Ten Years of Experience

Ten Years of Experience

A Background Issues Paper on the Employment Equity Act and Federal Contractors Program in preparation for the Parliamentary Review 2006

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1. Purpose of the Issues Paper

The purpose of this paper is to seek the input of those stakeholders most affected by the Employment Equity Act prior to a Parliamentary review of the legislation. This review is expected to commence in the fall of 2006. The Act also states that the Minister responsible for the legislation - currently the Minister of Labour - is also responsible for the Federal Contractors Program (FCP) and shall ensure that the requirements applied to contractors will be equivalent to those applied to employers under the Act. Comments, therefore, are also sought on the application, outcomes and requirements for the FCP.

In particular, the Labour Standards and Workplace Equity Division (LSWED) of Human Resources and Skills Development Canada (Labour) is seeking the views of employers subject to the requirements of the Act and the FCP as well as relevant unions and representatives of the four designated groups: women, Aboriginal peoples, visible minorities and persons with disabilities.

This document provides summaries of the requirements established by the Act and the FCP, the compliance processes currently in place for both programs and a short assessment of the impact the programs have had on closing gaps in workplace representation. It poses a number of broad questions to guide discussion but these are not meant to be exhaustive and participants are encouraged to raise issues of concern.

2. Background

a. Program Foundation

i. The Employment Equity Act

Objective and Mandate

The Employment Equity Act was first enacted by Parliament in 1986 and subsequently amended in 1995 to include the federal public service and to give the Canadian Human Rights Commission (CHRC) the mandate to ensure employers comply with their obligations. The revised Act came into force in October 1996.

The Act's original and continuing purpose is to achieve equality in federally regulated workplaces so that no person is denied employment opportunities for reasons other than their ability to do the job. In particular, the Act seeks to correct the conditions of disadvantage in employment experienced by women, visible minorities, Aboriginal people and persons with disabilities. To achieve this goal, the Act establishes a series of statutory requirements that an employer must meet in order to develop and implement an employment equity plan that would ensure reasonable progress toward full representation of these four groups.

Program Coverage

The act applies to four different categories of federally regulated employers employing just under one million employees or 6% of the Canadian workforce. These include:

• Private sector employers and Crown corporations with 100 or more employees. This includes approximately 474 private sector employers and 29 Crown corporations, with a combined workforce of over 651,000 employees. These firms are in the federally regulated sectors and are primarily in the Transportation, Banking, and Communications industrial sectors as well as a fourth group of varied employers in areas such as uranium mining, nuclear power generation and grains.
   
• Federal departments and agencies for which the Treasury Board is the employer, no matter the number of employees. This includes some 70 organizations in 2004/2005 with almost 160,000 employees. The Public Service Commission (PSC) shares employer obligations under the Employment Equity Act within its mandate and functions under the Public Service Employment Act.
   
• Separate Agencies with more than100 employees that are in the federal public administration as named in Schedule 5 v. of the Financial Administration Act and report directly to Parliament. There are 16 such employers with approximately 68,000 employees.
   
• Other public sector employers including the Canadian Forces, RCMP and CSIS. These three organizations have approximately 130,160 employees.
   

ii. The Federal Contractors Program (Section 42(2))

Objective and Mandate

The Federal Contractors Program (FCP) was originally established by a Cabinet decision in 1985 and announced through a Treasury board Circular (1986-44) following enactment of the Employment Equity Act in 1986. Like the Act, the program is intended to promote employment equity for the four disadvantaged groups. It applies to non-federally regulated employers who have 100 or more employees, and who have contracts of $200,000 or more with the Federal government. Contractors in construction and legal services are excluded.

The importance of the program was reaffirmed when Parliament required that the requirements of FCP become "equivalent" to the Legislated Employment Equity Program in the 1995 amendments (Section 42(2)) to the Employment Equity Act.

The compliance process, however, is different. In order to bid on a federal contract of $200,000 or more, a covered employer is first required to sign a commitment to employment equity and agree to implement, if the successful bidder, eleven steps leading to the implementation of an employment equity plan. The goal is to have a plan which, if implemented, will ensure reasonable progress towards fair representation for the four designated groups in line with their representation in the relevant workforce.

HRSDC administers the FCP nationally through the Workplace Equity Program of the Labour Standards and Workplace Equity Directorate, and through HRSDC Regional Offices. Staff provides education and consultation for employers, and also implements compliance reviews to assess an employer's progress in terms of their "reasonable effort" to achieve employment equity.

Program Coverage

Currently approximately 936 contractors (employing over 1.1 million individuals) are covered by FCP. This represents 6.9% of the Canadian labour force. Nearly half of all of these FCP employers are found in 6 industries: Business Services, Machinery and Equipment Supplies, Electrical, Chemical, Educational Services and Transportation Equipment. A majority of FCP employers have fewer than 500 employees.

b. Legislative Review Mandate

Section 44(1) of the Employment Equity Act states:

Five years after coming into force of the Act, and at the end of every five year period thereafter, a comprehensive review of the provisions shall be undertaken by the house of Commons as may be designated by the house for that purpose.

