January 2, 2024
Gone are the days of hidden salary figures. It’s the era of pay transparency.
“For companies, it’s the canary in the coal mine,” says Paola Accettola, CEO & Principal Consultant at True North HR. “It’s important to pay attention to it.”
Salary transparency is not just about numbers; it’s a pivotal stride toward wage fairness, dismantling gender and racial wage gaps, and empowering employees with the knowledge they need to advocate for their worth.
As the pay equity movement picked up steam over the years, the government stepped in with legislation, the Pay Transparency Act. It was assented to in 2018, but implementation has been a long time coming.
Having legislation in place is one step toward achieving pay equity, but bringing companies into pay transparency compliance is a whole other ball game.
In this blog, we talk about the implications of Ontario’s pay transparency legislation and how businesses can be compliant.
True North HR specializes in helping businesses avoid costly penalties by becoming compliant with all sorts of legislation. We provide customized solutions for clients who want to achieve pay equity. Contact us today to become compliant with pay transparency.
What is Pay Transparency?
Pay transparency means openly sharing compensation package information with employees and prospective candidates. Each company practices pay transparency differently.
Some provide details about how salaries are determined, others disclose salary ranges, and some even share individual employee salaries. The overall goal is to encourage openness and create trust around pay practices.
“The legislation will force employers to look at their pay practices, carefully, and strategically,” says Paola. “Pay transparency holds leaders accountable for fair and equitable compensation that aligns with the market.”
Pay transparency creates a fair playing field for all employees and encourages the participation of women and minority groups in the workforce.
Key Features of Ontario’s Pay Transparency Act
Before you get cracking on improving your pay transparency practices, let’s walk through the main points in the legislation.
Employers cannot ask candidates for compensation history in any way, whether personally or through an employment agency. These rules don’t apply if such compensation history is publicly available, such as for government employees.
Applicants can voluntarily disclose their compensation history.
Employers can collect information about comparable ranges of compensation for a job.
Use of Information
If an applicant voluntarily declares compensation history and the employer collects market information on salaries for the job posted, the company can combine this information to determine fair compensation.
Posting Salary Range Online
All employers are required to share pay details in job postings.
Further Rules in the Pay Transparency Legislation
There are some additional reporting requirements that will also fall on the employers.
Pay Transparency Reports
Employers with 100 or more employees are required to submit annual reports to the Ministry of Labour by May 15 of the following year. Yes, this is an additional piece of work companies have to bear, but our fractional HR services support just such tasks.
Sharing Reports Online
Businesses are required to post their pay transparency reports online, externally, and internally for employee awareness. The ministry will also publish these reports in an open forum.
Protection for Employees
Overall, this legislation provides employees several protections, such as
- No reprisal for inquiring about compensation packages
- Freedom to disclose their salary to a peer
- Ability to raise questions on the pay transparency reports
- Confidence to lodge non-compliance complaints with the ministry, and
- Ability to ask employers to comply with pay transparency regulations
Pay Transparency Advantages for Employers
Becoming compliant, Paola says, may sound like hard work, but it has many plus points. Pay transparency does a lot for companies, such as
- Giving leaders a chance to evolve
- Helping employees seize growth opportunities in a company
- Showing that the company is invested in its employees
- Attracting top candidates
- Showing the company’s ability to shift culture toward equity
What do Businesses Need to do to Achieve Pay Transparency Compliance?
From experience, we know how hard it is to find candidates that fit the bill. Most qualified candidates hesitate to apply when they’re not clear about the compensation. Following this law will help you attract the right talent to move your business forward.
Top candidates are already asking questions about pay transparency, says Paola. But underlying biases in hiring practices distort pay offerings. Candidates may hesitate when it comes to pay negotiation because of a defensive stance taken by leaders.
“Candidates that ask you hard questions push you to become better,” she says. “These are the kinds of candidates that will invest in the company.”
Dealing with any new legislation tends to reveal gray areas in company policies. You may find you don’t have a clear set of parameters around compensation. Embracing pay transparency can result in an internal reshuffling of pay scales the next time you’re seeking candidates for the same position.
“You can pay competitively, do right by your employees, and protect your bottom line,” says Paola.
Here are some steps to take to achieve compliance:
- Review current policies to identify missing pieces
- Calculate wage data to identify gaps
- Prepare a full transparency policy to apply not only to future candidates but also to current ones
- Effectively communicate changes to your employees. Remember to thoroughly address any concerns they may have
- Track your pay transparency activities to generate a report
- Post report online for all to access and read
Handling all this on your own can be a bit challenging, especially with new laws and legislation. Contact us today for support in achieving pay transparency compliance.