Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments): SOR/2024-101
Canada Gazette, Part II, Volume 158, Number 12
Registration
SOR/2024-101 May 27, 2024
PAY EQUITY ACT
P.C. 2024-577 May 24, 2024
Her Excellency the Governor General in Council, on the recommendation of the Minister of Labour, makes the annexed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments) under subsections 127(1) and 181(1) of the Pay Equity Act footnote a.
Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments)
1 Section 2 of the Pay Equity Regulations footnote 1 is replaced by the following:
References to employers
2 If a group of employers is recognized by the Pay Equity Commissioner as a single employer under section 106 of the Act, every reference in sections 10, 14 and 15, subsection 16(1), sections 18 to 20 and 22, subsections 23(1) to (6) and sections 24 to 26, 28 to 31, 38.1, 39 and 41 to 46.1 to an employer is, in respect of the group of employers, to be read as a reference to that group of employers unless the context otherwise requires.
2 Subsection 8(1) of the Regulations is replaced by the following:
Notice — group of employers’ obligation
8 (1) An employer that is in a group of employers and that is required to post a notice under subsection 15(1) or (2) of the Act must do so
- (a) within 60 days after the day on which the Pay Equity Commissioner recognizes the group as a single employer under section 106 of the Act if the group of employers becomes subject to the Act, for the purposes of subsection 55(1) and paragraphs 61(1)(b) and 89(2)(b) of the Act, less than 60 days after the day on which they are recognized; and
- (b) by the date on which the group of employers becomes subject to the Act, for the purposes referred to in paragraph (a), if that date is 60 days or more after the day on which the Pay Equity Commissioner recognizes the group as a single employer under section 106 of the Act.
3 Paragraph (c) of the description of B in subsection 11(1) of the French version of the Regulations is replaced by the following:
- c) s’il n’y a aucune catégorie d’emploi à prédominance masculine dans la bande, la rémunération calculée conformément à l’alinéa 49(1)b) de la Loi ou à l’alinéa 28b), selon le cas;
4 Subparagraphs 23(3)(b)(i) to (iii) of the Regulations are replaced by the following:
- (i) in the case of a job class that was created based on the maintenance worker typical job class described in item 1 of Schedule 1, a wage at the minimum hourly rate referred to in section 178 of the Canada Labour Code, without taking into account subsections 178(4) and (5) of that Act, as if the employees in positions in that job class are usually employed in the province in which the employer’s employees are usually employed or, if the employer’s employees are usually employed in more than one province, as if the employees are employed in the province with the highest minimum hourly rate, amongst the provinces in which the employees are usually employed, referred to in subsection 178(2) of that Act,
- (ii) in the case of a job class that was created based on the technician typical job class described in item 2 of Schedule 1, 1.2 times the minimum hourly rate referred to in subparagraph (i), and
- (iii) in the case of a job class that was created based on the manager typical job class described in item 3 of Schedule 1, 1.75 times the minimum hourly rate referred to in subparagraph (i); and
5 (1) Paragraph 30(a) of the Regulations is replaced by the following:
- (a) indicate whether the predominantly male job classes used to determine differences in compensation were from another employer or were created by the employer based on a typical job class set out in Schedule 1 and, if job classes were chosen from another employer, indicate the job classes that were chosen and the other employer that provided the data;
(2) Paragraph 30(d) of the Regulations is replaced by the following:
- (d) if a comparison of compensation was made to determine differences in compensation, indicate the method used to make the comparison.
6 Section 32 of the Regulations and the heading before it are repealed.
7 The Regulations are amended by adding the following before section 39:
Choice of method — no predominantly male job classes
38.1 (1) An employer — or, if a pay equity committee has been established, that committee —, other than an employer or pay equity committee referred to in subsection 78(2) of the Act, that has determined that either there are no longer any predominantly male job classes or there continues to not be any predominantly male job classes, must use, to determine differences in compensation for the purposes of subsection 78(1) of the Act,
- (a) at least three predominantly male job classes of its choice from another employer that meets the conditions set out in subsection 19(2); or
- (b) three fictional predominantly male job classes, each of which is created by the employer or committee based on a different typical job class set out in Schedule 1.
Criteria
(2) An employer or pay equity committee, as the case may be, choosing job classes provided by another employer under paragraph (1)(a) must, to the extent possible, ensure that those job classes meet the criteria set out in paragraphs 19(3)(a) and (b).
Clarification
(3) For greater certainty, under subsection (1), an employer or pay equity committee, as the case may be, may use job classes other than those used to establish a pay equity plan and may use different job classes with respect to each date for which it must, under section 39, collect information to update that pay equity plan.
8 Section 39 of the Regulations is amended by adding the following after subsection (1):
Other workplace information
(1.1) If, for the purposes of updating a pay equity plan, an employer or pay equity committee referred to in subsection 38.1(1), as the case may be, is using job classes from another employer chosen under paragraph 38.1(1)(a), it must also collect the following information:
- (a) in the case of an employer referred to in any of paragraphs 3(2)(a) to (d) of the Act, for each March 31 during the period beginning on the day after the day on which the most recent pay equity plan was posted and ending on the day before the day on which the revised pay equity plan is posted under section 80 or 81 of the Act, the information that represents the other employer’s workplace as it was on that March 31 and that is necessary to identify changes — other than changes excluded in accordance with section 40 — that are likely to have had an impact on pay equity since the day on which the most recent pay equity plan was posted or the previous March 31 with respect to which information must be collected under this subsection, if that day is more recent; and
- (b) in the case of an employer referred to in any of paragraphs 3(2)(e) to (i) of the Act, for each day on which the employer’s fiscal year ends during the period beginning on the day after the day on which the most recent pay equity plan was posted and ending on the day before the day on which the revised pay equity plan is posted under section 80 or 81 of the Act, the information that represents the other employer’s workplace as it was on that day and that is necessary to identify changes — other than changes excluded in accordance with section 40 — that are likely to have had an impact on pay equity since the day on which the most recent pay equity plan was posted or the previous day with respect to which information must be collected under this subsection, if that day is more recent.
9 The Regulations are amended by adding the following after section 41:
No predominantly male job classes
41.1 (1) For the purposes of subsection 78(1) of the Act, the rules, criteria and factors set out in sections 41 to 50 of the Act, as adapted by sections 20 to 29, must be used by the employer or pay equity committee referred to in subsection 38.1(1), with the following modifications:
- (a) the reference to “subsection 19(1)” in subsection 20(1), paragraph 22(b), section 26, subparagraphs 28(a)(i) to (iii) and (b)(i) and (ii) and paragraphs 29(1)(a) and (c) is to be read as a reference to “subsection 38.1(1)”;
- (b) the reference to “paragraph 19(1)(a)” in subsections 23(2) and (5) is to be read as a reference to “paragraph 38.1(1)(a)”;
- (c) the reference to “paragraph 19(1)(b)” in subsections 23(3) and (6) is to be be read as a reference to “paragraph 38.1(1)(b)”; and
- (d) the reference to “the individual predominantly female job class within the group that has the greatest number of employees” in subsections 20(3) and 23(4) is to be read, with respect to a period referred to in subsection 41(1) or (2), as the individual predominantly female job class within the group that has the greatest number of employees on the day with respect to which the workplace information that is used, for that period was collected under section 39 if, when the employer or pay equity committee, as the case may be, is using that information, it treats the group of job classes as a predominantly female job class in accordance with section 38 of the Act.
Factor referred to in paragraph 28(d)
(2) Despite subsection 11(2), in the calculation of the factor referred to in paragraph 28(d), for the purposes of updating a pay equity plan, references in subsection 11(1) to a predominantly male job class are to be read as references to a predominantly male job class chosen or created, as the case may be, under subsection 38.1(1).
Factor referred to in paragraph 29(1)(c)
(3) Despite subsection 12(2), in the calculation of the factor referred to in paragraph 29(1)(c), for the purposes of updating a pay equity plan, a reference in subsection 12(1) to a predominantly male job class is to be read as a reference to a predominantly male job class chosen or created, as the case may be, under subsection 38.1(1).
10 Section 44 of the Regulations is amended by adding the following after subsection (1):
Exception
(1.1) Despite subsection (1), for the purposes of identifying any differences in compensation under subsection 78(1) of the Act, an employer or pay equity committee, as the case may be, referred to in subsection 38.1(1) of the Regulations, must calculate compensation associated with predominantly male job classes in accordance with the rules set out in sections 23 to 25 for each period for which the workplace information that has been collected must be used under section 41, except that the reference to “paragraph 19(1)(a)” in subsections 23(2) and (5) is to be read as a reference to “paragraph 38.1(1)(a)” and the reference to “paragraph 19(1)(b)” in subsections 23(3) and (6) is to be read as a reference to “paragraph 38.1(1)(b)”.
11 Section 45 of the Regulations is renumbered as subsection 45(1) and is amended by adding the following:
Exception
(2) Subsection (1) does not apply with respect to an employer or pay equity committee referred to in subsection 38.1(1).
12 The Regulations are amended by adding the following after section 46:
Supplementary Information to Include in Pay Equity Plan
No predominantly male job class
46.1 If, in carrying out the update of the pay equity plan, the employer — or, if a pay equity committee has been established, that committee — has determined in accordance with section 35 of the Act that there is no predominantly male job class, it must revise the information included in the plan under sections 30 and 31 of these Regulations or, if the plan to be revised does not include that information, add it to the plan.
13 The Regulations are amended by adding the following after section 52:
Confidentiality
Data received from another employer
52.1 (1) Except to identify differences in compensation for the purposes of sections 60 or 78 of the Act and to comply with sections 30 or 46.1 of these Regulations, an employer and each member of a pay equity committee that is, directly or indirectly, provided with data from another employer for the purpose of the identification of those differences must keep that data confidential.
Bargaining agent
(2) A bargaining agent that receives from a member of a pay equity committee data that the member is required under subsection (1) to keep confidential must also keep the data confidential.
14 (1) Subsection 53(1) of the Regulations is amended by striking out “and” at the end of paragraph (a), by adding and at the end of paragraph (b) and by adding the following after paragraph (b):
- (c) for each job class referred to in paragraph 89(1)(f) of the Act, if that paragraph applies,
- (i) the amount, in dollars per hour, of the increase in the hourly rate of pay and the date on which that increase is payable or, if the employer has chosen to phase in that increase, the amount of each increase, in dollars per hour, and the dates on which each increase will be made,
- (ii) the number of women who occupy a position in that job class and who are entitled to the increase referred to in subparagraph (i), and
- (iii) the total number of employees who occupy a position in that job class;
- (d) the employer’s legal name, if different than the name submitted under paragraph 89(1)(a) of the Act;
- (e) if the employer has a business number, as defined in subsection 248(1) of the Income Tax Act, that number; and
- (f) the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plans the employer must establish.
(2) Subsection 53(2) of the Regulations is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):
- (c) for each job class referred to in paragraph 89(2)(f) of the Act, if that paragraph applies,
- (i) the amount, in dollars per hour, of the increase in the hourly rate of pay and the date on which that increase is payable, or if the employer has chosen to phase in that increase, the amount of each increase, in dollars per hour, and the dates on which each increase will be made,
- (ii) the number of women who occupy a position in that job class and who are entitled to the increase referred to in subparagraph (i), and
- (iii) the total number of employees who occupy a position in that job class;
- (d) the legal name of each employer in the group whose legal name is different than the name submitted under paragraph 89(2)(a) of the Act;
- (e) for each employer in the group that has a business number, as defined in subsection 248(1) of the Income Tax Act, that number; and
- (f) for each employer in the group, the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plans the group must establish.
15 Section 55 of the Regulations and the heading before it are replaced by the following:
Administrative Monetary Penalties
Violations
Designations
55 The following are designated as violations that may be proceeded with in accordance with Part 7 of the Act:
- (a) the contravention of any provision of the Act that is specified in column 1 of Part 1 of Schedule 2;
- (b) the contravention of any order made or issued under any provision of the Act that is specified in column 1 of Part 2 of Schedule 2; and
- (c) the contravention of any provision of these Regulations that is specified in column 1 of Part 3 of Schedule 2.
Classification
56 A violation related to a provision set out in column 1 of Part 1 or 3 of Schedule 2 or an order made or issued under a provision set out in column 1 of Part 2 of Schedule 2 is classified as a minor, serious or very serious violation as set out in column 2 of that Part.