The Act came into affect in October 1996 and the first legislative review commenced in October 2001 and resulted in a report to Parliament in June 2002. A second review is expected to be initiated in the fall of 2006.

3. Designated Group Representation: A Summary 1987 - 2004

a. Employment Equity Act Results: A Summary

The table below provides the changes in overall representation of the four designated groups that has taken place since the original Act as well as the overall labour market availability as of the 2001 Census/PALS.

Percentage of Designated Groups in Workforce under the Employment Equity Act

Designated Group	Industrial Sector	1987	1999	2004	Workforce Availability (2001 Census/PALS)
* The Public Service Human Resources Management of Agency Canada calculates availability minus those who are not Canadian Citizens. This is based on the mandatory preference given any qualified Canadian Citizen, a requirement upheld by a decision of the Supreme Court of Canada.
Women	Private Sector/Crowns	40.9%	44.8%	43.4%	47.3%
	Depts. And Agencies	42.0%	51.4%	53.5%	52.2%
	Separate Agencies	N/A	N/A	55.1%	47.3%
	Other Public Employers	N/A	N/A	18.0%	47.3
Aboriginal Peoples	Private Sector/Crowns	0.7%	1.5%	1.7%	2.6%
	Depts. And Agencies	0.7%	1.5%	4.2%	2.7%
	Separate Agencies	N/A	N/A	2.6%	2.6%
	Other Public Employers	N/A	N/A	2.9%	2.7%
Persons with Disabilities	Private Sector/Crowns	1.6%	2.4%	2.5%	5.3%
	Depts. And Agencies	1.6%	4.7%	5.8%	5.3%
	Separate Agencies	N/A	N/A	4.8%	5.3%
	Other Public Employers	N/A	N/A	1.8	5.3%
Visible Minorities	Private Sector/Crowns	5.0%	10.5%	13.3%	12.6%
	Depts. And Agencies	2.8%	5.5%	8.1%	10.4%* (12.6%)
	Separate Agencies	N/A	N/A	10.8%	12.6%
	Other Public Employers	N/A	N/A	2.7%	10.3%* (12.6%)

While for some designated groups in some sectors, the overall representation is positive, there still may exist gaps at the specific occupational group or category levels as well as in industrial sub-sectors. For example, visible minorities are frequently under-represented in senior management as are women in most non-traditional jobs. In the private sector, Aboriginal people are better represented in the transportation and "other" sectors than in communication and banking.

b. Federal Contractors Program

Federal contractors are not required to report on their levels of representation. Therefore, the information needed to track changes and to report on whether or not there have been improvements in representation is not available.

4. Employer Obligations

a. Reporting Requirements

i. Legislated Employment Equity Program

The Act requires employers to report annually on their representation of designated group members as well as data on hiring, promotion and terminations. The four groups of employers included in the legislation report differently.

Federally regulated private sector employers and Crown corporations must report each June 1 for the previous calendar year. They must report by 14 occupational groups and may have to report by province and designated Census Metropolitan Areas (CMA). In addition, the reports also contain a summary of employers' employment equity initiatives. These employers submit their annual reports to Human Resources and Skills Development Canada (Labour). The reports are made public, shared with the Canadian Human Rights Commission and used to prepare an annual summary report tabled in Parliament by the Minister of Labour.

Federal departments and agencies, report to Parliament through PSHRMAC for the previous fiscal year (April 1-March 31). These organizations are required to report by six occupational categories only.

Separate employers and other public sector employers, file reports directly to Parliament which are in the same format as those submitted by private sector employers. The RCMP, Canadian Forces and CSIS reports, however, are subject to separate regulations established for each respective organization.

ii. Federal Contractors Program (FCP)

While employers under the FCP must conduct a survey of their workforces and maintain statistics similar to those of private sector employers under the Employment Equity Act, there is no obligation to submit reports.

b. Employment Equity Plan Requirements

i. Legislated Employment Equity Program

In addition to filing annual reports, employers under the Act are required to meet a number of statutory requirements designed to ensure gaps in representation of the four designated groups are identified and corrected over time.

Employers are first required to identify if their organization has a problem with under-representation of the four designated groups and, if so, to determine what employment policies, systems, and practices might contribute to this result. This requires employers to survey their employees to determine the levels of representation of the four designated groups and compare the results with their availability in the appropriate labour markets. When under-representation is found, the next required step is to conduct an employment systems reviews to identify any barriers to full representation.

With the problems identified, the second requirement is to develop an employment equity plan to remove barriers and implement positive policies and practices to help achieve results. The employer must also establish short term hiring and promotion goals for three years as well as long term goals defined as greater than three years.

