PDF Version [ 2.5 MB / 82 pages | Download Adobe Reader ]
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.
What is Pay Equity?
Pay Equity is "equal pay for work of equal value". Pay equity has been recognized as a fundamental human right for many decades at the international level. In 1951, the United Nation's International Labour Organization (ILO) adopted Convention No. 100, the Convention Concerning Equal Remuneration for Men and Women for Work of Equal Value. Since then, the Canadian government has enacted various forms of legislation and statutory mechanisms in the area of labour standards or human rights to address the problem of wage discrimination. In 1972, as part of the response to the Royal Commission on the Status of Women, Canada ratified the ILO's Convention No. 100. Since the 1980s, almost all Canadian jurisdictions have dealt with pay equity in some manner using legislation or non-legislative approaches. Learn more about pay equity in various Canadian jurisdictions.
Why does Ontario need Pay Equity?
The gender wage gap is the difference in earnings between men and women. While progress has been made over the years on closing the gender wage gap, on average, women still do not earn as much as men.
Many factors contribute to the gender wage gap including differences between men and women in education levels, work experience, hours worked, unionization, and family and home responsibilities, as well as systemic discrimination. Pay equity recognizes that historically, women and men have tended to do different kinds of work. Work that has traditionally been performed by women has generally been undervalued and hence underpaid. The aim of pay equity is to close the part of the wage gap that is due to systemic gender discrimination in employer pay practices.
There are other forms of workplace gender discrimination, such as discriminatory hiring and promotion practices however these forms of discrimination are outside the jurisdiction of the Office. Other laws, such as the Employment Standards Act, 2000 and the Ontario Human Rights Code may offer remedies for other forms of workplace discrimination.
What is the Ontario Pay Equity Act?
In 1987, the Ontario government passed the Pay Equity Act. The Act describes the minimum requirements for ensuring that an employer's compensation practices provide pay equity for all employees in female job classes. The purpose of this Act is to redress systemic gender discrimination in compensation for work performed by employees in female job classes 4.(1).
What is the Pay Equity Commission?
The Pay Equity Commission (the Commission) is made up of two separate and independent bodies:
- The Pay Equity Office (the Office) is the regulatory agency that is responsible for the enforcement of the Act.
- The Pay Equity Hearings Tribunal (the Tribunal) is the quasi-judicial body that is responsible for adjudicating disputes arising from the enforcement of the Act.
The Commissioner is the head of the Commission and the Chief Administrative Officer of the Office, appointed by the Lieutenant–Governor in Council.
What is Pay Equity about?
Pay equity requires employers to identify and correct the gender discrimination that may be present in their pay practices and to adjust the wages of employees in female job classes so that they are at least equal to the wages of employees in male job classes found to be comparable in value based on skill, effort, responsibility and working conditions. According to the Act, all employees –both men and women– in undervalued female job classes would receive pay equity wage adjustments.
What is Pay Equity NOT about?
- Evaluating individual employees or their performance on the job
- Internal equity or fairness in pay among all job classes and individual employees
- Comparisons between two different female job classes (for example, receptionist and secretary) or two different male job classes (for example, mechanic and welder)
- Comparisons of female and male job classes between different employers
- Setting wages according to market rates of pay
- Women and men in male job classes or gender neutral job classes (these individuals have no entitlement under the Act)
- "Equal pay for equal (same) work" which means that if a man and a woman are doing substantially the same work, for example, a sales job in a department store, they must receive the same pay. Equal pay for equal work falls under Ontario's Employment Standards Act, 2000.
Q&As General Pay Equity
1. Is pay equity the same as equal pay for equal work?
No. Equal pay compares pay for workers in the same job; pay equity compares the pay for jobs usually done by women (for example; clerk, social worker, nurse or cosmetologist) in an establishment with the pay for different jobs usually done by men (for example; construction worker, truck driver, engineer or technician) in the same establishment.
2. Is the government dictating to employers how to pay their workers?
No. Employers determine rates of pay and benefits for their employees. The Act requires that employers assess their pay and benefits practices to ensure that female job classes are not underpaid compared to male job classes of equal or comparable value in the same organization. Employers that are subject to the Act are required to value and compare female job classes to male job classes in their workplaces using the factors set out in the Act, and to pay female job classes at least the same as a male job class of equal or comparable value, based on the results of the job comparisons. This may require modifications to existing compensation systems or practices.