Range — 10 to 99 employees
57 (1) The range of penalties in respect of a violation within a classification set out in column 1 of Part 1 of Schedule 3 is set out in column 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation, with respect to a violation committed by
- (a) an employer referred to in subparagraph 127(2)(a)(i) of the Act;
- (b) an employer referred to in subparagraph 127(2)(a)(ii) of the Act that has 10 or more employees at the time the notice of violation is served;
- (c) a group of employers for which the sum of the average of the number of employees of each of the employers in the group is at least 10 but less than 100; or
- (d) a bargaining agent representing some or all of the unionized employees of an employer referred to in paragraph (a) or (b) or of an employer that is in a group of employers referred to in paragraph (c).
Sum of the averages
(2) For the purposes of paragraph (1)(c)
- (a) if the employers in the group have posted one or more notices under subsection 66(1) or 66(2) of the Act at the time the notice of violation is served, the sum of the average is the one described in paragraph 71(b) of the Act; or
- (b) in any other case, the average is the one described in paragraph 9(a) or (b) of the Act that was used to determine the date on which the employer became subject to the Act, for each employer in the group of employers.
Range — 100 to 499 employees
(3) The range of penalties in respect of a violation within a classification set out in column 1 of Part 2 of Schedule 3 is set out in column 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation, with respect to a violation committed by
- (a) an employer referred to in paragraph 127(2)(c) of the Act whose average number of employees is at least 100 but less than 500;
- (b) a group of employers for which the sum of the average of the number of employees of each of the employers in the group is at least 100 but less than 500; or
- (c) a bargaining agent representing some or all of the unionized employees of an employer referred to in paragraph (a) or of an employer that is in a group of employers referred to in paragraph (b).
Range — 500 employees or more
(4) The range of penalties in respect of a violation within a classification set out in column 1 of Part 3 of Schedule 3 is set out in column 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation with, respect to a violation committed by
- (a) an employer referred to in paragraph 127(2)(c) of the Act whose average number of employees is 500 or more;
- (b) a group of employers for which the sum of the average of the number of employees of each of the employers in the group is 500 or more; or
- (c) a bargaining agent representing some or all of the unionized employees of an employer referred to in paragraph (a) or of an employer that is in a group of employers referred to in paragraph (b).
Average
(5) For the purposes of paragraphs (3)(a) and (4)(a) the average is
- (a) if the employer has posted one or more notices under subsection 65(1) of the Act at the time the notice of violation is served, the average described in paragraph 69(a) or 70(a) of the Act, as the case may be, in respect of the most recently posted notice; or
- (b) in any other case, the average described in paragraph 8(b) or 9(b) of the Act that was used to determine the date on which the employer became subject to the Act.
Sum of the averages
(6) For the purposes of paragraphs (3)(b) and (4)(b)
- (a) if the employers in a group of employers have posted one or more notices under subsection 66(1) of the Act at the time the notice of violation is served, the sum of the average is the one described in paragraph 71(a) of the Act; or
- (b) in any other case, the average is the one described in paragraph 9(a) or (b) of the Act that was used to determine the date on which the employer became subject to the Act, for each employer in the group of employers.
Prior violations
(7) For the purposes of subsections (1), (3) and (4), only prior violations that the employer, group of employers or bargaining agent, as the case may be, is deemed or determined to have committed during the 10 years before the day on which the notice of violation is served and that are of the same classification are taken into account.
Range — person referred to in section 130 of the Act
58 (1) The range of penalties in respect of a violation referred to in section 130 of the Act within a classification set out in column 1 of Part 1 of Schedule 3 that is committed by a person referred to in any of the paragraphs of that section is set out in column 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation.
Range — employee, agent or mandatary
(2) The range of penalties in respect of a violation of subsection 23(2) or 24(1) or section 99, 100, 101, 102, 103 or 124 of the Act or subsection 52.1(1) of these Regulations or an order made or issued under section 119 or 170 of the Act within a classification set out in column 1 of a Part of Schedule 3 that is committed by an employer’s or bargaining agent’s employee, agent or mandatary in the course of their employment or the scope of their authority as agent or mandatary is
- (a) set out in column 2 of Part 1 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation, if the employer is referred to in paragraph 57(1)(a) or (b) or is in the group of employers referred to in paragraph 57(1)(c) or the bargaining agent is referred to in paragraph 57(1)(d), as case the may be;
- (b) set out in column 2 of Part 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation, if the employer is referred to in paragraph 57(3)(a) or is in the group of employers referred to in paragraph 57(3)(b) or the bargaining agent is referred to in paragraph 57(3)(c), as the case may be; and
- (c) set out in column 2 of Part 3 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation, if the employer is referred to in paragraph 57(4)(a) or is in the group of employers referred to in paragraph 57(4)(b) or the bargaining agent is referred to in paragraph 57(4)(c), as the case may be.
Range — other person
(3) The range of penalties in respect of a violation of subsection 24(1) or section 99, 100, 101 or 124 of the Act or subsection 52.1(1) of these Regulations, within a classification set out in column 1 of Part 1 of Schedule 3 that is committed by a person who is not referred to in subsection (2) or in section 130 of the Act and who is not an employer, a group of employers or a bargaining agent, is set out in column 2 for a first violation, in column 3 for a second violation and in column 4 for a third or subsequent violation.
Prior violations
(4) For the purposes of subsections (1) to (3), only prior violations that the person is deemed or determined to have committed during the 10 years before the day on which the notice of violation is served and that are of the same classification are taken into account.
Determination of penalty amount
59 (1) The amount of the penalty is determined by the formula
- ((A – B) × C ÷ 20) + B
- where
- A
- is the maximum amount in the applicable penalty range of penalties set out in column 2, 3 or 4, as the case may be, of the applicable Part of Schedule 3;
- B
- is the minimum amount in the applicable range of penalties set out in column 2, 3 or 4, as the case may be, of the applicable Part of Schedule 3; and
- C
- is the gravity value.
Gravity value
(2) Subject to subsection (3), for the purpose of subsection (1), the gravity value is the sum of the values from the gravity scale set out in column 2 of the table to this subsection that are ascribed to each of the applicable criteria set out in column 1. A lower or negative gravity value reflects a mitigating factor and a higher or positive gravity value reflects an aggravating factor.
| Item | Column 1 Criteria |
Column 2 Gravity Scale |
|---|---|---|
| 1 | The degree of negligence of the employer, group of employers, bargaining agent or other person | 0 to 4 |
| 2 | The degree to which the employer, group of employers, bargaining agent or other person might derive strategic or economic advantage from a continuing violation | 0 to 4 |
| 3 | The degree to which the employer, group of employers, bargaining agent or other person demonstrated disregard for the authority of the Pay Equity Commissioner | 0 to 4 |
| 4 | The manner in which the violation came to the Pay Equity Commissioner’s attention | - 2 to 4 |
| 5 | The steps taken by the employer, group of employers, bargaining agent or other person to mitigate or reverse the harm done by the violation | - 2 to 4 |
Zero gravity value
(3) If the gravity value would, but for this subsection, be a negative amount, it is deemed to be zero.
Service Authorized or Required Under Part 7 of Act
Service — employer or bargaining agent
60 A document that is required or authorized to be served under Part 7 of the Act on an employer or bargaining agent may be served by
- (a) leaving a copy of it at the employer’s or bargaining agent’s head office or place of business with its agent or mandatary or with an officer or other individual who appears to manage or be in control of the head office or place of business;
- (b) sending a copy of it by registered mail or courier to the head office or place of business of the employer or bargaining agent or its agent or mandatary; or
- (c) sending a copy of it by fax, email or other electronic means to anyone referred to in paragraph (a), and then sending a copy of it by registered mail or courier, in the manner set out in paragraph (b), within 48 hours after the time of the original transmission.
Service — person
61 A document required or authorized to be served under Part 7 of the Act on a person, other than an employer or bargaining agent, may be served
- (a) personally, by leaving a copy of it with the person at any place or, if it is not feasible to find the person, with someone who appears to be an adult member of the same household at the person’s last known address or usual place of residence;
- (b) by sending a copy of it by registered mail or courier to the person’s last known address or usual place of residence; or
- (c) by sending a copy of it to the person by fax, email or other electronic means, and then sending a copy of it by registered mail or courier, in the manner set out in paragraph (b), within 48 hours after the time of the original transmission.
Substitutional service
62 If a document that is required or authorized to be served under Part 7 of the Act cannot reasonably be served in accordance with section 60 or 61, as applicable, it may be served by leaving a copy of it at the employer’s, bargaining agent’s or other person’s last known address or place of business or, in the case of an individual, at the individual’s usual place of residence or workplace.
Proof of service
63 Service referred to in sections 60 and 61 may be proved by
- (a) an acknowledgement of service signed by or on behalf of the employer, bargaining agent or other person served, specifying the date and location of service; or
- (b) a certificate of service signed by the person who effected the service, stating that service was made on the employer, bargaining agent or other person named in the certificate and indicating the means by which and day on which service was effected.
Date of service
64 A document that is required or authorized to be served under Part 7 of the Act is deemed to be served on
- (a) in the case of service made in accordance with paragraph 60(a) or 61(a), the earlier of the day on which the acknowledgment of service is signed by or on behalf of the employer, bargaining agent or other person served and the day on which the certificate of service is signed by the person who effected service; and
- (b) in the case of service made in accordance with paragraph 60(b) or (c) or 61(b) or (c), the earlier of
- (i) the day on which the acknowledgment of service is signed by or on behalf of the employer, bargaining agent or other person served,
- (ii) the day on which the certificate of service is signed by the person who effected service, and
- (iii) the 10th day after the date indicated on the receipt issued by the post office or courier.
Request for Review
Manner
65 A request for review under section 139 of the Act must be made in writing by the party named in the notice of violation or by that party’s authorized representative.
Publication of Information
Other information
66 The following information is prescribed for the purposes of paragraph 146(d) of the Act with respect to an employer, a group of employers or a bargaining agent that is determined under section 142 of the Act, or that is deemed by the Act, to have committed a violation:
- (a) the city, town or other locality and the province where the employer, each employer in a group of employers or the bargaining agent is located;
- (b) in the case of a violation resulting from non-compliance with an order made or issued under the Act, the nature of the order;
- (c) the date on which the period to file a request for review elapsed or, if a request for review was filed during that period, the date on which the decision was rendered;
- (d) whether the employer, group of employers or bargaining agent has complied with the provision or order, the non-compliance of which gave rise to the violation, and, if applicable, the date of that compliance;
- (e) whether the employer, group of employers or bargaining agent has taken measures to counteract any consequences of the violation;
- (f) whether the employer, group of employers or bargaining agent has paid the penalty set out in the notice of violation and, if so, the date on which the amount was paid; and
- (g) whether, under section 144 of the Act, a certificate of default of payment has been issued and whether that certificate has been registered with the Federal Court.
16 The schedule to the Regulations is numbered as Schedule 1.
17 Schedule 1 to the Regulations is amended by replacing the references after the heading “SCHEDULE 1” with the following:
(Paragraphs 19(1)(b), 23(3)(a) and (b), 30(a) and 38.1(1)(b))
18 The Regulations are amended by adding, after Schedule 1, the Schedules 2 and 3 set out in the schedule to these Regulations.
19 The Regulations are amended by replacing “the schedule” with “Schedule 1” in the following provisions:
- a) paragraph 19(1)(b); and
- b) subparagraphs 23(3)(a)(i) and (ii).
20 The French version of the Regulations is amended by replacing “au titre de” with “aux termes de” in the following provisions:
- (a) paragraph 19(2)(a);
- (b) section 20;
- (c) paragraph 22(b);
- (d) subsections 23(1) and (4); and
- (e) the portion of section 30 before paragraph (a) and paragraph 30(c).
