What is Pay Equity?

Someone hold two stacks of coins

The movement towards pay equity dates back to the 1860s to address the gender wage gap. However, it wasn’t until the 1950s that this concept gained substantial attention at the International Labour Convention 100, where Canada signed an agreement to ensure equal pay for work of equal value.

Perhaps you’ve heard this term tossed around, but it’s essential to understand the foundation of pay equity and how it impacts your organization. In this post, we’ll define the term, explore the laws in place to protect it, and introduce ways you can implement pay equity in your workplace. Let’s get started: 

What Pay Equity Is Not About

Pay equity emphasizes compensating employees for work of equal or substantially similar value. Value might be seen as an abstract term, but it represents effort and overall job responsibilities. If two roles are similar in these aspects, they should be remunerated similarly. For instance, let’s consider a project manager and an outreach coordinator. At first glance, these roles may seem distinct. but still, if both are accountable for driving processes forward and ensuring individual team members fulfill their responsibilities, their pay should reflect these similar demands.

It’s also important to note that pay equity doesn’t consider exterior aspects and is not pay equality. Pay equity does not account for:

  • Job performance
  • Current compensation trends
  • Internal equity linked to company policies

Equal Pay for Equal Work

The terms “equal pay for equal work” and “pay equity” are sometimes used interchangeably; however, pay equity is not about equal pay for equal work. This concept is often fuelled by gender bias and implies that female or male-dominated roles can earn a similar salary but are not comparable. For example:

  1. Teachers tend to be predominantly female roles, while lawyers are predominantly male.
  2. Equal pay for equal work suggests that teachers can make the same pay as each other, but that is not relatable to the work done by a lawyer, who may make more money. However, both roles require leveraging their knowledge with others to improve the lives of students and clients.
  3. Since many jobs typically held by women make less than men, it is crucial to distinguish between equal pay for work of equal value compared to simply “equal work.”

Equal pay for equal work is essential, especially if there is a discrepancy between compensation for a male and female in the same role with the same skills and effort. However, this is an employment standards issue, more so than a pay equity one.

Why is Pay Equity Important?

As a team member, you want to feel valued for the work you do. After all, it took time to gain experience for the role and fulfill all of your job responsibilities. But, without pay equity, there’s nothing to say your employer couldn’t pay you less than someone else based on bias or factors outside of your control. Pay equity is important because it acts as a way to protect employees while also ensuring fairness. The laws in place ensure this practice further communicates its importance, reinforcing the need for legislation that accounts for various employee circumstances.

One significant driver for these laws has been the gender pay gap. Throughout the last two centuries, numerous rallies, protests, and petitions have surrounded the concern for unfair labour practices in various workplaces and the impact of the pay gap on women specifically. These strides helped move the needle and pay equity laws ensure these efforts are recognized. 

Key Differences Between the Federal Pay Equity Act and Section 11 of the Canadian Human Rights Act

As mentioned, there are laws in place to protect pay equity and ensure businesses comply with this practice. From a federal perspective, the Pay Equity Act and Section 11 of the Canadian Human Rights Act directly speak to the fundamental concept of pay equity. However, they do have the same stringencies. 

  • The Federal Pay Equity Act is a proactive measure aimed at employers. It requires businesses to review how to better attune with pay equity and improve employee opportunities. This involves creating and updating a pay equity plan every five years to close new gaps and maintain pay equity compliance.
  • The right of pay equity is protected by Section 11 of the Canadian Human Rights Act and focuses more on labour laws. It specifically states that employers cannot discriminate against employees based on their gender as it relates to their pay if they are doing equal work of equal value. 

Pay Equity Laws in Canada

The Pay Equity Act is a federal law that extends throughout Canada, but in some provinces, there is further legislation to maintain or strengthen the concept of equal pay for work of equal value.

