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Frequently Asked Questions About Pay Equity

Section 11 of the Canadian Human Rights Act raises a number of questions asked by employers who are trying to grasp and apply the concept of pay equity. Many of these questions are answered in this section.

  1. What is pay equity?
  2. What is work of equal value?
  3. What is an establishment?
  4. I pay my employees according to the market in order to stay competitive, and it works. Why should I change that now?
  5. How can I implement pay equity?
  6. What form of compensation is included in this comparison?
  7. How much will implementing pay equity cost me?
  8. Who will help me implement pay equity?
  9. How can I find out more?
  10. As an employer, what does the law require me to do with respect to pay equity?
  11. I pay the same wages to men and women doing the same job. Is this adequate?
  12. How can I set up a system that compares the values of different jobs? Isn't this like comparing apples to oranges?
  13. What is the Labour Program's role in the implementation of pay equity?
  14. Should unions or employees be involved in implementing pay equity?
  15. Is pay equity the same thing as equal pay for equal work?
  16. Are the pay equity and employment equity programs different?
  17. How is value measured?
  18. What do wages include?
  19. Are there factors that justify a difference in wages?
  20. Is the size of an employer a factor?
  21. Can wages be reduced to correct a pay inequity?
  22. Is there a difference between a “wage gap” and a “pay equity gap”?
  23. What about commission sales?
  24. Who handles pay equity complaints?

1. What is pay equity?

People often think of pay equity as paying the same wages to men and women doing the same work. But pay equity is broader because it refers to "work of equal value".

Pay equity is therefore defined as paying the same wages to men and women doing work of equal value in the same establishment.

2. What is work of equal value?

It refers to different jobs in an establishment that have the same value to the employer. Value is assessed in terms of skill, effort, responsibility and working conditions, criteria that are laid out in the Canadian Human Rights Act and defined in its Equal Wages Guidelines.

3. What is an establishment?

It refers to all employees, from all geographical locations, unionized and non-unionized alike, who are subject to a common personnel and wage policy.

4. I pay my employees according to the market in order to stay competitive, and it works. Why should I change that now?

The market cannot ensure pay equity. The Canadian Human Rights Act requires you to implement pay equity based on an internal evaluation of job values within your establishment.

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5. How can I implement pay equity?

Step 1 - Determine if gender-based wage discrimination exists

A job evaluation tool (see below) will help you compare job values based on the four criteria: skill, effort, responsibility and working conditions across jobs. This will identify if you have pay equity or not.

There are several gender neutral job evaluation tools that can be used, such as Point Factor, Job Component, Ranking and Whole Job Comparison. These tools are available from compensation consulting firms and practitioners. These firms and practitioners can be accessed through your provincial human resources association. Your human resources specialist can also provide additional advice.

It is highly advisable to involve unions and employees in the process from the outset, to get their buy-in.

Step 2 - Eliminate any gender-based pay gap

Once your evaluation is complete, determine if the gaps identified are due to allowable factors listed in the Equal Wages Guidelines, such as differences in performance ratings, seniority, reclassification or downgrading of a position and regional rates of pay.

If gaps are not due to these allowable factors, you will need to review your compensation practices and close those gaps.

Step 3 - Once gaps are eliminated, maintain pay equity over time

Review and adjust over time, to ensure the continuation of gender neutral compensation practices.

6. What form of compensation is included in this comparison?

All forms of compensation are included: salary, benefits, perks, indirect and variable pay, and so on.

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7. How much will implementing pay equity cost me?

The costs will vary according to the tool you use and the pay gaps identified.

8. Who will help me implement pay equity?

Your compensation consultant, labour relations consultant and/or lawyer can help you implement pay equity.

9. How can I find out more?

To get more information about pay equity, contact the Labour Program.

To request mediation help related to pay equity, contact the Federal Mediation and Conciliation Service (Labour Program).

Contact the Canadian Human Rights Commission.

10. As an employer, what does the law require me to do with respect to pay equity?

The law requires an employer to establish and maintain a compensation system that pays men and women equal wages for doing work of equal value. To achieve this, the employer should institute a gender-neutral job evaluation system. The value of jobs must be measured by comparing skill, effort, responsibility and working conditions across jobs (called the four criteria). These criteria are set out in the Canadian Human Rights Act and defined in the Equal Wages Guidelines.

11. I pay the same wages to men and women doing the same job. Is this adequate?

Pay equity goes beyond this. You have to ensure that job values of different jobs are compared to pay the same wages for work of equal value.

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12. How can I set up a system that compares the values of different jobs? Isn’t this like comparing apples to oranges?

No, it is not comparing apples to oranges as job values can often be compared across jobs. There are a number of systems available to do that. The main systems are:

  • Point Factor
  • Job Component
  • Ranking
  • Slotting
  • Whole Job Comparison

These systems can be purchased from large national compensation consulting firms. Smaller consulting firms and sole practitioners are also available in your area, which can be accessed through the provincial human resources association. Your human resources consultant or lawyer can provide additional advice.

