Under the Pay Equity Act, employers must achieve and maintain pay equity. It must then periodically revisit its compensation practices to make sure wage gaps that have been closed do not re-open or that new gaps do not emerge.
On March 9, 2021, the Court of Appeal for Ontario issued a decision regarding the maintenance requirements for employers with proxy pay equity plans. The Court held that maintenance for plans achieved using the proxy comparison method requires ongoing reference to male comparators.
What is the proxy comparison method and how does it work?
There are three methods of comparison for achieving pay equity under the Act: job-to-job, proportional value (“PV”), and proxy. Job-to-job, the original method prescribed in the Act, compares female job classes directly to male job classes of equal or comparable value in the employer’s establishment. The PV method indirectly compares female job classes that do not have male comparators with male job classes in the same establishment. Job-to-job and PV are, however, of no use in establishments where the workforce is almost exclusively female.
To address the inability to compare male to female job classes in female-dominated workplaces, the proxy method was added in the 1993 amendments to the Act. It is only available to broader public sector organizations.
This method allows the employer to compare its unmatched female job classes with a group of female job classes that have achieved pay equity in another broader public sector organization offering similar services and where there are male comparators.
Many of Ontario’s elderly are cared for in nursing homes and homes for the aged. Employment in this sector is almost exclusively female. In this case, the Ontario Nurses’ Association and the Service Employees International Union, Local 1 alleged that Participating Nursing Homes, which operate 143 nursing homes across Ontario, had violated the Act by failing to properly maintain pay equity for their employees. Absent comparable male jobs, the for-profit nursing homes had used the municipally run Municipal Homes for the Aged in 1994 for the purposes of establishing pay equity. Since then, however, ONA and the SEIU argued that pay equity had eroded, sparking a lengthy legal battle. The unions argued that the Act required maintenance of proxy plans through ongoing reliance on external comparators. The nursing homes argued that proxy applied only to establish pay equity but not to maintain it.
The Court of Appeal ruled that there is an ongoing requirement for male comparators in maintaining pay equity. This decision upholds the earlier ruling of the Divisional Court, which had overturned the decision of the Pay Equity Hearings Tribunal.
The Tribunal’s decision
The Tribunal found that where the proxy method was used to achieve pay equity, the union had no right to claim parity with the proxy comparator for the purposes of maintenance (unless there is a specific agreement to that effect between the parties).
The Tribunal found that the Act did not contravene the section 15 equality provisions of the Canadian Charter of Rights and Freedoms. The Tribunal further declined to interpret the scope of the Act’s maintenance obligations with regard to the Charter value of equality.
The Divisional Court’s decision
On judicial review, the Divisional Court overturned the Tribunal’s decision. The Court made a number of key findings:
- The Court agreed that the Act did not contravene section 15 of the Charter.
- However, the Court found that the Tribunal erred by failing to consider the Charter value of equality when interpreting the Act, making the Tribunal’s decision unreasonable. The Court held the Act must be interpreted in a way that gives effect as fully as possible to Charter values, which the Tribunal failed to do.
- The Court looked to the Act’s statutory mandate: to recognize and redress the systemic discrimination women have faced in compensation and to make sure this discrimination does not re-emerge. The Court ruled that a proper balancing of the Charter’s equality protection and the Act’s mandate requires that women in predominantly female workplaces have continued access to male comparators (in proxy establishments) to maintain pay equity.
- The Court remitted the matter back to the Tribunal to specify what procedures should be used to ensure that claimants who achieved pay equity through the proxy method continue to have access to a male comparator to determine whether pay equity has been maintained.
The Court of Appeal’s decision
The Court of Appeal upheld the Division Court’s conclusion that the Tribunal’s decision was unreasonable. It held that the Tribunal’s interpretation of maintenance for proxy plans deprived women in establishments without male job classes access to an ongoing deemed male comparator. This ignored the purpose, scheme, and plain wording of the Act. The Act requires comparison between male and female job classes to redress systemic gender discrimination in compensation. The Court held that this creates an ongoing requirement for male comparators in the maintenance of pay equity. Finally, the Court determined that, having already found the Tribunal’s decision unreasonable, it was unnecessary to decide whether the Tribunal also erred in failing to take into account Charter values.
The Court remitted the matter back to the Tribunal to specify the procedures to be used to ensure proxy plans have continued access to male comparators to maintain pay equity.
What does this mean for unions?
This decision has important implications for pay equity plans achieved with proxy. The Court has now determined that maintenance obligations for proxy plans cannot be fulfilled on the basis of internal comparisons. Rather, there must be continued and ongoing reference and comparison to male comparators.
Want to find out more about pay equity? Check out our blog post here.
Contact us to discuss what steps you should take as a union to ensure you are meeting your pay equity obligations.