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What is Ontario’s Pay Equity Act?

 

Ontario’s Pay Equity Act aims to ensure that work traditionally done by women is paid the same as work of equal value traditionally done by men. Put another way, it seeks to eliminate the portion of the wage gap attributable to the undervaluation of women’s work.

In Ontario, since the late 1960s, what is now section 42 of the Employment Standards Act has required equal pay for employees of one sex relative to employees of another sex if:

  • they perform substantially the same kind of work in the same establishment;
  • their performance requires substantially the same skill, effort and responsibility; and
  • their work is performed under similar working conditions.

There are, however, exceptions for seniority systems, merits systems, systems that measure earnings by quantity or quality of production, or differences in pay due to any other factor other than sex.

For this legal protection to apply, the female and the male have to be performing “the same kind of work”. However, work that is stereotypically viewed as women’s work (e.g. nursing, secretarial) is not necessarily substantially similar to the work done by men in the workplace.

In addition, since the early 1970s, Ontario’s Human Rights Code has prohibited discrimination on the basis of gender in the workplace, and parallel provisions are usually incorporated into the anti-discrimination clauses in collective agreements. This means that it is possible to pursue a claim of systemic discrimination on the basis of gender pursuant to the Code. However, there is no prescribed method for comparing the value of a female job with the value of a male job which is not doing substantially similar work.

All of this led to the 1987 enactment of Ontario’s Pay Equity Act. The purpose of the Act is to ensure that work traditionally done by women is paid the same as work of equal value traditionally done by men. The system is “proactive” as opposed to “complaint driven”.

The criterion to be applied in determining value of work is a composite of the skill, effort and responsibility normally required in the performance of the work and the conditions under which it is normally performed. Essentially, what the Act requires is for most employers to evaluate male and female job classes, find male job classes that are similar in value to female job classes, and then compare the top rate for the female job class with the top rate of the similarly valued male job class. If the top rate is lower for the female job class, the rate for the female job class has to be increased until pay equity is achieved.

Generally speaking, job classes in which the incumbents are 60% or more female are treated as female (although there are some exceptions), and job classes that are 70% or more male are treated as male (with some exceptions).

Once pay equity has been achieved, employers have an ongoing obligation to maintain pay equity and to ensure that gender wage gaps do not re-open over time.

The key provision is section 7 in Part I of the Act. It requires an employer to establish and maintain compensation practices that provide for pay equity in every establishment of the employer. Section 7 also requires that no employer or bargaining agent shall bargain for or agree to compensation practices that would cause a contravention of this requirement.

As a result, unions have an explicit obligation not to bargain for or agree to practices that could lead to a contravention of the employer’s obligation to achieve and maintain pay equity.

In addition, for large private sector employers and public sector employers, Part II of the Act applies, and it supplements the basic regime by prescribing in detail how employers were to go about achieving pay equity as of January 1, 1990. In particular, Part II required that if the workforce was all or partly unionized, the pay equity plan applicable to a bargaining unit had to be bargained with the union.

Bargaining agents need to consider many factors when determining how to address equal pay and pay equity issues. Contact us to discuss the different options and to develop a strategic approach.