13. What is the Labour Program’s role in the implementation of pay equity?

The Labour Program has three roles with respect to pay equity:

  1. provide information to federally-regulated employers, employer associations, employees and unions on their respective roles and responsibilities;
  2. provide mediation services to assist unions and employers in discussing the implementation of pay equity in their workplaces; and
  3. monitor the progress that federally regulated employers are making in achieving pay equity and notify the Canadian Human Rights Commission when there are reasonable grounds to believe that an employer has not met its pay equity obligations and/or has not made reasonable efforts to do so.

14. Should unions or employees be involved in implementing pay equity?

There is no legal requirement to involve unions or employees. As the employer, you are responsible for ensuring Pay Equity. However, we strongly recommend that you develop a system that involves unions and employees from the outset to get their buy-in.

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15. Is pay equity the same thing as equal pay for equal work?

No. The concept of “equal pay for equal work” means that persons performing the same job, or similar work, must be paid the same wage, regardless of their gender. For example, a female janitor and a male janitor in the same establishment should receive the same wages for performing the same work.

Pay equity is addressed in section 11 of the Canadian Human Rights Act. It refers to the concept of “equal pay for work of equal value.” It adds a new dimension to the concept of equal pay for equal work by requiring that jobs within an establishment be compared on the basis of their value to the employer.

In other words, pay equity does not limit comparisons to similar work but requires the comparison of very different jobs, such as a female clerical job with a male janitor, or female lab technician job with a male carpenter.

16. Are the pay equity and employment equity programs different?

Yes. While both promote and support the goal of equity in the workplace, equal pay for work of equal value, or pay equity as it is often called, refers to the payment of equal wages to males and females performing work that is determined to be equal in value. The objective of equal pay for work of equal value legislation is to close that part of the wage gap that is due to pay inequities based on gender.

Employment Equity Programs arise from the Employment Equity Act; they are also administered by the Labour Program. Their objective is to ensure that no person shall be denied employment opportunities or benefits for reasons unrelated to ability. It is intended to correct the conditions of disadvantage in employment experienced by women, Aboriginal peoples, persons with disabilities, and visible minorities.

17. How is value measured?

Subsection 11.(2) of the Canadian Human Rights Act requires that four factors be taken into account when measuring the value of work. These factors are skill, effort, and responsibility, and working conditions. They are elaborated on in sections 3 to 8 of the Equal Wages Guidelines, 1986. Reference to the external wage market should not be made in determining the value of jobs to the employer.

The Labour Program recommends that employers use a job evaluation tool to determine the value of each job. In order to more readily meet the requirements of the law and the guidelines, employers should adopt a gender-neutral evaluation system that can measure the four factors to determine the relative value of jobs within the establishment.

18. What do wages include?

“Wages” consist of all forms of remuneration. This definition includes salary, commissions, vacation pay, severance pay and bonuses. It also includes employer contributions to pension funds or plans, long-term disability plans and all forms of health insurance plans. In addition, reasonable value for housing, payments in kind and any other advantage received directly or indirectly from the employer are included in the definition. The Canadian Human Rights Act prohibits the reduction of wages to correct gender-based pay inequities.

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19. Are there factors that justify a difference in wages?

Yes. Differences in wages between men and women performing work of equal value within the same establishment are permitted if they are due to one of the "reasonable factors" set out in section 16 of the Equal Wages Guidelines, 1986. These factors include:

  • differences in performance ratings;
  • seniority;
  • red-circling for re-evaluation, re-classification, downgrading of a position or demotion;
  • rehabilitation or temporary training assignments;
  • internal labour shortages; or
  • regional rates of pay.

The onus is on the employer to demonstrate that a factor is applied consistently and equitably.

20. Is the size of an employer a factor?

No. Pay equity legislation in the federal jurisdiction applies to all employers, regardless of size.

21. Can wages be reduced to correct a pay inequity?

No. The Canadian Human Rights Act prohibits the reduction of wages to correct gender-based wage inequities.

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22. Is there a difference between a “wage gap” and a “pay equity gap”?

Yes. The term “wage gap” refers to the difference between the wages paid to male and female predominant jobs, and can be due to a number of factors, some of which are permissible. The “pay equity gap” is the part of a wage gap that is attributable to gender based wage discrimination. Pay equity legislation is aimed at eliminating the “pay equity gap”.

23. What about commission sales?

There are two main systems of commission sales; total commission and base plus commission.

Total commission occurs when an employee’s income is based solely on an agreed upon percentage or portion of the sales revenue generated. While some employers use systems to even-out revenue during the year; such as various draw-down schemes; the compensation attached to these positions will fluctuate, and may be difficult to plot on a line.

The second system, base plus commission, occurs when an employee is guaranteed a base, and receives, in addition, either a percentage of sales or a percentage of sales over a certain level. In these cases, the employer has a salary level that is envisioned for a fully satisfactory sales person. This salary becomes the reference point for comparison.

Commission must be available on an equal basis to all employees to whom these systems apply within an establishment. Policies regarding commission sales should be reviewed in order to ensure that they will not introduce gender-bias. Employers with these systems should contact the Labour Program to explore the best options for recording and analyzing the job worth.

24. Who handles pay equity complaints?

The Labour Program does not have the authority to accept a pay equity complaint. If employees working for federally regulated employers believe they have legitimate pay equity complaints, they should contact the Canadian Human Rights Commission for advice on how to proceed.

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Date Modified:
2012-02-27