Pay equity Pay equity Pay equity

Assist in determining applicable legislation and compliance obligations, access to KPMG’s pay equity tool to quickly determine the pay equity gaps and calculate estimated compensation increases and lump sum payments, where applicable. Guide and represent employers through pay equity audits and regulatory reviews, including pay equity related labour relations questions and/or issues.

A KPMG pay equity professional will assist with drafting terms of reference and facilitating committee meetings.

Training provided on the job evaluation process and methodology, assistance in collecting job-related information and facilitating job evaluation sessions.

Half-day or full-day training to project team and relevant stakeholders. Preparation and presentation of a customized PowerPoint presentation for delivery in a webinar format to your employees to provide education on pay equity. Facilitation of a Q&A session with employees to allow for an understanding of the process.

Leveraging pay equity data to identify other areas of improvement and assist in gender wage gap reporting. This may include:

• Due diligence
• Create a meaningful Employee Value Proposition (EVP)
• Integration of the Board and investors
• Gender reporting nationally

Pay equity is internationally recognized as a fundamental human right and is more than paying individuals who do the same job, the same pay. Pay equity is about paying individuals equal pay for work of equal value. This means that if two individuals’ hold different jobs, but each contributes equal value to the organization’s operations, those two positions should receive equal pay.

This is decided by evaluating job classes using a gender-neutral job evaluation system, based on four factors: skill, effort, responsibilities and working conditions.

Pay equity is considered an important element of Inclusion, Diversity and Equity (ID&E) and ESG strategies. Pay equity legislation exists across Canada and applies to both public and private companies with more than 10 employees in Ontario, Quebec and federally.

According to the Canadian Human Rights Commission, approximately 4,600 federally regulated employers with an average of 10 or more employees and about 1.3 million employees are covered by the Federal Pay Equity Act.

Federally regulated private sectors:

• Air transportation, including airlines, airports, aerodromes and aircraft operations
• Banks, including authorized foreign banks
• Navigation and shipping activities
  • Port services, harbour services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders
• Postal and courier services
• Radio and television broadcasting
• Railways that cross provincial or international borders and some short-line railways
• Road transportation services, including trucks and buses, that cross provincial or international borders
• Telecommunications, such as, telephone, Internet, telegraph and cable systems
• Most federal Crown corporations, for example, Canada Post Corporation
• Businesses that are declared by Parliament to be "for the general advantage of Canada or for the advantage of two or more of the provinces, for example:
  • Grain elevators, grain handling, including grain elevators, flour, feed and seed mills, feed warehouses and grain-seed cleaning plants
  • Livestock food manufacturing
  • Uranium mining and processing and atomic energy, including nuclear power plants
• Protection of fisheries
• Any business that is vital, essential or integral to the operation of one of the above activities

Federally regulated public sector:

• Canada Revenue Agency
• Parks Canada
• Canadian Food Inspection Agency
• National Research Council of Canada
• Core Public Administration (Treasury)
• Parliament
• Senate, House of Commons, Library of Parliament
• The Royal Canadian Mounted Police
• The Canadian Security Intelligence Service
• The Canadian Armed Forces
• Parliamentary Protective Service

• Reduced legal, financial and reputational risks
• Improved attraction and retention
• Key element of diversity and inclusion and ESG strategies
• Improved gender wage gap reporting
  

Canada’s federal Pay Equity Act and supporting regulations came into force on August 31st, 2021. By November 1^st, 2021 employers who were subject to the Act were required to post a notice to all employees informing them of their obligations to establish a pay equity plan and committee (if required).

Employers have 3 years to develop and post their final pay equity plan (e.g. For those that become subject to the Act on August 31^st, 2021, they have until September 3, 2024).

Once a Pay Equity Plan is established, employers are required to increase the compensation of any predominantly female job classes receiving less pay than their male counterparts. All employees working in female job class where a wage gap is identified, regardless of their gender, require an increase to their compensation. Compensation increases must start on the day after the final pay equity plan is posted, September 4, 2024.

• Employers must provide annual statements to the Federal Pay Equity Commissioner
• First statement is due by June 30^th of the calendar year following the calendar year containing the 3rd anniversary of becoming subject to the Act
• If you became subject to the Act on August 31, 2021:
  • Your 3rd anniversary is on September 3^rd, 2024
  • Your first statement submission is due on June 30^th, 2025
• Subsequent statements must be submitted by June 30^th of each calendar year

• Employers who are late in posting their pay equity plan are subject to lump sum payments as well as interest on future payments, compounded daily using a prescribed rate
• Lump sum payments are payable to former employees who may no longer work for the company
• Administrative penalties for violating the Act, ranging from $30,000 to $50,000 per violation

The committee is made up of at least one member representing the employer, employees, and union (if applicable). The employer representative is chosen by the employer, while the employee representative is selected by an employee vote. Each bargaining agent selects at least one representative to represent bargaining unit members.

To facilitate the selection of employee representatives, an employer must make its premises and equipment available, and permit employees to take time away from work to participate in committee activities/meetings.

The definition of employee differs depending on the applicable provincial legislation

The following types of employment relationships are included in the federal pay equity Act as outlined in the CHRC’s Interpretations, Policies and Guidelines document on ‘Definition of Employee’:

• Non-management and management employees, including executives
• Unionized and non-unionized employees
• Full-time and part-time employees
• Permanent, casual, and temporary employees, including seasonal workers
• Dependent contractors
• Employees performing federally regulated activities as part of a separate unit for a
  provincial employer
• Employees on long-term leave (e.g. sick leave, maternity leave)

Certain employees can be excluded from pay equity. In the private sector, students who are working as part of a student employment program (e.g. co-op or internship) as well as those who are working during their school vacation are excluded. Independent contractors are also excluded from pay equity.

The gender of each job class is determined by examining three criteria:

• the gender of current incumbents
• the gender of past incumbents
• the occupational gender stereotype.

All three criteria are examined when making a final gender determination, however, current gender incumbency is often the most heavily weighted.

Yes, an employer or committee can use an existing job evaluation tool so long as it meets the pay equity requirements and does not discriminate on the basis of gender. Any job evaluation tool must include the following four pay equity factors:

• Skill
• Effort
• Responsibility
• Working Conditions

If one or more factor is missing, a new job evaluation tool must be developed, or the current job evaluation tool must be tailored accordingly.

Broadly, compensation for pay equity purposes can include numerous elements in addition to base salary including commissions, bonuses, vacation, and severance pay, employer contribution to health insurance plans, employer contribution to retirement and pension plans and other direct or indirect benefits of monetary value. A careful review of all elements of compensation must be undertaken, in order to ensure the correct calculation of total compensation.

No. Pay equity adjustments are only made to employees in female-dominated job classes where a salary adjustment has been identified. It is important to note that all employees who work in those job classes, regardless of gender, receive an increase in salary.

While we offer a full-service approach to developing a pay equity strategy, our advisors can work shoulder to shoulder with you to develop a customizable approach no matter where you are in the pay equity process. Contact us today to understand your legislative and compliance requirements.