21 These Regulations come into force on the day on which they are registered.
SCHEDULE
(Section 18)
SCHEDULE 2
(Sections 55 and 56)
Classification of Violations
PART 1
| Item | Column 1 Provision |
Column 2 Classification |
|---|---|---|
| 1 | 12 | Serious |
| 2 | 13 | Serious |
| 3 | 14(1) | Minor |
| 4 | 14(2) | Minor |
| 5 | 15(1) | Minor |
| 6 | 15(2) | Minor |
| 7 | 16(1) | Serious |
| 8 | 17(1) | Serious |
| 9 | 19(1) | Minor |
| 10 | 19(3) | Minor |
| 11 | 21(1) | Minor |
| 12 | 21(2) | Minor |
| 13 | 22(1) | Minor |
| 14 | 22(2) | Minor |
| 15 | 23(1) | Serious |
| 16 | 23(2) | Serious |
| 17 | 24(1) | Serious |
| 18 | 24(2) | Serious |
| 19 | 25 | Minor |
| 20 | 26 | Minor |
| 21 | 27 | Minor |
| 22 | 28 | Minor |
| 23 | 29 | Minor |
| 24 | 30(6) | Serious |
| 25 | 32 | Minor |
| 26 | 35 | Minor |
| 27 | 41(1) | Minor |
| 28 | 43 | Minor |
| 29 | 44(1) | Minor |
| 30 | 46 | Minor |
| 31 | 47 | Serious |
| 32 | 51 | Minor |
| 33 | 52 | Serious |
| 34 | 53(1) | Serious |
| 35 | 53(2) | Minor |
| 36 | 54(2) | Minor |
| 37 | 55(1) | Serious |
| 38 | 55(2) | Minor |
| 39 | 56(1) | Minor |
| 40 | 56(2) | Minor |
| 41 | 57(2)(a) | Minor |
| 42 | 57(2)(b) | Serious |
| 43 | 57(3) | Minor |
| 44 | 60 | Serious |
| 45 | 61(1) | Serious |
| 46 | 61(2)(a) | Minor |
| 47 | 61(2)(b) | Serious |
| 48 | 61(2)(c) | Serious |
| 49 | 61(2)(d) | Serious |
| 50 | 62(1) | Serious |
| 51 | 62(2) | Serious |
| 52 | 62(3) | Serious |
| 53 | 62(4)(b) | Minor |
| 54 | 62(4)(c) | Serious |
| 55 | 62(4)(d) | Serious |
| 56 | 62(4)(e) | Serious |
| 57 | 62(4)(f) | Serious |
| 58 | 62(5) | Serious |
| 59 | 63(2) | Serious |
| 60 | 64 | Serious |
| 61 | 65(1) | Minor |
| 62 | 65(2) | Minor |
| 63 | 66(1) | Minor |
| 64 | 66(2) | Minor |
| 65 | 66(3) | Minor |
| 66 | 67(1) | Serious |
| 67 | 67(4) | Minor |
| 68 | 67(6) | Minor |
| 69 | 68(1) | Serious |
| 70 | 68(4) | Minor |
| 71 | 68(6) | Minor |
| 72 | 73 | Minor |
| 73 | 74 | Minor |
| 74 | 75 | Minor |
| 75 | 76 | Minor |
| 76 | 77 | Minor |
| 77 | 78(1) | Serious |
| 78 | 78(2) | Minor |
| 79 | 79(1) | Serious |
| 80 | 79(2) | Serious |
| 81 | 80 | Serious |
| 82 | 81(1) | Serious |
| 83 | 81(2) | Minor |
| 84 | 82(2) | Minor |
| 85 | 83(1) | Serious |
| 86 | 83(2) | Minor |
| 87 | 84 | Minor |
| 88 | 85(2)(a) | Minor |
| 89 | 85(2)(b) | Minor |
| 90 | 85(3) | Minor |
| 91 | 88(1) | Serious |
| 92 | 88(2) | Serious |
| 93 | 88(3) | Serious |
| 94 | 88(4) | Serious |
| 95 | 88(5) | Serious |
| 96 | 88(6) | Serious |
| 97 | 89(1) | Serious |
| 98 | 89(2) | Serious |
| 99 | 89(3) | Minor |
| 100 | 89(4) | Minor |
| 101 | 90(1)(a) | Serious |
| 102 | 90(1)(b) | Serious |
| 103 | 90(2)(a) | Serious |
| 104 | 90(2)(b) | Serious |
| 105 | 91(2) | Serious |
| 106 | 94(1)(b) | Serious |
| 107 | 97(1) | Serious |
| 108 | 98 | Very serious |
| 109 | 99 | Very serious |
| 110 | 100 | Very serious |
| 111 | 101 | Very serious |
| 112 | 102 | Very serious |
| 113 | 103 | Very serious |
| 114 | 120(4) | Serious |
| 115 | 124 | Serious |
| 116 | 158(2) | Minor |
| 117 | 158(4) | Minor |
PART 2
| Item | Column 1 Provision |
Column 2 Classification |
|---|---|---|
| 1 | 118(4) | Serious |
| 2 | 119 | Serious |
| 3 | 120(1) | Serious |
| 4 | 158(1)(b) | Serious |
| 5 | 158(3) | Serious |
| 6 | 159(1)(b)(ii) | Serious |
| 7 | 160(1)(b) | Serious |
| 8 | 160(1)(c) | Serious |
| 9 | 170 | Serious |
PART 3
| Item | Column 1 Provision |
Column 2 Classification |
|---|---|---|
| 1 | 3 | Minor |
| 2 | 4 | Minor |
| 3 | 5 | Minor |
| 4 | 6 | Minor |
| 5 | 7(1) | Minor |
| 6 | 7(2) | Minor |
| 7 | 8(1) | Minor |
| 8 | 8(2) | Minor |
| 9 | 9(1) | Minor |
| 10 | 9(2) | Minor |
| 11 | 10 | Minor |
| 12 | 19(1) | Minor |
| 13 | 19(3) | Minor |
| 14 | 20(1) | Minor |
| 15 | 22 | Minor |
| 16 | 23(1) | Minor |
| 17 | 23(2) | Minor |
| 18 | 23(3) | Minor |
| 19 | 25 | Minor |
| 20 | 26 | Serious |
| 21 | 30 | Minor |
| 22 | 31 | Minor |
| 23 | 33 | Minor |
| 24 | 34 | Minor |
| 25 | 35 | Minor |
| 26 | 36(1) | Minor |
| 27 | 36(2) | Minor |
| 28 | 37(1) | Minor |
| 29 | 37(2) | Minor |
| 30 | 38(1) | Minor |
| 31 | 38(2) | Minor |
| 32 | 38.1(1) | Minor |
| 33 | 38.1(2) | Minor |
| 34 | 41(1) | Minor |
| 35 | 41(2) | Minor |
| 36 | 41(3) | Minor |
| 37 | 42 | Minor |
| 38 | 44(1) | Minor |
| 39 | 44(1.1) | Minor |
| 40 | 44(2) | Minor |
| 41 | 45(1) | Minor |
| 42 | 46.1 | Minor |
| 43 | 47 | Minor |
| 44 | 48 | Minor |
| 45 | 49 | Minor |
| 46 | 50 | Serious |
| 47 | 51 | Minor |
| 48 | 52.1(1) | Serious |
| 49 | 52.1(2) | Serious |
SCHEDULE 3
(Subsections 57(1), (3) and (4), 58(1) to (3) and 59(1))
Penalties
PART 1
| Item | Column 1 Classification |
Column 2 Range of Penalties ($): |
Column 3 Range of Penalties ($): |
Column 4 Range of Penalties ($): |
|---|---|---|---|---|
| 1 | Minor | 500 to 1,000 | 1,000 to 1,500 | 1,500 to 2,500 |
| 2 | Serious | 2,000 to 3,000 | 3,000 to 4,500 | 4,500 to 7,000 |
| 3 | Very serious | 5,000 to 7,500 | 7,500 to 12,000 | 12,000 to 30,000 |
PART 2
| Item | Column 1 Classification |
Column 2 Range of Penalties ($): |
Column 3 Range of Penalties ($): |
Column 4 Range of Penalties ($): |
|---|---|---|---|---|
| 1 | Minor | 1,000 to 1,500 | 1,500 to 2,500 | 2,500 to 4,000 |
| 2 | Serious | 3,000 to 4,500 | 4,500 to 7,000 | 7,000 to 10,500 |
| 3 | Very serious | 8,000 to 12,000 | 12,000 to 18,000 | 18,000 to 40,000 |
PART 3
| Item | Column 1 Classification |
Column 2 Range of Penalties ($): |
Column 3 Range of Penalties ($): |
Column 4 Range of Penalties ($): |
|---|---|---|---|---|
| 1 | Minor | 3,000 to 4,500 | 4,500 to 7,000 | 7,000 to 10,500 |
| 2 | Serious | 9,000 to 13,500 | 13,500 to 20,000 | 20,000 to 30,000 |
| 3 | Very serious | 18,000 to 27,000 | 27,000 to 40,500 | 40,500 to 50,000 |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Pay Equity Act (Act) and Pay Equity Regulations require that employers in federally regulated workplaces with 10 or more employees proactively examine their compensation practices and ensure that workers in predominantly female job classes receive equal pay for work of equal value. The regime is administered and enforced by the Pay Equity Commissioner (Commissioner), who is a member of the Canadian Human Rights Commission (CHRC).
After the coming into force of the Act and the Pay Equity Regulations in 2021, a number of issues were identified related to implementation. While the Act requires employers or pay equity committees to establish and proactively update their pay equity plan, the Pay Equity Regulations were silent about how to update a plan if the employer has no predominantly male job classes. Additionally, the Pay Equity Regulations did not align with the Canada Labour Code (Code) provisions regarding minimum wages for federally regulated workplaces, complicating the calculation of hourly rates of pay for typical job classes. While employers were required to submit annual statements about the implementation of pay equity in their workplaces, there was no requirement to provide information about increases to the hourly rate of pay owed to predominantly female job classes receiving an increase in compensation, making it difficult to assess the impacts on the gender wage gap. There was also a lack of clarity regarding the deadlines for some groups of employers to post the notice of obligations, which could have inadvertently led to violations. Finally, the pay equity regime did not include regulatory provisions to operationalize an administrative monetary penalties (AMPs) system. Without a system of AMPs, the Commissioner did not have all the potential tools available to address non-compliance with the pay equity regime.
The Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments) [the Regulations] are intended to address these issues and to support the implementation of the pay equity regime.
Background
Pay equity regime
Pay equity is the concept of equal pay for work of equal value. It addresses systemic discrimination in compensation systems resulting from the undervaluation of work traditionally performed by women. Together, the Act and Pay Equity Regulations direct federally regulated public and private sector employers with 10 or more employees to take proactive steps to ensure they are providing equal pay for work of equal value. Employers regulated under the Act include private sector employers in the following sectors: transportation (road, air, rail, maritime); banks; telecommunications and broadcasting; postal and pipelines; grain handling; and public sector employers such as the Prime Minister’s Office and ministers’ officers; federal Crown corporations; the federal public service; the Royal Canadian Mounted Police and the Canadian Armed Forces.
Under the Act, employers must develop and implement a pay equity plan for their workplace. Employers who have been subject to the Act since it came into force in August 2021 must develop and post a pay equity plan by September 3, 2024. The Act requires employers with 10 to 99 employees, where some or all of the employees are unionized, and employers with more than 100 employees to form a pay equity committee made up of employer and employee representatives. This committee will be responsible for developing and updating the pay equity plan. Employers with 10 to 99 employees, with no unionized employees, can develop and implement a pay equity plan without having to establish a pay equity committee, although they can choose to form a committee voluntarily.
Process for updating pay equity plans
Under the Act, employers or pay equity committees are required to update the pay equity plan at least every five years to identify and correct any pay gaps that emerge after the initial posting of the plan. The Act and Pay Equity Regulations set out a three-step process that employers and pay equity committees must follow to update their pay equity plan: (1) collecting data; (2) analyzing workplace information; and (3) comparing compensation.
The Pay Equity Regulations require employers and pay equity committees to collect data in the form of snapshots, and to use them as the basis of the pay equity analysis. A snapshot is a point-in-time data set (e.g. gender predominance of a job class, compensation of a job class) that the Pay Equity Regulations deem to be representative of the workplace for a one-year period. Under the Pay Equity Regulations, the last snapshot used to develop the updated pay equity plan is considered representative of the workplace for the period between the date that the preceding snapshot was taken and the date that the updated plan is posted.
Employers or pay equity committees must then carry out a pay equity analysis of the data collected in each snapshot to identify any changes that are likely to have impacted pay equity since the more recent of the posting date of the initial or most recently updated plan or the previous snapshot.