  • Ontario’s Pay Equity Act: This act requires public sector employers, as well as private sector employers with ten or more employees, to establish and maintain pay equity in the workplace.
  • Quebec’s Pay Equity Act: Quebec’s law applies to employers in the public and private sectors with ten or more employees. It aims to ensure pay equity for predominantly female job classes.
  • Manitoba’s Pay Equity Act: This act applies to public-sector employers and private-sector employers with ten or more employees. It requires the development and implementation of pay equity plans.
  • British Columbia’s Pay Equity Act: Enacted in 2018, this law applies to the public sector and certain public sector employers. It requires employers to achieve and maintain pay equity within their workplaces.
  • Nova Scotia’s Pay Equity Act: This act applies to public-sector employers and private-sector employers with ten or more employees. It aims to ensure that employees receive equal pay for work of equal or comparable value.
  • New Brunswick’s Pay Equity Act: Enacted in 2009, this law applies to public-sector employers and private-sector employers with ten or more employees. It requires the development and implementation of pay equity plans.
  • Prince Edward Island’s Employment Standards Act: While not exclusively a pay equity law, the act includes provisions that address gender-based wage discrimination.
  • The Saskatchewan Employment Act: While not specifically a pay equity law, this act contains provisions related to equal pay for work of equal value.

Overview of the Pay Equity Act

In December 2018, the federal government enacted the Pay Equity Act, and in August 2021, it came into effect. This legislation mandates compliance for all federally regulated workplaces with ten or more employees, casting a wide net into various industries and sectors throughout Canada. Let’s explore this form of law:

Understanding the Purpose and Scope of the Pay Equity Act

The purpose of the Pay Equity Act is simple: to ensure workplaces examine their compensation practices and verify that men and women doing equal work of equal value are paid the same amount. This scope involves all federally regulated workplaces in the public and private sectors, including parliamentary workplaces, with ten or more employees.

Key Components of a Pay Equity Plan

When examining their compensation practices, employers should put together a pay equity plan to address any disparity that would be cause for concern regarding pay equity. This review should include:

  1. Evaluating various jobs based on workplace positions and roles to identify the different job classes that make up their workplace.
  2. Determining whether the class is male or female-dominated, or gender neutral, and its value as it relates to the company.
  3. Calculating the compensation of each job class and comparing it to similar classes that do work of equal value.

When the Pay Equity Act came into force, employers had three years to establish a plan that addressed increasing the compensation of any female-dominated job class that received less than male equivalents. From here, the strategy should be revisited and updated every five years to ensure pay equity and close gender wage gaps.

Role of the Pay Equity Commissioner

To ensure the Act is upheld correctly and consistently, the pay equity commissioner is responsible for verifying compliance. But this is not their only role. They are also designated to support employers who need general guidance or are looking to establish pay equity plans.  

Despite the clear communication of this law as it relates to businesses, there are potentially times when employers and employees may have a discourse over pay equity. In these cases, the pay equity commissioner must work to resolve the dispute.

Pay Equity Implementation

Whether you are focused on staying ahead of the curve or remaining compliant in an ever-evolving business environment, there are a few considerations regarding what you can do to implement pay equity. 

Addressing Pay Equity Issues

Addressing pay equity issues involves identifying and rectifying wage disparities within your organization based on factors like gender, race, or other protected attributes. This process ensures that employees receive equal compensation for work of equal or comparable value. 

How Employers Can Implement or Improve Pay Equity Policies

Employers can implement or enhance pay equity policies through various steps:

  1. Evaluate job roles based on skills, effort, and responsibility to determine their relative worth within the organization.
  2. Analyze compensation data to identify pay gaps between different job categories.
  3. Create plans to address identified disparities, including salary adjustments and job reclassifications.
  4. Communicate pay equity policies to employees, highlighting the commitment to fair compensation.
  5. Train HR personnel, managers, and employees about pay equity principles and the importance of unbiased compensation.
  6. Regularly review pay data to ensure that pay equity is maintained over time.

If you’re struggling with the above steps or unsure where to start, True North HR offers pay equity compliance consulting to get your organization on the right track.

