PAY
EQUITY

Public Sector Restructuring

Restructuring is widespread in the public sector. Some restructuring is mandated by legislation, such as school board mergers and the creation of the new City of Toronto. Other restructuring is mandated by Ministry programming changes, such as hospitals, municipalities other than Toronto, and Community Care Access Centres.

The Public Sector Labour Relations Transitions Act, 1997 (Bill 136) defines those employers affected by public sector restructuring as belonging to the following sectors:

• the municipal sector
• the New City of Toronto
• the New Toronto Hydro Electric Commission
• the school sector
• the hospital sector
• some other amalgamations

For pay equity purposes, public sector restructuring may involve the sale of business provision in section 13.1 of the Pay Equity Act. Any merger or dissolution described by Bill 136 is designated as a "sale of business" under the Pay Equity Act. The date of the "sale" under the Pay Equity Act is designated as the "changeover date" as defined by Bill 136. Mergers or dissolutions not covered by Bill 136 may also fall under the definition of a "sale of business" under the Pay Equity Act.

The sale of business provisions in the Pay Equity Act set out pay equity obligations following a "sale" and establish a process for meeting these obligations. Bill 136 refers to "predecessor" and "successor" employers, which are then designated as "sellers" and "purchasers" under the Pay Equity Act. We will use the terms "sale of business," "seller" and "purchaser" in this Fact Sheet.

Section 7(1) and 7(2) of the Act requires that employers establish and maintain pay equity. Both sellers and purchasers must examine their pay equity plans after restructuring has occurred and determine whether each plan is still appropriate for the female job classes in their establishments. The purchaser is liable for any outstanding pay equity obligations of the seller, although the purchaser may enter into a merger or amalgamation agreement with the seller that designates all or some retroactive pay equity obligations to the seller. Neither the seller nor the purchaser can by agreement opt out of their obligations under the Act.

After the sale, the purchaser is bound by the seller's plan for those positions it keeps. A seller will continue to be bound by its plan if it continues as an organization and has employees. If an employer believes a plan is no longer appropriate because of the restructuring, it must prepare a new plan. Where there is a bargaining agent, the plan must be negotiated with the bargaining agent. The process for preparing new plans is outlined below.

When a purchaser obtains new job classes through restructuring, it is required to:

• Complete any retroactive pay equity adjustments due to female job classes under the seller's plan; and
• Continue implementing the plan until the purchaser develops a new plan, if necessary.

Retroactive adjustments may include any remaining amounts required to achieve pay equity under the job-to-job and proportional value plans. The deadline to achieve pay equity under these plans in the public sector was January 1, 1998. (There is no similar deadline for achieving pay equity for proxy comparison adjustments.)

The purchaser becomes liable on the date of the sale (changeover date) for any outstanding pay equity obligations of the seller, which may include retroactive pay equity adjustments as far back as January 1990. Again, this will include the full amounts due under job-to-job and proportional value plans to comply with the January 1, 1998 deadline for achievement.

Not always. Employers need to review their pay equity plans to decide whether they are still appropriate for the female job classes in their respective establishments. If there are changes that result in a plan no longer being appropriate for the female job classes covered by the plan, then the employer, whether it is the seller (if they still exist) or purchaser, must develop a new pay equity plan.

A bargaining agent may trigger the development of a new pay equity plan if it believes that the plan is no longer appropriate because of the sale. As well, a non-union employee may file a complaint that a pay equity plan is no longer appropriate for a female job class as a result of the sale.

The following are some changes that might make a pay equity plan no longer appropriate:

• The addition or subtraction of jobs from a pay equity plan;
• Changes in job duties or responsibilities that are sufficient to alter the value of jobs in a pay equity plan;
• Changes to the composition of the bargaining unit or non-union group;
• The gender neutral comparison system no longer adequately captures the work of male and female job classes, which may require either amending the gender neutral comparison system or selecting or negotiating a new gender neutral comparison system;
• Female job classes from a proxy pay equity plan are moved into an organization that was not required to use proxy comparison; those jobs may now achieve pay equity through job-to-job or proportional value;
• Female job classes are moved into an organization required to do proxy comparison from an organization that achieved pay equity using job-to-job or proportional value.

Remember that employers must have one plan for all non-union employees, and separate plans for each bargaining unit.

There is no deadline for preparing new plans after restructuring. However, where notice to bargain a new plan has been given, the time frames to reach agreement on a new plan apply as outlined in the chart below.

If a new plan is required after restructuring, it is effective as of the date of the sale. If adjustments are required to establish pay equity for any female job classes, they must be paid out retroactive to the effective date of the plan.

Not necessarily. If a new plan is negotiated or prepared, the adjustments or job rates for female job classes may be different than adjustments or job rates under the original pay equity plan(s). However, employers and bargaining agents must be able to show that the new adjustments or job rates for female job classes have been correctly determined using either the job-to-job, proportional value or proxy methods of comparison.

Any questions about funding for pay equity adjustments should be directed to your funding ministry. The Pay Equity Commission has no control or authority for pay equity funding.

Where it is determined that a new plan must be prepared, the chart below outlines the processes for union and non-union plans.