In response to the report of the House of Commons committee on pay equity, the Government of Canada announced October 29th, 2018 its intention to bring in legislation to better ensure all employees in federally regulated sectors receive equal pay for work of equal value (otherwise known as “pay equity”).
What is Pay Equity?
Pay Equity is significantly different than equal pay for equal work, which is already required throughout Canada. Pay equity requires employers to identify and correct gender discrimination that may be present in their compensation 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 when they are found to be comparable in value based on skill, effort, responsibility and working conditions. If 60% of the incumbents are female, the job class is considered female; if 70% are male, the job class is considered male; if the number of males and females is approximately equal, the job class is considered gender neutral.
Why do we need to legislate Pay Equity?
Preliminary estimates suggest that this could improve the gender wage gap from 91.4 cents to 94.1 cents for the core public administration, and from 88.1 cents to 90.7 cents in the federal private sector. This is part of the Government’s commitment to breaking down barriers to gender equality in education, employment and entrepreneurship, so that women and girls can contribute to—and benefit from—Canada’s success and prosperity.
Proactively managing Pay Equity compliance.
The federal law will no longer be ‘complaint-based’ as set out in the Canadian Human Rights Act, and the Equal Wage Guidelines. Instead of employers needing to ensure their compensation systems avoid complaints, the forthcoming legislation will take a ‘proactive’ approach. Its aim is to help employers comply with the law rather than forcing employees to first lodge complaints about discriminatory wages.
Who is affected by the Pay Equity Legislation?
The content of the forthcoming legislation will resemble the models currently in place in Ontario and Quebec and will apply to all federally regulated businesses and industries with 10 or more employees. Representing approximately 6 percent of all Canadian workers, these organizations will include:
- Marine shipping, ferry and port services;
- Air transportation, including airports, aerodromes and airlines;
- Railway and road transportation that involves crossing provincial or international borders;
- Canals, pipelines, tunnels and bridges (crossing provincial borders);
- Telephone, telegraph and cable systems;
- Radio and television broadcasting;
- Grain elevators, feed and seed mills;
- Uranium mining and processing;
- Businesses dealing with the protection of fisheries as a natural resource;
- Many First Nation activities;
- Most Federal Crown Corporations;
- Federal contractors with contracts equal to or greater than $1 Million;
- Private businesses necessary to the operation of a Federal Act.
A proactive pay equity model requires that employers establish and maintain compensation practices that provide for pay equity. The onus is on employers to have an approach in place for comparing jobs to ensure that pay equity exists. Once pay equity has been achieved, it must be maintained. There are also posting and reporting requirements that may apply.
An ‘Expense’ or an ‘Opportunity’?
That will depend on how your organization addresses the issue…
The standard approach to implementing Pay Equity is to introduce a job evaluation methodology that has only one desired result – to ensure, at the end of the day, the organization can prove people are paid fairly based on the relative skill, effort, responsibility and working conditions required in their jobs. That process will always be an expense – purchasing the methodology (paper based or automated); organizational leadership time; consultant time; management and staff time; and of course, the cost of addressing any identified issues with current compensation practices.
Government officials and independent consultants will tell you from their past- experience that using a ‘traditional’ approach to implement pay equity has been seen to:
- Help bring about more objective pay practices;
- Increase understanding of the jobs within the organization and identify strengths, weaknesses, and opportunities for improving productivity;
- Represent a first step towards a diversity strategy, where other forms of discrimination negatively impacting employee engagement may be found;
- Help staff gain a greater understanding of organizational structure and goals.
While this may potentially be true, the only quantifiable numbers are those related to the cost of implementing pay equity.
So how can implementing Pay Equity create a significant opportunity for your organization? It starts with re-thinking how job information is gathered and evaluated. Instead of accepting industry standard – simple and generic – methodologies to produce one-dimensional, standalone results, consider a competency anchored job evaluation approach. In considerably less time, and with no additional work, improve the quality of outcomes while quantitatively decreasing the time required to –
- achieve pay equity compliance;
- write/update job descriptions;
- evaluate jobs;
- manage the staffing process;
- engage staff;
- improve the recruiting process;
- manage employee performance;
- develop job anchored training plans for incumbents;
- identify succession candidates for evaluated jobs;
- improve employee engagement by directly/indirectly addressing 10 of the 12 measures in the Gallup Q12 Survey;
- confirm your organizational values are making a ‘bottom line’ difference.
With a more holistic perspective to achieving pay equity, your organization can position itself to not only achieve compliance, but ensure staff are recognized, developed, rewarded and always held accountable for what they are paid to do.
For more information, including a Cost/Benefit Analysis uniquely created for your organization, please give our office a call (403.259.6210) or connect with us through our website at https://encv.com.
We’ll give you the numbers that define your organizations opportunity.
Douglas A.W. Chapman
Founder and Managing Director