RE-IMPLEMENTATION
OF PROXY

FAQ

Yes.  The government passed legislation in 1996 (Schedule J of the Savings and Restructuring Act) to phase out the proxy method so that it was fully repealed from the Pay Equity Act by January 1, 1997. During the phase-out period, employers were required to pay out 3% of 1993 payroll in pay equity adjustments by September 30, 1996.

However, a legal challenge was brought against this legislation, and a court decided that Schedule J violated the Charter of Rights and Freedoms by repealing the proxy method. The court declared that Schedule J had no force or effect - this means that the Proxy method is reinstated in the Pay Equity Act, as though it had never been repealed.

Yes - now that the Proxy method has been reinstated in the Act, employers affected must reinstate their proxy pay equity plans. Proxy applies only to public sector organizations who were not able to match all their female job classes using either the Job-to-Job or Proportional Value methods of comparison and who had employees on July 1, 1993. These organizations must return to their proxy pay equity plans and make any necessary adjustments, including retroactive adjustments, to comply with the obligations as they were originally set out in the Pay Equity Act.

Proxy adjustments must be made to the job rate of female job classes on January 1 of each year, starting in 1994, using a minimum of 1% of the previous year's payroll, until pay equity is achieved. Retroactive proxy adjustments may now be required for 1994, 1995, 1996 and 1997. Adjustments in 1998 and future years may be required on an annual basis in order to achieve pay equity.

When determining the payroll for any given year, employers must include the pay equity adjustments made or owed for that year.

There is no deadline to achieve pay equity using the Proxy method; however, the Job-to-Job and Proportional Value methods require pay equity to be fully achieved by January 1, 1998.

No.  The 3% funding provided by the funding Ministries allowed for an enhanced proxy adjustment in 1994. Proxy adjustments must still be made for 1995 and 1996, and as long as necessary, using a minimum of 1% of the previous year's payroll, until pay equity is achieved.

When Schedule J of the Savings and Restructuring Act, 1996 phased out proxy, it changed and reduced employer's obligations for the period from 1994 to 1996. Employers who had made proxy adjustments effective in 1994 amounting to 3% of 1993 payroll, were no longer required to make any further adjustments in 1995 and 1996. Employers who had not made adjustments effective in 1994 were required to make proxy adjustments amounting to 3% of 1993 payroll by September 30, 1996.

Since the Proxy method is now reinstated in the Pay Equity Act in its original form, both groups of employers must examine their proxy pay equity plans to determine whether any additional retroactive adjustments are required for the period from 1993 to 1996 in order to meet their original obligations.

The Pay Equity Act requires that pay equity adjustments be made to the job rate of female job classes on an annual basis, using 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. If adjustments were properly made during the three-year period from 1994 to 1996, the total amount spent would be approximately 6% of 1993 payroll. As a result, the 3% of 1993 payroll paid out either in 1994, or during the proxy phase-out in 1996, would be insufficient to meet the current obligations, and cannot be spread out to cover other years. Both groups of employers must now make any necessary retroactive proxy adjustments to cover the period from 1994 to 1996.

These plans may need to be redone in order to determine how pay equity can be achieved. In addition, some employers paid out the 3% of 1993 payroll in a lump sum or "bonus" form on September 30, 1996, and did not incorporate these payments into the job rate of the female job classes. These are not true pay equity adjustments.

These employers must reinstate proxy adjustments retroactively to January 1, 1997, and make any further adjustment required for the 1997 year, based on 1% of 1996 payroll, and each following year until pay equity is achieved.

These employers must redo their proxy pay equity plan(s) in order to ensure they are meeting their obligation to achieve pay equity. If the information obtained from the comparator proxy organization was destroyed also, an employer may need to re-apply to that proxy organization for the necessary information to re-do its plan. The Pay Equity Office will be communicating with potential comparator proxy organizations, as required, to inform them of the renewed proxy obligations under the Act and to seek their cooperation with this process.

If the employer still has unmatched female job classes, it must now return to using the Proxy method for all female job classes in the establishment. If the proxy plan requires 1997 adjustments for job classes which did not receive a Job-to-Job or Proportional Value adjustment, the employer must make a minimal adjustment to the affected female job classes, even though it has already spent 1% of 1996 payroll.

Yes.  The Pay Equity Act allows employers to amend a non-union plan, or negotiate an amended plan with a bargaining agent, where there has been a change in circumstances which makes the plan no longer appropriate. However, pay equity must be achieved by January 1, 1998, where the Job-to-Job or Proportional Value methods are used. There is no deadline to achieve pay equity using the Proxy method.

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