Understanding Pay Equity Analysis

A pay equity analysis is a systematic examination of job roles to determine their relative value and identify any compensation disparities. At True North, our analysis considers factors such as job content, skill, effort, and responsibility. We aim to ensure that employees are compensated fairly, regardless of gender or other characteristics. This process may involve a few moving parts, like quantitative assessments, data analysis, and collaboration between your team and ours. Our professionals are keen to understand your concerns, distill the data of our findings and communicate how to implement changes that will make all the difference.

Best Practices for Ensuring Fair Pay

To ensure fair pay within an organization, we recommend considering these best practices:

  • Transparency: Maintain transparent communication about pay scales, job evaluation processes, and compensation criteria.
  • Regular Audits: Conduct periodic pay audits to identify and address potential pay gaps or disparities.
  • Unbiased Hiring and Promotions: Base hiring and promotions on skills, qualifications, and experience, avoiding bias.
  • Training and Awareness: Educate employees and managers about pay equity principles and the impact of unconscious bias.
  • Equal Opportunity: Ensure equal access to career development opportunities, training, and mentorship programs.
  • Supportive Culture: Foster a workplace culture that values diversity, equity, and inclusion, encouraging open discussions about compensation concerns.

These practices contribute to building a more equitable and inclusive workplace where employees are compensated fairly based on the value of their contributions and responsibilities.

In Summary

Pay equity ensures that individuals doing work of equal value are compensated accordingly. It breaks down barriers associated with systemic bias and discrimination to create an environment where people are remunerated for their experience and skill set. The laws in place to protect this concept further communicate its importance. To be compliant, businesses must have a pay equity plan in place that addresses any potential pay bias in their compensation structure. But this isn’t always easy. At True North, we recognize that and are here to lend a hand.

Our team specializes in the analysis of pay equity. We can provide sound, strategic advice on improving your pay equity plan and remaining compliant with provincial and federal laws. To learn more about our services, reach out to us

Frequently Asked Questions about Pay Equity

What factors contribute to pay equity?

Pay equity ensures that individuals receive equal pay for work of equal or comparable value. Several factors contribute to pay equity, including the following:

  • Job Content: The tasks, responsibilities, and qualifications required for a job play a crucial role in determining its value.
  • Skill, Effort, and Responsibility: The skill, effort, and responsibility required for a job are considered when assessing its value.
  • Working Conditions: Factors such as physical and mental demands, hazards, and working environment are considered.
  • Education and Training: The education and training needed for a job impact its value.
  • Experience: Employees’ relevant experience can influence their job’s value.

Achieving pay equity involves assessing these factors across different job categories to ensure that compensation aligns with the value of the work performed, regardless of gender or other protected characteristics.

What is the Equal Pay Act?

The Equal Pay Act is a United States labour law aimed at removing the wage gap based on gender. In addition, the term “Equal Pay Act” is often used to refer to legislation aimed at ensuring equal pay for equal work or work of equal value. However, the specific name and content of the act can vary depending on the jurisdiction. In Canada, the federal government has the Pay Equity Act, which seeks to address pay inequities in the federal public sector and federally regulated industries. At the provincial level, various provinces have their pay equity legislation with similar goals. These laws typically require employers to assess job classes, identify pay disparities based on gender or other protected characteristics, and take measures to correct those disparities.

How is pay equity calculated?

Pay equity calculations involve a systematic process to evaluate the value of different jobs within an organization. Here’s a general outline of the process:

  • Jobs are evaluated based on factors such as skill, effort, responsibility, and working conditions. This process assigns points or values to different aspects of each job.
  • Compensation data is analyzed to identify pay disparities between job categories. If jobs of comparable value are paid differently, adjustments may be needed.
  • Based on the analysis, organizations develop pay equity plans that outline how pay disparities will be corrected. These plans may involve salary adjustments, job reclassification, or other measures.
  • Organizations implement the pay equity plan and continue to monitor and assess pay equity over time to ensure ongoing fairness.