Question Period Note: PAY EQUITY

What progress has been made on the implementation of pay equity?

We have taken long-overdue action to make equal pay for work of equal value a reality for federally regulated workers.

The Pay Equity Act and supporting regulations came into force on August 31, 2021.

This new proactive pay equity regime applies to federally regulated public and private sector workplaces with 10 or more employees.

The new regime is administered and enforced by Canada’s first federal Pay Equity Commissioner.

As the Pay Equity Commissioner carries out their duties, including assisting workplace parties in understanding their rights and obligations, I will continue to advance the implementation of the Pay Equity Act by moving forward regulations that will, among other things, strengthen the Commissioner’s ability to encourage compliance.

The Minister of Labour is mandated to continue advancing the implementation of the Pay Equity Act across federally regulated workplaces. With the Act now in force, this primarily entails regulatory development, including the creation of an administrative monetary penalty (AMP) scheme and continuing to work with Indigenous partners to identify potential adaptions to make the Act work for Indigenous Governing Bodies.

Regulatory process

The Pay Equity Regulations came into force with the Act on August 31, 2021. The regulations set out some of the key elements of the pay equity regime, including the manner for posting documents in the workplace, the method(s) to complete a pay equity plan in a workplace with no predominantly male job classes (proxy), and the process for updating pay equity plans (maintenance).

A second regulatory package prescribing key elements of the AMP system set out in the Act, as well as other requirements such as how to maintain a pay equity plan in a workplace with no predominantly male job classes, is forthcoming. Initial consultations with stakeholders took place in spring 2022.

The Labour Program is reviewing the feedback obtained during these consultations and developing draft regulations. Stakeholders and the public will have an opportunity to provide further comments when the draft regulations are pre-published in Canada Gazette, Part I. This is anticipated to happen in early 2023.

The Act does not currently apply to Indigenous Governing Bodies (such as First Nations band councils). These workplaces will be excluded from the application of the Act until a date the Governor in Council may specify by order. This delay allows the Government to conduct further consultations with Indigenous partners so that any necessary adaptations to the regime can be made through regulations to ensure that proactive pay equity is a success in these workplaces.

The Labour Program has obtained input from the Native Women’s Association of Canada and Pauktuutit Inuit Women of Canada to better understand the perspectives of Indigenous women. The Labour Program is also undertaking a collaboration with the Assembly of First Nations to pursue engagement activities to determine if any of the provisions of the Act need to be adapted to meet the needs of First Nations band councils and their employees.

Consultations and expert input

On October 25, 2018, the Government of Canada released its Proactive Pay Equity What We Heard report, which summarizes feedback from stakeholders, including key employer, employee and advocacy stakeholders. In developing the proactive pay equity regime, input received during the 2017 Labour Program legislative consultations with employee, employer and advocacy stakeholders has been taken into consideration, as well as recommendations from the Parliamentary Special Committee on Pay Equity and the Pay Equity Task Force (Bilson Report). The legislation builds on lessons learned from Ontario and Quebec, the only two jurisdictions in Canada that have had a proactive approach to pay equity applying to both the public and private sectors for many years.

As part of the regulatory development process, Labour Program officials held a series of information sessions as well as solicited feedback from stakeholders, including employer representatives, labour representatives, advocacy groups, and pay equity experts, through a consultation paper that was distributed in the summer of 2019. Additionally, thirty-two stakeholder submissions commenting on the draft regulations were received when they were pre-published in Part I of the Canada Gazette between November 2020 and January 2021.

Pay Equity Commissioner’s Appointment

On September 10, 2019, Ms. Karen Jensen was appointed to the Canadian Human Rights Commission to prepare for the coming into force of the Pay Equity Act. Ms. Jensen started her three-year term as the first federal Pay Equity Commissioner when the Act came into force on August 31, 2021.

Ms. Jensen was selected by a committee that included representatives from the Prime Minister’s office, the Privy Council Office, the Minister of Employment, Workforce Development and Disability Inclusion’s office, the Minister of Justice’s office and the Labour Program.

Gender wage gap

In Canada in 2021, for every dollar a man earned, a woman earned 90 cents on the dollar as measured in hourly wages for full-time workers.

While proactive pay equity legislation is an important tool that will contribute to reducing the gender wage gap by addressing the portion of the gap that is due to the undervaluation of women’s work, it needs to be part of a broader array of policy tools, such as the Government’s investments in early learning and child care, improved financial support for training and learning, enhanced parental leave flexibility, pay transparency, the continued appointment of skilled, talented women into leadership positions, and better access to flexible work arrangements.

Funding announcement

In fall 2018, the Government announced $26.6 million over six years and $5.8 million per year ongoing to support the administration of the new proactive pay equity regime, over the first 6 years starting in 2018–19:

$15 million for the CHRC to implement and administer the new regime;

$8 million for the CHRT through the Administrative Tribunals Support Service of Canada to support enforcement of the legislation; and

$3 million for ESDC to support the establishment of the new regime.

Additionally, $49.4 million has been made available to implement the proactive pay equity regime within the federal public service.

Parliamentary Budget Officer Fiscal Analysis Report

On November 4, 2020, the Office of the Parliamentary Budget Officer (PBO) released a report providing a fiscal analysis of the new proactive pay equity regime introduced in the Act. The objective of the report is to assist parliamentarians in scrutinizing the financial impact that the Act will have on the Government. The report was produced based on PBO analysis using information from publicly available sources (e.g. Labour Force Survey) and information provided by government departments, including the Labour Program.

The PBO report estimated that the Act, once it is fully implemented, would cost $477 million in increases to eligible public sector employees’ salaries and an additional $144 million in expenditures on pensions and other employee benefits. While this will entail costs to the federal government and taxpayers, external analysis of the PBO report has noted that these costs will be offset by the positive effects of the increase in salaries and other benefits for eligible employees (e.g. increased tax revenue due to higher wages, increased spending). In addition, by requiring private sector employers to move forward with proactive pay equity in their workplaces, the Act will lead to further benefits.

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