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Labour

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Tips on How to Implement Pay Equity

The Pay Equity Process

A project management approach to implementing pay equity involves the four steps outlined in the diagram below.

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The diagram shows the four steps to Pay equity. These steps are Project Initiation, Job Analysis, Documentation and Evaluation, Implementation and Maintenance. Communication is at the core of all these steps.

You should work together with your employees to achieve pay equity. Open and transparent communication throughout the process is key to its successful implementation.

In unionized environments, the law places the pay equity responsibility on you, the employer, but wages and working conditions are settled through collective bargaining with employee representatives.

1. Project Initiation

Before starting the process, you may want to ask yourself a few questions to help determine the current state of your compensation practices, such as:

  • Do you have a gender-neutral method of assessing the value of work?
  • Does this method take into account the four job evaluation factors required by the Canadian Human Rights Act: skill, effort, responsibility and working conditions?
  • Do you pay employees either according to these assessed values or according to market values?
  • What benefits are included in your compensation package, and are they equally available to male and female employees?
  • Do you want to obtain external pay equity expertise?

The Labour Program recommends that you establish a representative job evaluation committee that includes the employer, union and employee members to guide the pay equity process. This will help provide balanced perspectives and increase the credibility of the results.

Establishing ground rules for the way the project will be carried out helps manage the expectations of all parties involved. You should also develop a plan for communicating with employees and have a dispute resolution mechanism to address issues employees may have. The parties should agree, in advance and in general terms, on how they will address any wage gaps identified during the pay equity process. Areas of discussion may include the length of time over which the wage gap will be closed and the allocation of resources.

In this step, you should define the establishment, identify occupational groups and determine their gender-predominance according to the requirements of the Canadian Human Rights Act and the Equal Wages Guidelines, 1986. It is important to remember that employers are not permitted to maintain separate establishments for the purpose of establishing or maintaining differences in wages between male and female employees.

2. Job Analysis, Documentation and Evaluation

Job Analysis and Documentation

Job analysis and documentation involve collecting, recording and analyzing complete and accurate information about identified jobs. Job information can be recorded through various means, such as questionnaires or job descriptions. This information should be current, accurate and consistent in format and style and should include information about the four factors outlined above.

Job Evaluation

Job evaluation is the systematic process of determining the relative value of jobs. There are many types of job evaluation plans, but to be appropriate for pay equity purposes, a plan must be gender neutral and measure the four factors mentioned above. Each job should be evaluated on a factor-by-factor basis and assigned a relative rank by the job evaluation committee.

3. Implementation

Once job evaluation is complete, the Labour Program recommends that you review your compensation policies and practices.

You should examine your employees’ wages to see whether gaps exist between male and female groups. Generally, this involves determining the existing wage rate for each position and plotting pay lines. You may not need to calculate the monetary value of direct and indirect benefits if these benefits are equally accessible to men and women. Some wage differences may be explained by one of the reasonable factors listed in the Guidelines; however, these factors must be applied in a consistent and equitable manner.

You should then calculate the total wage adjustments required to address inequities within your establishment. It is important to remember that, under Canadian legislation, you cannot reduce wages to correct a pay inequity. The Labour Program will also verify that you have developed a reasonable schedule for implementing pay equity. This will depend on the size and complexity of your establishment.

4. Maintenance

Once pay equity has been implemented, you should conduct periodic pay equity reviews to identify any new wage gaps and avoid complaints. There are a number of factors that could cause wage gaps to emerge, including organizational change and the negotiation or renewal of a collective agreement. They might also include the elimination or creation of new jobs or occupational groups, or a change in the gender predominance of an occupational group.

In practical terms, pay equity maintenance means that you must monitor changes in your establishment for any pay equity implications those changes may carry. Wage gaps that reopen or are created after pay equity is achieved must be closed as they occur.

Advantages of Pay Equity

There are many advantages to integrating pay equity principles into your compensation system. These advantages include having a system that is:

  • likely to meet legal requirements;
  • developed around your business strategy and requirements; and
  • likely to improve employee morale, reduce workforce turnover and increase the ability to predict wage costs.

The Labour Program encourages employers to implement pay equity in their establishments using a project management approach.

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Date Modified:
2012-02-27