Lastly, employers or pay equity committees must conduct a comparison of compensation to identify and measure the size of any pay equity gap.
The Pay Equity Regulations were silent on how to update pay equity plans where workplaces have no predominately male job classes.
Calculating the hourly rates of pay for a “typical job class”
The Pay Equity Regulations permit employers or pay equity committees of workplaces with no predominantly male job classes to choose between two methods when establishing their pay equity plans: the proxy method and the typical job class method. The proxy method requires that employers or pay equity committees select three or more predominantly male job classes from another organization or business covered by the Act to develop proxy male job classes in their plan. The typical job class method requires that employers create three fictional predominantly male job classes using the rules established in the Pay Equity Regulations.
The Pay Equity Regulations prescribe the methods to determine the minimum hourly rate of pay for each of the three fictional job classes under the typical job class method. The methods for the three fictional job classes were
- maintenance worker job class — the provincial minimum wage of the province where the work would be done or, if the work would be done in more than one province, the highest of those minimum hourly rates;
- technician job class — 2.5 times the provincial minimum wage of the province where the work would be done or, if the work would be done in more than one province, the highest of those minimum hourly rates; and
- manager job class — 3.33 times the provincial minimum wage of the province where the work would be done or, if the work would be done in more than one province, the highest of those minimum hourly rates.
Annual statement requirements
Employers are required to submit annual statements to the Commissioner with information on their pay equity plans, which enables the Commissioner to assess the implementation of the pay equity regime in federally regulated workplaces. Information that must be provided includes, but is not limited to
- the number of predominantly female job classes for which an increase in compensation is required; and
- the dollar amount and percentage of the increase in compensation for each job class for which an increase is required.
While the annual statement requirements under the Pay Equity Regulations collected certain information on increases to compensation owed to predominantly female job classes, they did not require employers to indicate what portion of the increase in compensation was due to increases to the hourly rate of pay owed to each predominantly female job class receiving an increase in compensation as opposed to non-pay benefits such as health or life insurance.
Posting the notice of obligation for groups of employers
The Act provides that two or more employers may apply to the Commissioner to be recognized as a group of employers under the Act, allowing them to develop a single pay equity plan as a group. When the Commissioner chooses to recognize the group of employers, the Act requires that the Commissioner must choose the day on which the group becomes subject to the Act. The day must be after one of the employers in the group became subject to the Act and is the earliest day that would give the group sufficient time to meet their obligations under the Act.
Under sections 14 and 15 of the Act, employers and groups of employers must post a notice of their obligations under the Act. Sections 7 and 8 of the Pay Equity Regulations further specified that the posting had to be made within 60 days after the day that they became subject to the Act. This notice includes information related to the employer’s responsibility to establish a pay equity plan and, as applicable, a pay equity committee, including the requirements for pay equity committee membership and the process for selecting or appointing its members. If the Commissioner set a date that the group of employers became subject to the Act that was more than 60 days before the day the Commissioner approved a group’s application, the group of employers would have been in violation of the requirement to post their notice of obligations within 60 days after the day that they become subject to the Act.
Administrative monetary penalties
The Act provides the Commissioner with powers to encourage compliance with the pay equity regime, including issuing notices of violation to parties who fail to comply with a provision of the Act or the Pay Equity Regulations or who contravene an order. The Act sets out that if the Commissioner has reasonable grounds to believe that a designated provision has been violated, the Commissioner may issue a notice of violation. The Act also prescribes the information that must be included in the notice of violation.
The Commissioner is empowered to conduct enforcement activities to verify compliance with the Act and the Pay Equity Regulations, including responding to complaints and conducting investigations and compliance audits. The Commissioner is supported by the Pay Equity Unit of the CHRC in exercising these enforcement activities to ensure compliance, either reactively in response to a complaint, or proactively based on the discretion of the Commissioner.
The Act also provides authority for the Governor in Council to make regulations with respect to specific aspects of the AMPs system, including designating contraventions of certain provisions of the Act and any regulations as violations, specifying the method of determining the amount of a penalty to be issued, and setting out other procedural details, such as how documents will be served.
The Act sets out the following maximum penalties per violation:
- up to $30,000 to employers and bargaining agents for violations related to workplaces with between 10 and 99 employees; and
- up to $50,000 to employers and bargaining agents for violations related to workplaces with 100 or more employees.
Under section 131 of the Act, the employer or bargaining agent is liable for violations committed by their employees, agents or mandataries acting in the course of their employment. This applies to employees who are pay equity committee members and who, under subsection 22(3) of the Act, are deemed to be at work when doing work of the committee.
Prior to these Regulations, no AMPs provisions existed under the Act.
Objective
The Regulations have the following objectives:
- Establish the process for updating pay equity plans in workplaces that have determined there are no predominantly male job classes;
- Ensure alignment between the Pay Equity Regulations and the federal minimum wage requirements under the Code if employers without predominately male job classes use typical job classes as a basis for analysis;
- Require the submission of additional information to better measure the impact of the pay equity regime on the gender wage gap;
- Ensure that each employer within a group of employers can comply with the posting deadline for a group of employers’ notice of obligations as set out in the Act; and
- Operationalize the AMPs system set out in the Act.
Description
The Regulations amend the Pay Equity Regulations to establish a process for updating pay equity plans in workplaces with no predominantly male job classes, revise the rules for calculating the hourly rates of pay for a “typical job class,” require additional information in the annual statement, amend the posting deadline for a group of employers to post their notice of obligations, and establish an AMPs system.
As a result of stakeholder feedback during prepublication, some changes were made to the Regulations as set out below.
- Changes were made to better align the French and English text and to provide more precision to provisions within the Regulations relating to the posting deadline for a group of employers’ notice of obligation, the method for calculating rates of pay for typical job classes, and the determination of monetary penalty amounts.
- A change was made to the Regulations to clarify how to calculate the sum of the average of the number of employees for a group of employers with respect to the monetary penalty range for workplaces with 10 to 99 employees.
- The Regulations were amended to require employers to submit the following additional information in the annual statement: their legal name; their business number, where available; and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan along, with the total number of employees holding positions in the predominantly female job class that is receiving an increase in compensation. Previously, the Regulations only required the number of women holding positions in that job class who are entitled to an increase in the hourly rate of pay to be reported.
- Minor changes were made to the Schedule of the Regulations to change the classification of violations from minor to serious for the following provisions:
- subsection 61(1), paragraph 62(4)(f), and subsection 88(4) of the Act, which require that compensation be paid according to established deadlines;
- subsections, 62(5), 88(5) and 88(6) of the Act, which require that interest be paid on lump sum payments;
- section 80 and subsection 81(1) of the Act, which require that that the revised pay equity plan be posted;
- subsections 89(1) and 89(2) of the Act, which require that employers submit an annual statement to the Commissioner; and
- subsection 97(1) of the Act, which is the requirement to pay interest on an amount the employer fails to pay.
- The Regulations were amended to designate the failure to comply with section 25 of the Pay Equity Regulations as a violation with a minor classification. This section requires the employer or pay equity committee to exclude any differences in compensation that would either increase or decrease the position’s compensation with what its compensation would otherwise be. Upon review, it was determined that this provision ought to have been designated as it establishes the same type of obligations as section 46 of the Act, which was designated and classified as minor.
The Regulations are summarized below.
Establish a process for updating pay equity plans in workplaces with no predominantly male job classes
In order to update their pay equity plans, the Regulations require employers and pay equity committees of workplaces with no predominantly male job classes to: (1) collect workplace data; (2) analyze workplace information; and (3) compare compensation. This process is based on the pre-existing process under the Pay Equity Regulations to establish the initial pay equity plan in workplaces with no predominantly male job classes.
Revise the rules for calculating the hourly rates of pay for a “typical job class”
The Regulations change the method for determining the rates of pay for the typical job classes to ensure alignment with the 2021 amendments to the Code. Employers regulated under Part III of the Code are required to pay their employees the higher of either the provincial minimum wage in the province where the employee is usually employed, or the new federal minimum wage.
The method to calculate the minimum hourly rates of pay for the maintenance worker job class has been changed to be the greater of either the federal minimum wage or the applicable provincial minimum wage. The applicable provincial minimum wage is determined as either the provincial minimum where an employer’s employees are usually employed or, if the employer’s employees work in more than one province, the highest provincial minimum wage amongst the provinces where they work.
The Regulations also lower the multipliers from 2.5 times to 1.2 times for the technician job class and from 3.33 times to 1.75 times for the manager job class, because when the new federal minimum wage rule under the Code is applied to the current multipliers for the technician and manager job classes, the result is a higher fictional minimum wage than real minimum wages currently paid to federally regulated employees in similar sectors.
While this change ensures that employers cannot use a rate of wages less than the minimum wage to calculate the pay of a typical job class, it does not impact pay increases for the predominately female job classes against which the typical job class is compared. This is because existing employees must already be paid at least the federal minimum wage for employers subject to Part III of the Code or are already paid at least the federal minimum wage for employers who are subject to the Act but not Part III of the Code.
Require additional information in the annual statement
To better equip the Commissioner to determine the impact of the pay equity regime on the gender wage gap, the Regulations require employers to submit the following additional information as part of their annual statements:
- the dollar amount of the increases in the hourly rate of pay owed to each predominantly female job class receiving an increase in compensation;
- the date that the increases in the hourly rate of pay are made or, if the increases are being phased in, the dollar amount of each annual increase and the date it is to be paid; and
- the number of women in the predominantly female job class receiving an increase in compensation who are entitled to an increase in the hourly rate of pay and the total number of employees holding positions in that predominantly female job class.
This information enables the Commissioner to isolate and compare changes to predominantly female job classes’ hourly rates of pay. It excludes pensions, as well as other payments and benefits received from the employer from the calculation of compensation.
To help the Commissioner better determine which employers are submitting annual statements and ensure that employer contact information is up to date, employers are required to submit the following additional information as part of their annual statements:
- their legal name;
- their business number, where available; and
- the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan.
Amend the posting deadline for a group of employers to post their notice of obligations
The Regulations revise when a group of employers must post their notice of obligations. Under the Regulations, a group of employers that becomes subject to the Act less than 60 days after they are recognized by the Commissioner as a group of employers are required to post their notice within 60 days of being recognized. A group of employers that becomes subject to the Act 60 days or more after they are recognized by the Commissioner as a group of employers are required to post their notice by the day that they become subject to the Act.
This ensures that each employer in a group of employers has adequate time to post the notice of obligations within their workplaces, and that employees receive the notice in a timely manner.
Establish an administrative monetary penalties system
The Regulations establish a framework for issuing AMPs in relation to designated provisions of the Act and Pay Equity Regulations with specified penalty ranges that take into account the size of the workplace and compliance history. The Schedule of the Regulations adds Schedules 2 and 3 to the Pay Equity Regulations. Schedule 2 sets out the designation of violations, while Schedule 3 establishes the ranges of penalties.
Designation of violations
Schedule 2 designates violations under the Act and Pay Equity Regulations. Only designated violations are subject to an AMP. Designated violations include contraventions of
- provisions setting out requirements for the development, posting and revision of pay equity plans;
- provisions related to making pay adjustments identified in pay equity plans;
- provisions prohibiting actions that harm employees or prevent the Commissioner from administering or enforcing the legislative regime; and
- orders made by the Commissioner under a designated provision of the Act.
Most of the obligations under the Act and Pay Equity Regulations relate to employers, though some obligations also apply to bargaining agents or other persons.
Method used to determine the amount of an AMP
The Regulations specify the method of determining the amount of an AMP in any given situation. The baseline penalty amount applicable to a violation varies depending on the type of violation and the category of violator. Each designated violation is classified as “minor,” “serious” or “very serious” based on the relative severity of the impact of non-compliance on the following factors:
- the ability to establish or update a pay equity plan in the workplace;
- the Commissioner’s ability to administer or enforce the legislative regime; and
- the financial impact of non-compliance on employees.
Provisions related to obligations such as posting notices, submitting annual statements, or other administrative provisions are categorized as minor. Provisions that set out key obligations in the pay equity process, such as requirements to establish a pay equity committee or to post a final pay equity plan, or require compliance with an order of the Commissioner, are categorized as serious. The classification of very serious is reserved for the violation of provisions that prevent the Commissioner from administering and enforcing the Act, such as obstructing the work of the Commissioner, or actions that have been taken that harm employees’ interests — such as reducing pay to achieve pay equity, or where there have been acts of reprisal for participation in the pay equity process.