Finally, to ensure the success of the employment equity process, the employer must consult with employee representatives, provide ongoing information on its employment equity initiatives to all employees and maintain appropriate records.

The standard that an employer's plan must meet is that, if all reasonable efforts are made to implement the plan, it will lead to reasonable progress toward the removal of the gaps in representation.

ii. Federal Contractors Program

Contractors under the FCP are subject to equivalent requirements with respect to the implementation of employment equity as employers subject to the Employment Equity Act. Since the last legislative review in 2001-2002, a concerted effort has been made to ensure this is the case. The FCP criteria for implementation, therefore, are very similar to those set out above.

5. Compliance Process

a. Legislated Employment Equity Program

The Employment Equity Act gave the Canadian Human Rights Commission the mandate to monitor employers' performance and conduct compliance audits of employers under the legislation. The purpose of these audits is to assess whether or not the employers are complying with the statutory requirements of the Act and, where they are not, to ensure necessary steps are taken to achieve compliance.

Section 22 of the Act explicitly states that negotiation and persuasion is the preferred approach to reaching compliance with enforcement procedures used as a last resort only. The Act, however, does allow for enforcement if there is a failure to co-operate or to take the steps necessary to achieve compliance. The Commission may issue a formal Direction to complete required work and may subsequently refer an employer to an Employment Equity Tribunal if compliance is not achieved. The tribunal may, if it agrees in whole or in part with the Commission's position, issue an Order to remedy the non-compliance. An employer may also ask for a Tribunal if it believes a Direction is not warranted.

Once an employer is in compliance, the CHRC monitors performance through the employer's annual reports to ensure reasonable progress on correcting under-representation is achieved. If it is not, the Commission may initiate further action to ensure all reasonable efforts have been made to implement the plan and, if so, that the employer has reviewed and made necessary revisions as required by the Act. The enforcement provisions for failure to make reasonable efforts remain the same as above.

While the Commission is responsible for ensuring compliance overall, HRSDC (Labour) has the mandate to ensure employers report annually and that these reports are in compliance with the legislation. The Act allows for financial penalties for employers who do not report or who fail to comply with the reporting requirements.

b. Federal Contractors Program

Responsibility for ensuring federal contractors meet their obligations under the FCP resides with HRSDC (Labour). Once an eligible employer is successful in receiving a contract, it is obligated to take all steps necessary to meet the requirements of the program. The organization also becomes eligible for a compliance review. An employer that is not in compliance at the time of a review must implement a series of steps equivalent to those of employers under the Employment Equity Act.

In situations of initial non-compliance, the Workplace Equity Officer (WEO) assigned to complete the review assists the employer to meet the program's obligations. If the employer fails to complete the work successfully, however, it may, through a progressive process of sanctions, be barred from any future contracts of over $25,000 until such time as the non-compliance has been corrected.

Unlike the employers under the Employment Equity Act, FCP employers are not required to submit annual public reports on their progress. Data are not available, therefore, to monitor whether or not reasonable progress is being achieved. Three years after an initial audit, therefore, a follow-up review may be initiated to assess progress and determine if the employer has remained in compliance.

6. Non-legislated Support Initiatives

The Employment Equity Act and the Federal Contractors Program require employers to take significant steps to identify and correct under-representation. Given the growing complexity of the Canadian labour market and human resources management, this process could be assisted by various non-legislated support initiatives put in place by government. This may include a strategy on disability supporting delivery of employment training, accommodation and accessibility or a similar strategy for Aboriginal peoples or assistance to help identify qualified job candidates. Initiatives to deal with faster recognition of foreign credentials or programs to support training of women in non-traditional areas may also be necessary.

Employers, unions and designated group organizations now have enough experience to know where such existing initiatives are working and where they are currently not available but required. There is a need to know what initiatives might be required to support the objectives of the Act and the FCP.

7. The Next Step

The next step is to obtain your views on how well the Employment Equity Act and/or the Federal Contractors Program have met their objectives over the last five years. Some organizations will be contacted to arrange a meeting to discuss the questions posed in this document. But there are also a number of other ways you can make your views known. You may:

• Provide a written report by sending your comments and recommendations to:
  Ms. Gay Stinson
  A/Senior Director
  Labour Standards and Workplace Equity
  Human Resources and Skills Development Canada
  165 Hotel de Ville St.
  Phase II, 10th Floor
  Gatineau, Que.
  K1A 0J2
   
• Respond by writing an e-mail containing or attaching your views to:
  Rhys Phillips

If you require any additional information, you are invited to contact:

Mr. Rhys Phillips
Senior Advisor
Labour Standards and Workplace Equity
Human Resources and Skills Development Canada
165 Hôtel de Ville St.
Phase II, 10th Floor
Gatineau, Que.
K1A 0J2

Telephone: 819-953-7517
E-mail: Rhys Phillips