The more the merrier

On October 23, 2024, the Pay Equity Commissioner (“PEC”) released her decision in Public Service Alliance of Canada (PSAC) v. Bank of Canada.¹ This case confirmed that the bargaining unit agent for an employer’s unionized employees has the absolute authority under the Pay Equity Act, SC 2018, c 27, s. 416 (the “Act”) to determine the number of representatives it has on the employer’s pay equity committee. Additionally, the decision provides helpful guidance to employers on what may or may not constitute as behaving in a bad faith, arbitrary, and/or discriminatory manner within the meaning of subsection 150(3) of the Act.

On October 16, 2023, the Public Service Alliance of Canada (“PSAC”) filed a complaint under subsection 150(3) of the Act alleging that the Bank of Canada (the “Bank”) had acted in bad faith by making a decision to limit PSAC to one member and one alternate member on its pay equity committee. Although the Act requires the Bank to facilitate the establishment of a pay equity committee that meets the Act’s requirements, PSAC argued that, as the bargaining unit for security officers and IT professionals, it had the sole authority and discretion to select the number of representatives to represent its bargaining unit members on the pay equity committee.  The Bank disagreed, and argued that that if a bargaining agent could select any number of representatives it so chooses, pay equity committees could grow to such a size that they could become non-functional.

Pursuant to subsection 16(1) of the Act, employers with 100 or more employees, or 10 to 99 employees if any of those employees were unionized on the date the employer became subject to the Act, are required to make all reasonable efforts to establish a pay equity committee to complete the pay equity exercise.

Further, the composition requirements of the committee are set out at subsection 19(1) of the Act, as follows:

19 (1) A pay equity committee is to be composed of at least three members and must also meet the following requirements:

(a) at least two-thirds of the members must represent the employees to whom the pay equity plan relates;
(b) at least 50% of the members must be women
(c) at least one member must be a person selected by the employer to represent it
(d) if some or all of the employees to whom the pay equity plan relates are unionized employees, there must be at least the same number of members to represent those employees as there are bargaining agents, with each bargaining agent selecting at least one person to be a member and to represent employees who are members of any bargaining unit represented by that bargaining agent and
(e) if some or all of the employees to whom the pay equity plan relates are nonunionized employees, at least one member must be a person selected by those employees to represent them

Who decides the number of representatives on a pay equity committee?

Absent clear intention and given the numerous uses of the open ended “at least one” throughout the Act, the PEC held that there is “no legislated maximum number of members to the committee and no limit on the number of members that can be selected by a bargaining agent for the committee.”² Therefore, the PEC held that the Bank did not have the authority to determine the number of members that PSAC may select to represent each of its bargaining units on the pay equity committee.

The PEC added that there were several mechanisms under the Act to address the employer’s concern about a pay equity committee becoming non-functional. For example, if the committee members who represent employees cannot unanimously agree on an issue, then the employer’s position prevails pursuant to subsection 20(1) of the Act. Further, if employee (including bargaining agent members) and employer representatives on a committee reach an impasse on a step in the pay equity exercise, there are dispute resolution mechanisms in place to ensure that the pay equity exercise can be completed. Finally, there are other options, such as applying for a different committee composition or proceeding without a committee altogether.

What constitutes acting in a bad faith, arbitrary or discriminatory manner within the meaning of Subsection 150(3)?

The PEC recognized that the Act did not define the terms “bad faith”, “arbitrary”, or “discriminatory”, and that there has been no case law that interprets these terms within the context of the Act.  Borrowing from dictionary definitions and court interpretations of provincial pay equity legislation, the PEC determined the following:

• Acting in “bad faith” must include an element of ill-will or an intention to mislead or deceive³
• The term “arbitrary” can be understood as including actions that are capricious, rather than based on reason or judgement;⁴ and
  
• What constitutes as a “discriminatory” action will be determined using a broad and purposive approach, similar to the approach taken in the labour and human rights contexts.⁵

The PEC determined that PSAC did not meet its burden of demonstrating that the Bank acted in bad faith or in an arbitrary or discriminatory manner.  The Bank did not have an intention to mislead PSAC, and PEC found that the Bank’s decisions to set the maximum number of members was reasoned and based on its understanding of its rights and obligations under the Act at the time.⁶

For federally regulated employers, this decision clarifies that:

1. The employer is responsible for establishing the pay equity committee and facilitating its work, but that responsibility does not extend to unilaterally setting maximum numbers of committee members, whether based on proportionality or other reasons
2. Bargaining unit agents have the sole authority to complete the selection process and determine the number of representatives who will represent their bargaining unit members on the pay equity committee
3. While there may be concerns about pay equity committees growing to an unmanageable size, mechanisms in the Act itself provide protection against unreasonable delays and obstructions
   
4. To mitigate against allegations of bad faith, arbitrary, or discriminatory conduct, all employer decisions related to the Act should be made in writing and supported by clear reasons.