The penalty range for a violation is determined by the role of the party who committed the violation, with different penalty ranges established for different sizes of workplaces, associated bargaining agents, and other persons. Within each category, the penalty range can also vary based on the classification of the violation and the compliance history of the party that has committed the violation.
The Commissioner determines penalty amounts within the applicable range on a case-by-case basis, using a list of aggravating and mitigating criteria to assess the gravity of the incidence of non-compliance. Each gravity criterion is assessed on a point scale. The sum of the points assessed for all of the gravity criteria is the gravity value. The gravity value will be used as part of a formula to determine the penalty amount that would apply within the applicable penalty range.
| Classification | First violation | Second violation | Third and subsequent violations |
|---|---|---|---|
| Minor | 500 to 1,000 | 1,000 to 1,500 | 1,500 to 2,500 |
| Serious | 2,000 to 3,000 | 3,000 to 4,500 | 4,500 to 7,000 |
| Very serious | 5,000 to 7,500 | 7,500 to 12,000 | 12,000 to 30,000 |
| Classification | First violation | Second violation | Third and subsequent violations |
|---|---|---|---|
| Minor | 1,000 to 1,500 | 1,500 to 2,500 | 2,500 to 4,000 |
| Serious | 3,000 to 4,500 | 4,500 to 7,000 | 7,000 to 10,500 |
| Very serious | 8,000 to 12,000 | 12,000 to 18,000 | 18,000 to 40,000 |
| Classification | First violation | Second violation | Third and subsequent violations |
|---|---|---|---|
| Minor | 3,000 to 4,500 | 4,500 to 7,000 | 7,000 to 10,500 |
| Serious | 9,000 to 13,500 | 13,500 to 20,000 | 20,000 to 30,000 |
| Very serious | 18,000 to 27,000 | 27,000 to 40,500 | 40,500 to 50,000 |
| Level | Gravity criterion | Point value |
|---|---|---|
| 1 | The degree of negligence of the violating party | 0 to 4 |
| 2 | The degree to which the violating party might derive strategic or economic advantage from continued non-compliance | 0 to 4 |
| 3 | Demonstrated disregard for the authority of the Commissioner | 0 to 4 |
| 4 | The manner in which the violation came to the Commissioner’s attention | –2 to 4 |
| 5 | The steps taken to mitigate or reverse the harm done by the violation | –2 to 4 |
Service of documents in relation to AMPs
The Regulations establish requirements for the service of documents related to AMPs, including notices of violation and any review decision by the Commissioner. Service will be made to employers, groups of employers, and bargaining agents by
- leaving a copy at the head office or place of business with an officer of the employer or bargaining agent or other individual who appears to manage or be in control of the office or place of business, or with an agent or mandatary of the employer or bargaining agent;
- sending a copy by registered mail or courier to the head office or place of business of the employer or bargaining agent, or its agent or mandatary; or
- sending a copy by electronic means to the head office or place of business, followed by a copy sent by registered mail or courier within 48 hours.
Similarly, service will be made to persons by
- leaving a copy with the person or with adult members of the person’s household;
- sending a copy by registered mail or courier to the person’s last known residential address, or usual residence; or
- sending a copy to the person by electronic means followed by a copy by registered mail or courier within 48 hours.
The Regulations also set requirements for substitutional service and for establishing proof of service.
Additional information that may be published in relation to AMPs
The Act allows for the names and information regarding employers, employers within groups of employers or bargaining agents who have received an AMP to be made publicly available. Naming of violators provides an incentive for employers and bargaining agents to comply with the Act. Violators may only be identified once a penalty imposed under the AMPs system is final — meaning it has been paid, or all review provisions under the Act have been exhausted.
The Regulations expand the categories of information that may be published in order to further deter non-compliance. This additional information includes the city and province where the violator is located, the nature of the order in the case of a violation resulting from non-compliance with an order, the date on which the period to file a request for review either elapsed or a review decision was made, whether compliance was achieved and the date, whether the set penalty was paid and the date and whether the payment is in default.
Regulatory development
Consultation
In developing the Regulations, the Labour Program consulted with employer and employee representatives, union representatives, national Indigenous organizations, industry experts and advocacy experts through a survey on the proposed AMPs regime with the option to provide additional comments, if desired. A discussion paper was also sent to stakeholders asking detailed questions on the proposed AMPs regime and on the other areas addressed in the Regulations, including the proposal to update information required to be provided in annual statements to the Commissioner and the proposal to establish a process for updating pay equity plans for employers with no predominantly male job classes. Both the discussion paper and survey were sent out in May 2022 with responses requested by June 2022.
Of the 210 stakeholder organizations who were invited to participate in the survey and discussion paper consultations, 35 completed the survey, including employers, employer organizations, employees, and unions, with 28 stakeholders providing comments as well as answering the questions. In addition, 10 stakeholders provided written submissions on the discussion paper.
Stakeholder feedback was positive overall. Employer and employee representatives were generally in favour of the initiative and supportive of the new compliance and enforcement tools. Related to AMPs, the majority of employer and employee representatives agreed with offering a penalty range for violations, and that penalty amounts should be determined on a case-by-case basis using prescribed gravity criteria. Employers advocated for clear and transparent rules and emphasized the need for communication and education by the Commissioner before an AMP is issued. Employee representatives generally expressed that the proposed penalty amounts were sufficient; however, some representatives expressed concern that penalty ranges were too low to deter large employers from undertaking repeated violations.
Some employers also expressed concern that the new annual statement requirements could increase their administrative burden should the requirements be expanded through the Regulations. There was no employer or employee feedback received on the other measures.
The Regulations are based on stakeholder feedback from the consultations. Related to AMPs, the provisions establish penalty ranges for minor, serious or very serious violations that take into account employer size and compliance history. They also define gravity criteria that describe factors the Commissioner will take into consideration when determining the penalty amount for a specific violation.
The Regulations respond to employer concerns regarding the potential administrative burden of additional statement requirements by limiting the new required information to (1) the dollar amount of the increase in the hourly rate of pay provided to predominantly female job classes receiving an increase in compensation; (2) the date or dates that the increases in the hourly rate of pay were made; (3) the number of women holding positions in the predominantly female job class receiving an increase in compensation who are entitled to an increase in the hourly rate of pay; and (4) the total number of employees holding positions in that predominantly female job class.
Prepublication in the Canada Gazette, Part I
The Regulations were prepublished in the Canada Gazette, Part I, on November 18, 2023, followed by a 30-day comment period.
A total of 15 submissions were received from interested parties, including three individuals, two employers, one employer association, eight unions and the CHRC. Comments were received through the Canada Gazette’s Online Regulatory Consultative System and by email.
Generally, stakeholders endorsed the Regulations and the AMPs system as a mechanism to advance pay equity in federally regulated workplaces. The majority of comments requested clarifications or recommended minor changes to the proposed approach. Some stakeholders commented on topics they had raised in earlier consultations on the Act, Pay Equity Regulations, and earlier consultations for these Regulations. These included matters such as the service of documents, the rules for multiple violations of the same provision, and the proxy method for workplaces with no predominantly male job classes. All comments raised in earlier consultations were considered in the development of the Regulations.
Some comments requested clarification in the Background section of the Regulatory Impact Analysis Statement. In response, the following changes were made:
- Additional detail was added on public sector employers regulated under the Act, such as the Prime Minister’s Office and ministers’ offices, to provide a more comprehensive list of the types of employers who are subject to the Act.
- Clarifications were made regarding the requirement to establish a pay equity committee for unionized and non-unionized workplaces to ensure the rule is easily understood by readers of the Regulatory Impact Analysis Statement.
- Information was added detailing that the Pay Equity Unit of the CHRC will support the Commissioner in undertaking enforcement activities to better describe the roles and responsibilities for overseeing pay equity at the CHRC.
- Clarifications were made that the maximum monetary penalties established in the Act are per violation to ensure that the Regulatory Impact Analysis Statement more accurately reflects the Act.
The following paragraphs provide a thematic summary of the consideration given to the key comments submitted by stakeholders when finalizing the Regulations. As detailed below, in some cases, changes were made to the Regulations in response to stakeholder feedback.
Alignment between the French and English text
Several stakeholders proposed changes to the Regulations to better align the French and English text and to improve the clarity of specific passages. The proposals were carefully considered, and changes were made as set out in the Description section.
Process for updating pay equity plans
The Regulations permit employers of workplaces with no predominantly male job classes to choose between two methods to collect the data needed to update their pay equity plans: the proxy method or the typical job class method. The data must be collected each year and form the basis of the pay equity analysis. Two unions suggested that employers of these workplaces should not be allowed to alternate between the two methods each year because in their view this approach is not workable. They further asked for clarification as to why this approach was chosen. The Regulations allow this option to give employers the flexibility to change methods in instances where one method is not available or feasible. For example, since the proxy method relies on another employer’s willingness to share their workplace data, there are instances where the proxy method may not be available from one year to the next. In those instances, the Regulations permit the employer to instead use the typical job class method. Moreover, it is unlikely that employers would attempt to switch between the methods when updating plans without good reason due to the significant amount of time and effort involved with changing methods compared to staying with the same method, and the challenges they may face in securing a proxy employer willing to provide employment data. As such, no changes were made to the Regulations.
Two unions suggested that the Regulations should specify that employers of workplaces with one or two predominantly male job classes should follow the method to update pay equity plans for workplaces with no predominantly male job classes. This suggestion deviates from the policy intent under the Act, which establishes separate processes for workplaces with any number of predominantly male job classes and for those with no predominantly male job classes. While the above comments will be considered in the context of future reviews of the Pay Equity regime, they are beyond the scope of this regulatory package. As such, no changes were made to the Regulations.
Calculating the hourly rates of pay for a “typical job class”
Five unions expressed concerns that the changes made by the Regulations to the method prescribed for determining the rates of pay for the typical job classes result in fictional wages that are not representative of real wages currently paid to federally regulated employees in similar sectors. The changes made are intended to align the Pay Equity Regulations with the federal minimum wage requirements under the Code and to ensure that employers using the typical job class method create fictional wages that represent the minimum rate of pay for each job class, not the real wages or average rate of pay for each job class. As such, no changes were made to the Regulations.
Annual statement requirements
The CHRC and one union pointed out that the Regulations do not require employers to report in the annual statement the total number of employees in the job class receiving an increase in the hourly rate of pay. Upon further analysis, it was determined that this information is necessary for the Commissioner to properly isolate and compare changes to predominantly female job classes’ hourly rates of pay. In response to this feedback, the Regulations were amended to require that employers include in the annual statement the total number of employees holding positions in the predominantly female job class where increases in compensation were made.
The CHRC recommended that the annual statement requirements include the legal name of the employer, the registered business number of the employer and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan. They noted that this information would help better determine which employers are submitting annual statements and ensure that employer contact information is up to date. In response to this feedback, the Regulations were amended to require this new information through the annual statement. This will support the Commissioner’s compliance activities with minimal new administrative burden for employers. The changes are described more fully under the small business lens and one-for-one rule sections of this document.
Five unions recommended that employers be required to submit additional information on company size, dates of postings, and the use of external resources as part of their annual statements. They further proposed that the annual statement require data on female job classes that are not receiving wage increases, an assessment of the impacts of these increases, and the number of new jobs added to the bargaining unit or workplace. These stakeholders emphasized that providing additional information could support the Commissioner in more effectively monitoring the pay equity regime and enforcing compliance. These comments were carefully considered and it was determined that the pay equity regime’s annual statement requirements strike the balance between providing the Commissioner with the necessary information to effectively enforce the regime, without creating undue administrative burden for employers. As a result, these additional annual statement requirements have not been added to the Regulations.
Posting the notice of obligation for groups of employers
Three unions requested that the Regulations establish a 60-day window after an employer becomes subject to the Act within which the employer can, with one or more other employers, submit a request to the Commissioner to be recognized as part of a group of employers under the Act. The stakeholders argued that the current rules, which allow employers to request to be a group of employers at any time, could be used by employers as a delay tactic and to secure additional time to complete their pay equity plan. This suggestion was examined and it was determined that a 60-day time limit is not feasible, as there may be circumstances where a group of employers may need to seek recognition as a single employer more than 60 days after they become subject to the Act. Further, when a group of employers apply to be considered a single employer, there is no guarantee that the Commissioner will grant their request. If rejected, these employers would be required to post a pay equity plan within three years of becoming subject to the Act. If the request is approved, the group would have three years from the time they become subject to the Act as a group of employers to post their pay equity plan. The Commissioner establishes the date that the group of employers become subject to the Act and can set a date retroactively to prevent misuse of the application process for delaying the posting of the pay equity plan. In light of this rationale, no changes were made to the Regulations.
