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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.
Who is in the public sector? Who is in the private sector?
The public sector includes the Ontario government, as well as municipalities, hospitals, universities and colleges, school boards, and corporations established by these entities. It also includes organizations subject to government licensing, such as daycare or childcare agencies licensed under the Day Nurseries Act, nursing homes licensed under the Nursing Act, legal aid clinics established under the Legal Aid Services Act, child welfare services, long–term care facilities, Native friendship centres, community health services, residential care facilities, developmental and rehabilitation services, and sexual assault centres. Generally, public sector organizations are established and/or governed by legislation. For a comprehensive listing of public sector organizations, refer to the listing in the Appendix in the Schedule to the Act.
The private sector means all employers who are not in the public sector.
Who is an employer?
In most situations, the identity of the employer responsible for pay equity will be clear. In situations where it is not clear, determining the employer for pay equity purposes will depend on the facts and circumstances of the business structure and/or employment relationships. The Tribunal devised four tests that, when applied, determine who is the employer for pay equity purposes (Ontario Nurses Association v. Haldimand-Norfolk, 1989 CanLII 1454 (ON PEHT)).
- Who has overall financial responsibility?
- Who has responsibility for compensation practices?
- What is the nature of the business, service, or enterprise?
- What is most consistent with achieving the purpose of the Pay Equity Act?
The first three tests are applied to identify who controls the work and, if still unclear, the fourth is applied. (Canadian Union of Public Employees, Local 1582 v. Metropolitan Toronto (Municipality), 1989 CanLII 1461 (ON PEHT)).
For pay equity purposes, the employer controls the work, financial issues, employment or labour relationships and the organization's core activities. The employer is the decision–maker with the power and capacity to affect pay practices. (See also Hilton Works v.MacDonald, 1993 CanLII 5419 (ON PEHT)), Thomson Newspapers Corporation v. Southern Ontario Newspaper Guild, 1993 CanLII 5427 (ON PEHT)).
1. In a franchise, who is the employer for pay equity?
In cases where the individual franchise owner controls hiring, firing and disciplining employees, setting wages and valuing jobs, the individual franchisee is likely to be the employer responsible for pay equity. In cases where the franchise is corporately owned and the corporation retains control and decision-making power over human resources and pay systems, then the corporation is likely to be the employer for pay equity.
2. A large general merchandise retailer with three divisions: department store, discount merchandise, and specialty superstore operate under different names. Is each division considered the employer for pay equity purposes or would they all fall under the same pay equity process?
Internal divisions created by the corporate entity for operational, marketing or other purposes do not necessarily constitute separate employers for pay equity. Unless the divisions have been structured so that the authority and accountability for determining pay and valuing work has been transferred to the individual divisions, generally the corporate entity remains the employer for pay equity purposes.
3. Who is an employee?
The Act does not provide a specific definition of "employee" except by the two exclusions; however the Tribunal has applied two tests from common law to decide employee status of individuals (Wellington (County) v. Butler, 1999 CanLII 14830 (ON PEHT)):
- The "total relationship test" examines the nature, structure and actual aspects of the employment relationship.
- The "organizational or integration test" examines whether or not the work is integral to the business.
In the absence of a specific definition, employers should interpret "employee" broadly for the purpose of pay equity.
4. Which employees are covered by the Pay Equity Act?
All employees including management, full–time, part–time, contract and seasonal workers are entitled to pay equity rights under the law. All employees covered under the Act are entitled to receive pay equity adjustments to achieve pay equity, or to make a complaint under the Act that pay equity was not achieved or maintained for their female job class, or to object to a pay equity plan in the case of non-unionized employees of Part II employers.
Part-time employees, who work at least one third of the normal work period, are covered by the Act. Part–time employees, who work on a regular and continuing basis, although for less than a third of the normal work period, are also covered.
Workers who are employed on a seasonal basis, in the same position, for the same employer are also covered. Clow v. Peterborough (City), 1995 CanLII 7217 (ON PEHT).
