Equity Using the Proxy Method
1. Identify key female job classes
While all female job classes in the seeking organization must be included when applying the proxy method, key female job classes are initially identified and their duties and responsibilities are described and provided to the proxy employer. The proxy employer uses this information to find similar female job classes in its organization as of January 1, 1994. The Act defines "key female job class" as one where there is the most number of employees or the duties of the job class are essential to the employer.
2. Select the proxy organization
The seeking employer selects a proxy employer from the Proxy Schedule of the Act contained in Ontario Regulation 396/93. Column 1 of the Schedule contains nine broad categories of seeking employers: Health Care Services; Services for Seniors; Services for People with Disabilities; Counselling, Referral and Accommodation Services; Services for Children and Families; Correctional Services; Cultural Organizations; and Miscellaneous. The seeking employer chooses the description from Column 1 that matches its programs and services. Column 2 of the Schedule provides the potential proxy employers for the seeking employer categories. Once the seeking employer has determined the type of potential proxy employer it requires from Column 2, it looks for an organization of this type in its geographic division. If a proxy employer cannot be found in the same geographic division, the seeking employer selects the one closest to it.
Two or more seeking employers may agree to form a "combined establishment" so long as all of these seeking employers fall under the same description in the Schedule to the Act [21.16].
3. Request information from the proxy employer
The provisions for information exchange between the seeking and proxy employers are detailed in [21.17] of the Act.
[21.17 (1)] For the purpose of making a comparison for a key female job class using the proxy method, a seeking employer may request any potential proxy employer to provide it with the following information relating to a potential proxy establishment of the potential proxy employer (as of January 1, 1994):
- Information about the duties and responsibilities of each female job class in the potential proxy establishment whose duties and responsibilities are similar to those of the key female job class of the seeking employer.
- The pay equity job rate for each female job class in the potential proxy establishment referred to in paragraph 1.
- The total cost of benefits provided to or for the benefit of the employees of the potential proxy establishment, expressed as a percentage of the total amount of all wages and salaries paid to those employees.
- Such other information as may be prescribed in the regulations.
The proxy employer is required to provide the job and pay equity adjusted job rate information requested by the seeking employer [21.17 (2)]. The proxy employer must provide the information within 60 days of receiving the request [21.17 (3)]. If no similar job classes exist in the proxy organization, the proxy employer provides information for a group of female job classes whose pay equity job rates are representative of the range of pay equity job rates in the potential proxy establishment [21.17 (5)]. If the key female job classes from the seeking employer are in a bargaining unit, the proxy employer provides job information for unionized jobs unless the seeking employer and union agree that the jobs may be compared to non-unionized jobs in the proxy establishment [21.17 (6)].
[21.17 (2)] The potential proxy employer shall provide the requested information if:
- the request is made in writing;
- the request is accompanied by a copy of the order issued under subsection 21.12 (2);
- the request is accompanied by an organization chart showing the reporting relationships for all job classes of the seeking employer;
- the request contains a detailed description, in a form approved by the Commission, of the duties and responsibilities of the key female job class of the seeking employer that is to be compared using the proxy method;
- the request contains such additional information as may be prescribed in the regulations;
- the request is signed by the employer or a partner of the employer, or, if the employer is a corporation, if the request is accompanied by a copy of a resolution of the corporation's board of directors resolving that the corporation make the request and by a certificate of an officer of the corporation certifying that the copy is a true copy; and
- if the members of the key female job class of the seeking employer have a bargaining agent:
- the request is signed by the bargaining agent, and
- it indicates whether the seeking employer and the bargaining agent have agreed that the class may be compared to job classes that are not in a bargaining unit of the establishment that is selected as the proxy establishment.
4. Proxy comparison method and achievement of pay equity
Achievement of pay equity in the establishment of a seeking employer occurs when:
- key female job classes are compared to proxy female job classes and the comparisons made as if the proxy female jobs were male job classes of the seeking employer; and
- other female jobs in the seeking establishment are compared to key female jobs as if the key female jobs were male job classes of the seeking employer [21.15 (1)].
Proxy job comparisons are conducted by valuing and comparing the seeking employers' female job classes to those of the proxy employer. To do this, the seeking employer evaluates the job classes of the seeking and proxy establishments using a gender neutral comparison system [21.15 (3)] and determines the job rates. Once all the job values and job rates have been determined, and comparisons made using proportional value [21.15 (2)], the seeking employer is required to post a pay equity plan by January 1, 1994 [21.18, 21.19]. The seeking employer must achieve pay equity by increasing the wages of all female job classes such that the relationship between the value of the work performed and job rates of all female jobs of the seeking employer is the same as that of the female job classes of the proxy employer. At least 1% of the employers' previous year's payroll must be spent every year on adjustments until pay equity is achieved.
Q&A Proxy Funding
1. Our organization no longer receives funding to cover the minimum 1% of payroll for proxy pay equity adjustments. Are we still obligated to make the payments?
Yes. Employers covered by the Act are responsible for achieving and maintaining pay equity for their female job classes. An employer's inability to pay adjustments, either due to financial hardship or lack of funding, does not exempt that employer from its obligations under the Act. Kensington Village v. Service Employees International Union, Local 220, 2000 CanLII 22420 (ON PEHT).
Any questions related to funding should be directed to the funding agency or Ministry.
2. How is maintaining using the proxy method different from job-to-job or proportional value methods?
The proxy employer provides a 'seeking' employer with "pay equity job rates" for female job classes that are similar to the key female job classes of the seeking employer. The "pay equity job rate" is the rate that the proxy employer's job classes would have been paid had the job class achieved pay equity on January 1, 1994 [21.11 (1)]. The proxy employer's pay equity job rates are used to determine the pay equity gaps that exist for the seeking employer's female job classes. Adjustments are paid to existing job classes until the pay equity target job rate is achieved, in addition to any job rate increases that may have been paid in the interim [21.11 (3), 21.22 (3)]. The seeking employer maintains pay equity by ensuring that all new female job classes are paid at least the pay equity target job rate for the job class.
3. Does an employer using the proxy method compare its job rates to job classes in the proxy organization to maintain pay equity?
No. Job and wage information from the proxy organization is collected and used only once to make comparisons and to determine the pay equity target rates for female job classes in the seeking establishment. Seeking employers do not go back to their proxy employer for information to maintain pay equity.
Pay differentials between the seeking employer's job classes and the proxy employer's job classes after pay equity has been achieved is an issue that is beyond the jurisdiction of the Act.
Note (2019): The PEHT's 2016 decision in Ontario Nurses' Association v Participating Nursing Homes is under review and is before the courts. This information will be updated once a decision has been made.
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