Administrative monetary penalties
Designation and classification of violations
Two unions suggested changing the classification from minor to serious for each step of the process to establish and update pay equity plans. They expressed concerns that any errors undertaken during these steps could result in inaccurate compensation payouts to workers in the predominantly female job classes. These steps are considered minor violations as they are supporting steps in the process to establish or update a pay equity plan and pay compensation increases. Further, non-compliance with these provisions could arise out of human errors due to the complex nature of the prescribed processes. As such, no changes were made to the classification of these provisions.
Related to this, one stakeholder recommended that non-compliance with the legislative requirement to include prescribed elements in the posted pay equity plan be classified as serious instead of minor. The prescribed elements include the number of pay equity plans that must be established, the number of employees, and information on job classes, the value of work and differences in compensation. As it was determined that this requirement has no impact on the main requirements to establish and post a pay equity plan, which remain classified as serious, no changes were made to the classification of this requirement.
Two unions underlined the need to change the classification from minor to serious for the designated provisions related to operating and supporting the work of a pay equity committee, as a violation of these provisions would jeopardize the committee’s ability to develop a pay equity plan that meets the regime’s objectives. This includes requirements regarding the composition of the pay equity committee, seeking permission from the Commissioner to establish a pay equity plan without a pay equity committee and undertaking measures to support the committee. As it was determined that these provisions have no impact on the main requirement to establish a pay equity plan with a committee, which remain classified as serious, no changes were made to the classification of these requirements.
Three unions suggested classifying as serious instead of minor all requirements related to the requirements to pay compensation, pay interest, or make lump sum payments. Upon further analysis, it was determined that these provisions are essential to the effective implementation of pay equity within workplaces and, subsequently, their classification was changed from minor to serious. Other provisions requiring employers to establish a schedule to phase in compensation increases were maintained as minor violations as it was determined that non-compliance with these provisions has no impact on the main requirements to make compensation payments.
One union raised the need to change the classification from minor to serious for the requirement to post the revised pay equity plan. Upon review, it was determined that this requirement meets the test for serious classification as posting the revised pay equity plan once it has been updated is a key requirement of the pay equity regime and is equal in importance to the requirement to post the initial pay equity plan. Therefore, the recommended change was made to align with the serious classification assigned to provisions that require employers to post the draft and final pay equity plan.
One union and the CHRC suggested changing the classification from minor to serious for the provisions establishing the requirement to submit prescribed information through the annual statement. The annual statement requires information on the employer, the date the pay equity plan was most recently posted, compensation, and hourly wage increases to predominantly female job classes. The stakeholders argued that failing to submit the required information would significantly impact the Commissioner’s ability to administer and enforce the pay equity regime and to measure the regime’s impact on the gender wage gap in federally regulated workplaces. Upon further analysis, it was determined that the information provided through the annual statement is essential for the Commissioner to identify and communicate with employers, and analyze progress made in closing the gender wage gap. As a result, the classification was changed from minor to serious for provisions related to the annual statement in order to ensure that employers submit the annual statements completely and on time.
Several suggestions were received to change the classification of different provisions from serious to very serious. Namely, two unions suggested that requirements to keep records be classified as very serious instead of serious because these elements are key to the regime and violations could lead to irreparable consequences. While record keeping is an important component of the pay equity regime, it was determined that this requirement does not meet the test for a very serious violation as it does not reduce compensation in order to achieve pay equity, obstruct the Commissioner from administering or enforcing the regime, involve knowingly making false or misleading statements, nor involve acts of reprisal against employees or persons involved in the pay equity process. As a result, no changes were made to the classification of these provisions.
Similarly, one union recommended that the requirement to establish a pay equity plan be classified as very serious instead of serious as it is the purpose of the Act to produce pay equity plans by which to measure and correct any gender wage gaps. This requirement does not constitute a very serious violation, given that establishing the pay equity plan is only one step in the process to proactively examine compensation practices and ensure that workers in predominantly female job classes receive equal pay for work of equal value. Further, the failure to establish a pay equity plan does not hinder the Commissioner’s ability to administer or enforce the pay equity process. As such, no changes were made to the classification of this provision.
Lastly, one union recommended changing the classification from minor to serious for two provisions related to orders or directions by the Commissioner: the requirement to provide the Commissioner with pay equity plan amendments following an order to amend the pay equity plan, and the requirement to post within the specified period a decision or document issued by the Commissioner. The stakeholder argued that these provisions should be classified as serious because they are violations of orders of the Commissioner that should not be ignored. Both provisions were determined to not meet the test of a serious violation because they themselves are not an order by the Commissioner. Rather they describe requirements that could be enforced via an order by the Commissioner. As a result, no changes were made to the classification of these provisions.
Application of administrative monetary penalties
Penalty ranges
Three unions expressed concerns regarding penalty amounts, reiterating concerns conveyed in earlier consultations that penalty maximums prescribed in the Act are insufficient to compel compliance. To address these concerns, the stakeholders proposed indexing penalty amounts to inflation. The Act does not provide authority for the maximum penalty amounts to be adjusted according to inflation. As such, it would not be possible to prescribe penalty ranges in the Pay Equity Regulations that index to inflation. For this reason, no changes were made to the Regulations.
One union further suggested designating all violations as serious or very serious and imposing the maximum penalty of $30,000 for each violation committed in a workplace with up to 99 employees and $50,000 for each violation in a workplace with 100 or more employees. The Regulations designate violations according to the relative severity of the impact of non-compliance. No changes were made in response to these comments as the suggestions counter the policy rationale for penalty ranges.
Imposing penalties
One employer noted a lack of specificity in the Regulations regarding the application of AMPs in various circumstances, such as prescribing an interval period between individual violations (i.e. daily, monthly, etc.) or setting out the process in instances where the pay equity process is slowed due to delayed decisions by the Commissioner. They contended that this information would assist employers in understanding the full cost implications of violations and the repercussions in situations where violations occur beyond their control. Two unions further highlighted a lack of clarity in the Regulations regarding the number of warnings that would precede the issuance of an AMP.
The Regulations establish a process by which the Commissioner determines penalty amounts on a case-by-case basis. Under the Regulations, the Commissioner uses the prescribed formula and a prescribed list of aggravating and mitigating criteria to assess the gravity of an incidence of non-compliance. Further, the CHRC will be developing guidelines on how AMPs will be determined in different circumstances. Therefore, no changes were made to the Regulations.
Public notice for investigations
One union proposed that the Regulations should mandate employers and bargaining agents to make public a notice indicating a compliance investigation is underway and to identify the names of the firms or consultants under investigation.
During an investigation, the Act establishes that the Commissioner will issue a notice to relevant workplace parties, informing them of the commencement of an investigation into a dispute, objection, or complaint. This ensures transparency for the implicated workplace parties. As the Act already establishes the circumstances when information can be made public, no changes were made to the Regulations.
Gravity criteria
The Regulations establish that penalty amounts are determined within the prescribed penalty ranges on a case-by-case basis, using the list of prescribed gravity criteria. Each gravity criterion is assessed on a point scale. The first three criteria, the degree of negligence of the violating party, the degree to which the violating party might derive strategic or economic advantage from continued non-compliance and the demonstrated disregard for the authority of the Commissioner, have a point range from 0 to 4. The last two gravity criteria, the manner in which the violation came to the Commissioner’s attention and the steps taken to mitigate or reverse the harm done, have a point range from −2 to 4. The negative point values in the last two criteria account for instances where employers take certain actions to mitigate the negative impacts of violations. Three unions expressed concern that the negative gravity values could have the effect of artificially and unfairly reducing the amount of a monetary penalty. They suggested instead that the lowest step on the severity scale for the last two gravity criteria should be 0 instead of −2.
The negative values in items 4 and 5 of the gravity criteria are designed to promote behaviours such as prompt voluntary reporting and undertaking mitigation activities quickly. As such, no changes were made to the Regulations.
Reduced penalties for early payments
One employer suggested adding a provision to reduce the penalty amount when an early payment is made. In the 2022 consultations on the proposed regulatory approach, a number of stakeholders expressed concerns with the difficulty that employers would have paying fines in a short period of time after receiving notice of the violation in order to receive the reduced penalty. Using gravity criteria allows the Commissioner to determine penalty amounts by assessing the gravity of the incidence of non-compliance and is intended to promote compliance. Therefore, the suggestion to reduce penalties for early payments was not adopted.
Penalties for bargaining agents
Three unions raised concerns about the application of AMPs to bargaining agents. They stated that bargaining agents should not bear the same penalty ranges as employers in the case of a violation. Instead, they asked that the application of AMPs be limited to specific obligations incumbent on bargaining agents and proposed that all bargaining agents be subject to the scale of penalties for small workplaces with 10 to 99 employees.
Most of the obligations under the Act and the Pay Equity Regulations relate to employers, though some obligations also apply to bargaining agents or other persons. Applying the same penalty ranges to bargaining agents as employers for those provisions of the Act and Pay Equity Regulations is designed to consider the harm of non-compliance with those provisions, regardless of the party responsible for the violation.
Modern treaty obligations and Indigenous engagement and consultation
In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, a modern treaty implications assessment was conducted. There were no impacts on modern treaties identified in relation to these Regulations.
Indigenous-owned federally regulated private-sector businesses are subject to the Act. As such, National Indigenous Organizations and Indigenous-owned federally regulated businesses were invited by email to provide feedback on the discussion paper and take part in the online survey. No written submissions or survey responses were received from stakeholders representing Indigenous organizations.
The Act provides that employers who are Indigenous governing bodies (IGBs) are excluded from the application of the Act until a date specified by the Governor in Council. The Regulations, therefore, do not affect these employers at this time. A collaborative engagement process has been initiated with Indigenous partners to collect their views on the Act itself and see how it can be tailored to ensure positive results in an Indigenous context.
Instrument choice
The Regulations are necessary to make technical amendments to the Pay Equity Regulations and to introduce provisions enabling the use of the AMPs regime to ensure compliance with the requirements of the Act and Pay Equity Regulations. As there is no other instrument (e.g. internal policies or operational policy directives) that could attain the objectives sought, regulatory amendments are required.
Regulatory analysis
Benefits and costs
Updates following prepublication
The cost and benefit estimates have been updated following the addition of new annual statement requirements to the Regulations. Under the new requirements, employers must provide in the annual statement the total number of employees holding positions in the predominantly female job class that is receiving an increase in compensation. They must also provide their legal name, their business number, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan. As a result, the total present value of costs changed from $3,905,965 to $4,069,195. Of these total costs, the administrative costs borne by business changed from $593,999 to $755,210 and the administrative costs borne by the government changed from $16,929 to $18,948. There were no changes to the compliance costs for business or government.
Costs
The costs associated with the Regulations over a 10-year period are estimated at $4,069,195. Of these total costs, $755,210 will be administrative costs incurred by businesses, $18,948 will be administrative costs incurred by government, $3,062,479 will be compliance costs incurred by government and $232,557 will be compliance costs incurred by businesses. No costs will be passed on to workers or consumers from the regulatory package.
Benefits
The Regulations facilitate employers and pay equity committees being able to comply with the requirements set out in the Act within legislated time limits and ensure that the Commissioner has the information required to properly measure the pay equity regime’s impact on the gender wage gap. The Regulations also promote increased compliance with the Act and Pay Equity Regulations, thereby contributing to reducing the gender wage gap in federally regulated workplaces.