5. Are workers in non-standard employment relationships such as consultants, contract, or contingent workers covered by pay equity?
From time to time, employers hire contract, consultants or contingent workers for specific tasks or projects. These individuals may be self–employed for taxation purposes or paid on a contract basis. However, if an individual acts and works like an employee, he/she may well be treated as one under the law. For pay equity purposes, if these individuals fill ongoing positions in the business and their day-to-day work is largely controlled by the organization, they would be considered employees covered under the Act.
6. Which employees are NOT covered by the Pay Equity Act?
The Act only specifies two groups that are not covered:
- First, [1. (1)] states: "employee" does not include a student employed for his or her vacation period.
- Second, under limited circumstances, it may be possible to exclude casual workers [8. (3–4)] from pay equity.
7. What is the definition of a "casual" position?
A position shall not be considered "casual" if [8. (4)]:
- the work is performed for at least one-third of the normal work period that applies to similar full–time work. "Similar full–time work" does not have to be in the same or similar job class to the casual position. It can be interpreted broadly to mean similar to other job classes in the same job family or category (e.g. clerical work).
- the work is performed on a seasonal basis in the same position for the same employer
- the work is performed on a regular and continuing basis, although for less than one-third of the normal work period that applies to similar full–time work. "Regular" implies that the work will be performed according to a pattern, for example every other Friday or three hours per week, with a shared expectation between the employer and employees as to that pattern. "Continuing" suggests the existence of the work over a reasonable period of time.
The exclusion of casual positions applies only when the work performed is casual work. The definition of a position as casual does not depend on whether the individual employee(s) hired to do the work is/are employed on a casual basis. This means that regardless of the number of hours or sporadic schedule of any individual worker, if the job meets any one of criteria listed in (a), (b) or (c) above, the designation of casual would not be appropriate and the position would not be exempt from the Act (Circle of Life Health Services v.Toronto East General Hospital, 2003 CanLII 57507 (ON PEHT)).
Examples of Casual Workers:
- A general clerk is hired for a few days to complete a one-time project or an interviewer is hired for two months to conduct a one-time customer survey. These individuals would be considered in casual positions and exempt from pay equity.
- An employee is scheduled to work every Monday throughout the year. This work is "regular and continuous". Therefore, the job is not casual and the position is not exempt under the Act.
- An employer runs a ski resort and hires ski instructors for four months every winter. The employer hires both new and returning employees as instructors. These employees are not considered casual and thus the position is not exempt under the Act because the work performed is seasonal and for the same employer.
1. If a company hires clerical assistants through a temporary staffing agency to process its backlog of orders, is this employer responsible for pay equity for these temp workers?
No. If the employer is paying the agency for the service of providing a person to do some specific work, then the temporary agency workers would not likely be included in the employer's pay equity processes or plan. Generally, temp workers are the employees of the temp agency and covered by the temp agency's pay equity processes or plan.
2. If students work at an amusement park full–time from June to September and on every Friday evening and Saturday throughout the year are they excluded from pay equity?
No. Students who work during their vacation period are not covered by the Act; however, students who work in addition to their vacation period on a regular basis should be considered part–time employees for purposes of pay equity.
3. Are co–op students who do work as part of their university or college training program covered by the Act?
Yes. If a co–op student works for remuneration during the school year, not just on their vacation period, and their work is controlled by what appears to be a typical employer/employee relationship, the student may be covered by the Act.
4. Are family members or business owners considered employees by the Act?
Depends. Regardless of whether an individual is a family member or business owner, the question of whether he/ she is considered an "employee" is a legal one for which criteria has been developed in decisions of courts and the Tribunal. Generally, if an individual performs work in an ongoing position in the business and their day–to–day work is largely controlled by the organization and he/she is paid in a similar manner as other employees, that individual would likely be considered an employee and covered under the Act. Employers are advised to define "employee" broadly for the purposes of pay equity.
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