3. Can pay equity resolve internal wage inequity?
Sometimes. As employers conduct pay equity job comparisons, they discover illogical pay patterns or internal wage inequities in their organization. If they wish, employers may choose to establish internal wage equity among all of their jobs, but the Act does not require them to do so. The Office does not have jurisdiction to correct all wage issues. The Act only requires that female job classes be paid at least the same as male job classes of equal or comparable value.
4. An employee in a male job class complains that he is paid less than a co–worker in a female job class. Is this a pay equity issue?
No. The purpose of the Act is to correct systemic discrimination in compensation for female job classes. The Act does not require that male or gender neutral job classes that are paid less than other similarly-valued job classes receive a wage increase. If the employee is in a male or gender neutral job class, there is no remedy for that individual under the Act.
5. An employee in a female job class is paid less than a co–worker in another female job class. Is the employer required to compare these two jobs?
No. Pay equity requires employers to value job classes and to make comparisons between female and male job classes of equal or comparable value. For example, the Act does not require an employer to compare the job rate of a cafeteria cashier with a housekeeper if both are female job classes.
6. If cleaners are earning an average of $15.00 per hour in a region, can an employer in the area claim that pay equity has been achieved if he pays his cleaners this rate?
No. Relying on market pricing will not excuse an employer from examining its pay practices as required by the Act. An employer also cannot rely on external labour market information for valuing and comparing job classes and rates. For pay equity purposes, the employer is required to evaluate job classes and compare the job rates of similarly valued male and female job classes within the establishment.
7. A female employee who has just been hired is paid at the bottom of the grid at $20 per hour. A male employee in the comparable male job class who has worked in the company for six years is paid at the top of the salary grid at $26 per hour. Is this a pay equity issue?
Unlikely. If a company has a formal seniority system where employees are paid based on their length of service, an employee who is just starting with the company will be paid less than one with more seniority. Based on this example, as the female employee's seniority increases, she should expect to move up the salary grid at the rate of $1 per hour more each year until she too earns the maximum job rate in six years, unless there are other non-pay equity issues.
8. An employer pays a year-end bonus to the salesperson with the highest sales each month. Is this a pay equity issue?
Unlikely. If it can be shown that the bonus is equally accessible to men and women, is awarded as a measure of merit for outstanding performance in sales and the bonus is not given on a regular or rotating basis, this is not likely a pay equity issue.
What is the structure of the Pay Equity Act?
Part I of the Act applies to ALL employers covered by the Act and sets out the fundamental principles and general, ongoing obligations. This first part prescribes the minimum requirements to establish, achieve and maintain compensation practices that provide for pay equity. It covers the purpose of pay equity, when pay equity is achieved, definitions of terms, exceptions where differences in compensation between male and female job classes are permitted, prohibition against reducing compensation to achieve pay equity, and prohibition against intimidation of employees exercising their rights to pay equity.
Part II of the Act, labelled "Implementation," contains specific provisions and deadlines for larger and public sector employers in existence when the Act came into effect. Part II of the Act applies only to:
- Public sector employers who were in existence on January 1, 1988 or came into existence by July 1, 1993, and
- Private sector employers who employed 100 or more employees on January 1, 1988, and
- Private sector employers who employed 10 to 99 employees on January 1, 1988 and chose to post a plan by December 31, 1993.
Part II employers are required to follow a mechanism for preparing, posting and amending pay equity plans within specific time frames for implementation. Part II also outlines different processes that these employers must adopt, depending on whether or not their employees were represented by bargaining agents on the relevant date.
Part III was repealed on January 1, 1994.
Part III.1 of the Act describes the proportional value method of comparison. Part III.2 describes the proxy method for those public sector employers (specifically described in the Appendix to the Act) that had employees on July 1, 1993 and could not achieve pay equity for their female job classes using job-to-job or proportional value methods of comparison.
Part IV explains enforcement, complaints and investigations.
Part V outlines governance issues including the structure, jurisdiction of the Commission, the Office, the Tribunal and sets out the powers of Review Officers.
Part VI contains Regulations, Schedule and the Appendix that describes public sector employers.
Previous | Next