Costs
- Period: 2024–2025 to 2033–2034
- Price year: 2019
- Present value base year: 2024
| Impacted stakeholder | Description of cost | Type of cost | Year 1 | Year 3 | Year 6 | Year 10 | Total (present value) | Annualized value |
|---|---|---|---|---|---|---|---|---|
| Industry | Updating pay equity plans in workplaces with no predominantly male job classes | Compliance | $30,096 | $18,966 | $76,471 | $11,811 | $232,557 | $33,111 |
| Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | Administrative | $114,505 | $100,013 | $57,634 | $43,969 | $755,210 | $107,525 | |
| Government (RCMP) | Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | Administrative | $90 | $78 | $64 | $49 | $674 | $96 |
| Government (Core Public Administration) | Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | Administrative | $1,370 | $1,197 | $977 | $745 | $10,297 | $1,466 |
| Government (Canadian Armed Forces) | Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | Administrative | $89 | $78 | $63 | $48 | $667 | $95 |
| Government (Separate Agencies) | Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | Administrative | $1,022 | $893 | $644 | $491 | $7,310 | $1,041 |
| Government (Canadian Human Rights Commission) | Receiving submission of additional information in annual statements to facilitate measuring the impact of the pay equity regime on the gender wage gap | Compliance | $115,760 | $150,811 | $123,106 | $93,917 | $1,240,701 | $176,648 |
| Government (Canadian Human Rights Commission) | Operationalizing the AMPs system | Compliance | $544,455 | $210,284 | $148,246 | $60,218 | $1,821,779 | $259,380 |
| All stakeholders | Total costs | Compliance | $690,311 | $380,060 | $347,824 | $165,946 | $3,295,036 | $469,139 |
| Total costs | Administrative | $117,076 | $102,259 | $59,382 | $45,302 | $774,159 | $110,223 | |
| Total costs | All | $807,388 | $482,319 | $407,206 | $211,248 | $4,069,195 | $579,363 |
The timeframe for this analysis is 10 years, from 2024–2025 to 2033–2034. Each year’s timeframe is April 1 to March 31. All costs are calculated in 2019 price year. To calculate present value (PV), a discount rate of 7% was used, as recommended by the Canadian Cost-Benefit Analysis Guide for the evaluation of regulations, projects, programs or other government initiatives. The costs appearing below are in 2024 present value terms.
Sources of information for costing
The number of employers and employees were derived from the 2015 Federal Jurisdiction Workplace Survey (FJWS). The 2015 employer counts are used as is. The number of employers in the federally regulated private sector is expected to change very little and there is no reliable way of updating the count. Hourly wage rate estimates were obtained from the 2019 Labour Force Survey (LFS). These wage estimates are based on the proxy for federal jurisdiction employees using four-digit North American Industry Classification System (NAICS) codes for three employer sizes: small (10 to 99 employees), medium (100 to 499 employees) and large (500 or more employees). The hourly wage estimates by federally regulated employers were then multiplied by the weight of each industry to obtain the average hourly wage of employees. The estimated wage rates were then marked up by 25% for non-wage benefits and other overheads (e.g. accommodation). This is the standard overhead proportion used by the Treasury Board Secretariat (TBS). Following this 25% markup, the following 2019 hourly wage estimates were used for the purposes of this analysis: $44 for small companies, $46 for medium-sized companies and $50 for large companies.
The wage estimate for the Canadian Armed Forces was obtained using the four-digit North American Industry Classification System (NAICS) code 9111. This NAICS code comprises establishments of the Canadian Armed Forces and civilian agencies primarily engaged in providing defence services. This wage estimate was marked up by 25% for non-wage benefits and other overheads. Following this markup, a wage of $58 was used. The number of separate federal public service agencies as well as their employee counts are sourced from the Treasury Board Secretariat. A wage of $65 per hour was used for the RCMP, the core public administration, and the separate agencies.
Assumptions about the labour time required to complete various tasks was partly based on input obtained from a consultant specializing in pay equity plans during the development of the Pay Equity Regulations. Assumptions to estimate the cost to government as an employer were based on input provided by the Treasury Board Secretariat.
Costs to businesses
Federally regulated private sector employers, including Crown Corporations, are expected to incur costs due to the requirements to update pay equity plans in workplaces with no predominantly male job classes and to provide additional information in their annual statements.
Updating pay equity plans in workplaces with no predominantly male job classes
The Regulations establish the process for updating pay equity plans for employers or pay equity committees in workplaces where there are no predominantly male job classes.
The costing of this item was completed only for small (10 to 99 employees) and medium-sized businesses (100 to 499 employees), since large companies (500 or more employees) are assumed to have multiple job classes due to their size. For this reason, large companies are not expected to encounter a situation where there are no predominantly male job classes and the cost for large companies to comply is zero.
The costing assumes that 5% of small employers (179 employers) and 2% of medium-sized employers (11 employers) do not have any predominantly male job classes.
The cost to employers to train employees on the regulatory compliance requirements is calculated by assuming that it will take one employee a total of 1 hour to complete this task in both small and medium-sized employers. This amount of time is then multiplied by the number of small and medium-sized employers with no predominantly male job classes and by the average hourly federal jurisdiction employee wage in each of these two employer size categories. The costing assumes that this training will take place in year 1 (2024–2025).
The estimated cost to small employers is $7,876, which is equivalent to a cost of $44 per employer on average, while the cost to medium-sized employers is $506, which is equivalent to a cost of $46 per employer on average. The total onetime cost to small and medium employers of the time required to familiarize themselves with the regulatory requirements will be $8,382 ($44 per employer on average).
Employers will have to produce annual snapshots every year, for a total of 10 snapshots over the 10-year period. The cost to employers to produce these 10 snapshots is calculated by assuming that small employers will require a total of 2.5 employee hours to produce a snapshot while medium-sized employers will require a total of 4 employee hours. Employers can opt to spread these hours between more than one employee. These hours were then multiplied by the total number of snapshots (10), the estimated number of small and medium-sized employers with no predominantly male job classes and the average hourly federal jurisdiction employee wage in each of these two employer size categories.
The estimated cost to small employers is $147,975, or $827 per employer on average, while the cost to medium-sized employers is $15,211, or $1,383 per employer on average. The total cost to employers to produce these 10 snapshots is $163,186 ($859 per employer on average).
Employers will also have to apply the proxy method or the typical job class method in year 6 (2029–2030) in order to be able to update their pay equity plan. The costing assumes that 40% of employers (76 employers; 72 small and 4 medium-sized) will use the proxy method while 60% (114 employers, 107 small and 7 medium-sized) will apply the typical job class method.
The cost to employers to apply the proxy method is calculated by assuming that it will take small employers a total of six employee hours to apply this method while medium-sized employers will require a total of nine employee hours. At the same time, small employers will require 1 hour to apply the typical job class method while medium-sized employers will require 1.5 hours. These hours are then multiplied by the number of small and medium-sized employers with no predominantly male job classes that will use each of these methods and the average hourly federal jurisdiction employee wage in each of these two employer size categories.
Small employers applying the proxy method will incur a total cost of $13,552, which is equivalent to a cost of $188 per employer on average, while medium-sized employers will incur a total cost of $1,181, or $295 per employer on average.
At the same time, small employers applying the typical job class method will incur a total cost of $3,357, which is equivalent to $31 per employer on average, while medium-sized employers will face costs of $344, or $49 per employer on average. The total cost to employers to apply these methods would be $18,434 ($97 per employer on average).
Employers will also incur costs for analyzing the first five snapshots and updating their pay equity plans. These costs will also be incurred in year 6 (2029–2030). They are calculated by assuming that it will take small employers a total of seven employee hours to complete this task and medium-sized employers a total of nine employee hours. These hours are then multiplied by the number of small and medium-sized employers with no predominantly male job classes and the average hourly federal jurisdiction employee wage in each of these two employer size categories.
The estimated cost to small employers is $39,308, or $220 per employer on average, while the cost to medium-sized employers is $3,247, or $295 per employer on average. The total estimated cost to employers to analyze the first five snapshots and update their pay equity plans is $42,555 ($224 per employer on average).
The total compliance cost to employers in the federally regulated private sector, including Crown Corporations, of establishing a process for updating pay equity plans where there are no predominantly male job classes is estimated at $232,557 ($1,224 per employer on average). The total estimated cost for small employers is $212,068 ($1,185 per employer on average), while the total cost to medium-sized employers is $20,489 ($1,863 per employer on average).
Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap
The Regulations require that employers in the federally regulated private sector with 10 or more employees submit additional information as part of their annual statements to the Commissioner. Employers without pay adjustments and those with less than 10 employees do not need to submit any additional information to the Commissioner.
Employers with 10 or more employees with wage adjustments need to submit the following information for each job class receiving a wage adjustment:
- The date(s) and dollar amount of increases to the hourly rate of pay for each predominantly female job class receiving an increase in compensation;
- The number of women and the total number of employees in the job class; and
- Their legal name, their business number, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan.
The costing takes into account the fact that not all employers with 10 or more employees have pay adjustments when creating and updating their pay equity plan.
Costs for employers with wage adjustments following the creation of a pay equity plan (years 1 to 5)
The costing assumes that all medium-sized (563) and large (197) employers will have wage adjustments following the creation of a pay equity plan. The costing also assumes that 97%, or 3 476 small-sized employers, will have wage adjustments.
The costs to employers associated with the requirement to submit additional information on the date(s) and dollar amounts of hourly pay increases in each year are calculated by assuming that small employers will require a total of 0.25 employee hours to complete this task, medium-sized employers a total of 0.3 employee hours and large employers a total of 0.4 employee hours.
Costs are estimated by multiplying the number of employers with wage adjustments following the creation of their pay equity plan by the total number of employee hours it will take to complete this task and the average hourly federal jurisdiction employee wage. The estimated costs to employers over years 1 to 5 are as follows:
- $167,773 for small employers (or $48 per employer)
- $34,084 for medium-sized employers (or $61 per employer)
- $17,286 for large employers (or $88 per employer)
The costing is similar for the calculation of the costs to employers associated with providing the number of women and the total number of employees in each job class receiving a wage adjustment. It is assumed that small employers take 0.25 hours to complete this task, medium-sized employers take 0.30 hours and large employers take 0.35 hours.
The estimated costs over years 1 to 5 are as follows:
- $167,773 for small employers (or $48 per employer on average)
- $34,084 for medium-sized employers (or $61 per employer on average)
- $15,125 for large employers (or $77 per employer on average)
The costing is similar for the calculation of the costs to employers associated with providing their legal name, their business number, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan. It is assumed that for all small, medium and large employers it will take 0.08 hours to complete this task.
The estimated costs over years 1 to 5 are as follows:
- $53,687 for small employers (or $15 per employer on average)
- $9,090 for medium-sized employers (or $16 per employer on average)
- $3,457 for large employers (or $18 per employer on average)
Costs for employers with wage adjustments following the update of a pay equity plan (years 6 to 10)
The costing assumes that 65% of small employers (2 330 employers), 75% of medium-sized employers (422 employers), and 100% of large employers (197 employers) will have wage adjustments following the update of their pay equity plan (years 6 to 10).
The estimated costs to employers associated with submitting information on the date(s) and dollar amounts of hourly pay increases are calculated by assuming that in years 6 to 10, small employers will take a total of 0.25 employee hours to complete this task, medium-sized employers a total of 0.3 employee hours and large employers a total of 0.4 employee hours.
Costs are estimated by multiplying the number of employers with wage adjustments following the update of their pay equity plan by the number of employee hours it will take to complete this task and the average hourly federal jurisdiction employee wage. The estimated costs over years 6 to 10 are as follows:
- $80,157 for small employers (or $34 per employer)
- $18,226 for medium-sized employers (or $43 per employer)
- $12,324 for large employers (or $63 per employer)
For the calculation of the costs to employers of providing the number of women and the total number of employees in each job class receiving a wage adjustment, small employers are assumed to take 0.25 hours to complete this task, medium-sized employers 0.30 hours and large employers 0.35 hours. The methodology used to estimate these costs is the same as above.
The estimated costs over years 6 to 10 are as follows:
- $80,157 for small employers (or $34 per employer)
- $18,226 for medium-sized employers (or $43 per employer)
- $10,784 for large employers (or $55 per employer)
For the calculation of the costs to employers of providing their legal name, their business number, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan, all small, medium and large employers are assumed to take 0.08 hours to complete this task.
The estimated costs over years 6 to 10 are as follows:
- $25,650 for small employers (or $11 per employer)
- $4,861 for medium-sized employers (or $12 per employer)
- $2,465 for large employers (or $13 per employer)
The total cost to employers associated with submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime is estimated at $755,210. The total cost to small employers is $575,198, the total cost to medium-sized employers is $118,572, while the total cost to large employers is $61,441.
Cost to the federal public service, the RCMP, the Canadian Armed Forces and separate agencies
The core public administration, separate agencies, the RCMP and the Canadian Armed Forces are expected to incur costs due to the requirements to provide additional information in their annual statements. However, they are not expected to incur costs from the requirement to update pay equity plans in workplaces with no predominantly male job classes.
Updating pay equity plans in workplaces with no predominantly male job classes
There are no estimated costs to the core public administration, the RCMP, the Canadian Armed Forces and separate agencies. The core public administration, the RCMP and the Canadian Armed Forces are all large employers that will have multiple job classes due to their size, including some job classes that are predominately male.
Among the 21 separate agencies, 13 are large, 3 are medium-sized and 5 are small. Large agencies are expected to have at least one predominately male job class. For the purposes of this cost analysis, it is also assumed that the medium and small agencies have at least one predominately male job class, as it is expected that the gender balance at small and medium sized agencies will mirror the general composition of the federal public service overall.
Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime
Costs to the core public administration and the RCMP
The core public administration and the RCMP are large employers that will likely have wage adjustments following both the creation and update of their pay equity plans. Based on information provided by the Treasury Board of Canada Secretariat — Office of the Chief Human Resources Officer, the submission of this information will be done by an employee at the PE-05 group and level, and this task will require 0.6 employee hours at the RCMP and 10 employee hours at the core public administration. The hours required for the core public administration are higher than for employers in the federally regulated private sector because the Treasury Board of Canada Secretariat will need to compile the information from all the different departments making up the core public administration and then submit the information. Costs are estimated by multiplying the number of employee hours it will take to complete this task by the average hourly wage of an employee at the PE-05 classification. The estimated costs over the 10-year period are as follows:
- $4,885 for the core public administration
- $293 for the RCMP
Providing the number of women and the total number of employees in each job class receiving a wage adjustment is assumed to require a total of 0.7 employee hours for the RCMP and 11 employee hours for the core public administration. The estimated costs over the 10-year period are as follows:
- $5,373 for the core public administration
- $342 for the RCMP
Providing the legal name of the employer, the business number of the employer, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan is assumed to require a total of 0.08 employee hours for the RCMP and 0.08 employee hours for the core public administration. The estimated costs over the 10-year period are as follows:
- $39 for the core public administration
- $39 for the RCMP
Costs to the Canadian Armed Forces
The costing assumes that as a large employer, the Canadian Armed Forces will have wage adjustments following both the creation and update of their pay equity plan. We assume that the Canadian Armed Forces will require 0.7 hours to submit information on the date(s) and dollar amounts of hourly pay increases. The hours required are higher than for large employers in the federally regulated private sector because of the large size of the Canadian Armed Forces. Costs are calculated by multiplying the number of employee hours it will take to complete this task by the average hourly wage in the Canadian Armed Forces. The estimated costs over the 10-year period are $305.
The costing is similar for the calculation of the costs to employers associated with providing the number of women and the total number of employees in each job class receiving a wage adjustment. The costing assumes that the Canadian Armed Forces will take 0.75 hours to complete this task. The estimated costs over the 10-year period are $327.
The costing is similar for the calculation of the costs to employers associated with providing their legal name, their business number, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan. The costing assumes that the Canadian Armed Forces will take 0.08 hours to complete this task. The estimated costs over the 10-year period are $35.
Costs to the separate agencies
The costing assumes that all separate agencies, irrespective of their size, will have wage adjustments following the creation of a pay equity plan. The costs are calculated by assuming that small separate agencies will require 0.25 hours to submit information on the date(s) and dollar amounts of hourly pay increases, medium-sized agencies 0.3 hours and large agencies 0.4 hours. This task will be completed by an employee at the PE-05 group and level. This employee will be paid the same amount irrespective of the size of the separate agency, as there is a common pay scale in the federal public service. Costs are estimated by multiplying the number of agencies with wage adjustments by the number of employee hours it will take to complete this task and the average hourly wage of an employee at the PE-05 classification. The estimated costs to separate agencies over years 1 to 5 are as follows:
- $356 for small agencies
- $257 for medium-sized agencies
- $1,483 for large agencies
The same methodology is used to calculate the cost to separate agencies employers associated with providing the number of women and the total number of employees in each job class receiving a wage adjustment. The costing assumes that small agencies will take 0.25 hours to complete this task, medium-sized agencies 0.3 hours and large agencies 0.35 hours. The estimated costs to separate agencies over years 1 to 5 are as follows:
- $356 for small agencies
- $257 for medium-sized agencies
- $1,298 for large agencies
The same methodology is used to calculate the legal name of the employer, the business number of the employer, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan. The costing assumes that all small, medium and large agencies take 0.08 hours to complete this task. The estimated costs to separate agencies over years one to five are as follows:
- $114 for small agencies
- $68 for medium-sized agencies
- $297 for large agencies
The costing assumes that 60% of small agencies (3 employers), 67% of medium-sized agencies (2 employers), and 100% of large agencies (13 employers) will have wage adjustments following the update of their pay equity plan (years 6 to 10). The assumptions as to the time required to complete each task are the same as for the years following the creation of the pay equity plan. The costs are estimated by multiplying the number of agencies with wage adjustments by the number of employee hours it will take to complete the task and the average hourly wage of a PE-05 employee. The costs associated with submitting information on the date(s) and dollar amounts of hourly pay increases are as follows between years 6 and 10:
- $152 for small agencies
- $123 for medium-sized agencies
- $1,057 for large agencies
The costs associated with providing the number of women and the total number of employees in each job class receiving a wage adjustment are as follows:
- $152 for small agencies
- $123 for medium-sized agencies
- $925 for large agencies
The costs associated with providing the legal name of the employer, the business number of the employer, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan are as follows:
- $49 for small agencies
- $33 for medium-sized agencies
- $211 for large agencies
The overall estimated costs to the core public administration, the RCMP, the Canadian Armed Forces and the separate agencies to submit additional information in the annual statements to the Commissioner are $18,948.
Costs to the CHRC
The CHRC, as a regulator, will incur the costs necessary to implement and enforce the Regulations. These include costs associated with measuring the impact of the pay equity regime on the gender wage gap; operationalizing, implementing, and administering the AMPs system; and updating and developing communications strategies to share information about new enforcement measures.
Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime
The CHRC will need to update its reporting system and information portal to capture additional information provided in the annual statements, to process it and to vet it for errors.
The CHRC will also need to build a form that employers will use to submit information. This task will require 20% of a full-time EC-06 employee’s time in the three-month period between April and June 2024, who would also have to work with contractors to ensure that the form and data can be properly integrated into the Portal.
Additionally, once the form is built, another full-time employee (at the EC-07 group and level, 100% of the employee’s time) will be required to receive, analyze and vet the information received for any errors. This employee will use the information submitted by employers for data analysis and research purposes. This employee will be required in the last seven months of year 1 and between years 2 and 10.
Moreover, the information submitted by employers will provide specific details on key elements of the pay equity process and will require the additional time and expertise of a full-time employee (at the EC-06 group and level, 5% of the employee’s time) to assess the meaning of these key elements for the administration and enforcement of the Act. This employee will be required in the last seven months of year 1 and between years 2 and 10.
Information technology support will be required throughout the entire process (at the IT-02 group and level, 20% of a full-time employee’s time). This employee will be required from years 1 to 10.
Based on the employees required and their salaries, the total costs to the CHRC over the entire 10-year period to process the information submitted by employers are estimated at $1,240,701.
Operationalizing the AMPs system
The CHRC will also incur costs as they will need to dedicate some of their compliance and enforcement personnel to the administration of the AMPs system. The costing assumes that the AMPs system will be implemented in the first nine months of 2024–2025. Administration of the system will begin in the last seven months of 2024–2025 and continue through the rest of the 10-year period.
Implementation of the AMPs system
The CHRC will need to develop numerous templates, processes, and procedures for the implementation of the AMPs system. The AMPs rules, including the calculation of penalties, are highly complex. The CHRC will require time and resources to develop training materials and deliver training to staff to build internal capacity to implement the system.
Implementation of the AMPs system will require two EC-06 employees (100% FTE), one LP-03 (50% FTE) and one CS-02 employee (100% FTE) in the first nine months of 2024–2025 to provide legal support and to support with computer systems. Personnel costs for the implementation of the AMPs system, based on the employees required and their salaries, are estimated at $344,832.
Administration of the AMPs system
The CHRC will need to dedicate some of their compliance and enforcement personnel to the administration of the AMPs system. This personnel is as follows:
- One EC-06 employee and one EC-03 employee to provide guidance and information about the AMPs and to administer and issue the AMPs;
- One FI-02 employee to administer and recover the AMPs payments and transfer the payments to the Receiver General for Canada and/or equivalent entity;
- One CS-03 employee to manage and update the case management system and support the infrastructure for issuing, receiving, and tracking AMPs; and
- Ongoing support from one Legal Counsel (LP-03).
Compliance and enforcement personnel costs will depend on the degree of employer non-compliance. It is assumed that non-compliance will be the highest in the first two years. However, it is anticipated that preliminary indications of violations and compliance orders will progressively incentivize employers to comply. As a result, the compliance rate of employers is expected to gradually rise between years 3 and 5. Employer’s non-compliance rate will rise in the year when pay equity plans are updated (year 6) and will gradually decline afterwards until the next pay equity plan update. As a result of this variation in the compliance rate of employers, the FTEs required will vary from year to year:
- EC-06 employee: 100% FTE in the last 7 months of year 1 and in year 2, down to 63% FTE in year 5, and between 75% and 40% FTE in years 6 to 10;
- EC-03 employee: 50% FTE in the last 7 months of year 1 and in year 2, down to 30% FTE in year 5, and between 38% and 20% FTE in years 6 to 10;
- FI-02 employee: 50% FTE in the last 7 months of year 1 and in year 2, down to 30% FTE in year 5, and between 38% and 20% FTE in years 6 to 10;
- CS-03 employee: 10% FTE in the last 7 months of year 1 and in year 2, down to 6% FTE in year 5, and between 7% and 4% FTE in years 6 to 10; and
- LP-03 employee: 20% FTE in the last 7 months of year 1 and in year 2, down to 13% FTE in year 5, and between 15% and 8% FTE in years 6 to 10;
Based on the employees required and their salaries, compliance and enforcement personnel costs are estimated at $1,438,771.
Other costs
The CHRC will also incur costs to explore new software and/or upgrade existing software to allow for issuing AMPs. Software costs in 2024–2025 are anticipated at $20,000.
The CHRC will also incur costs to develop a communications strategy to announce the new enforcement measures. Developing this strategy will require 75 hours of an IS-03 employee’s time, 120 hours from an IS-04 employee, 75 hours from an IS-05 employee and 75 hours of an AS-03 employee’s time. Based on the number of employees required and their salaries, the costs to develop the strategy are estimated at $18,175 and will be incurred in year 2024–2025.
Overall costs to the CHRC
The overall costs to the CHRC are anticipated to be $3,062,479 over the 10-year period examined.
Qualitative benefits
Positive impacts
- Higher level of transparency regarding pay equity among federal jurisdiction employees, through additional information being included in annual statements.
- Increased productivity and better workplace morale, through more effective implementation of the pay equity regime.
- Improved employee mental health and reduced stress, though more effective implementation of the pay equity regime.
Small business lens
The small business lens applies, as there are impacts on federally regulated private sector small businesses associated with the Regulations. As the Act only applies to employers with 10 or more employees, the total number of federally regulated employers affected by the Regulations who are small businesses is approximately 3 600, employing approximately 91 600 employees. This number does not include employers with over 100 employees, who are not considered small businesses.
The total compliance costs to small businesses associated with updating the pay equity plan when there are no predominantly male job classes will be approximately $212,068 for this 10-year timeframe. Of these costs, $7,876 will be associated with familiarizing themselves with the regulatory requirements, $147,975 with producing ten annual snapshots, $16,909 to apply the proxy method or typical job class method, and $39,308 to analyze the first five snapshots and update their pay equity plan. Administrative costs associated with submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap will be approximately $575,198. Small businesses will incur no costs from the implementation of the AMPs system. Overall, the total costs to small businesses associated with the Regulations are estimated to be $767,266 over the 10-year period. No flexibility in the application of the Regulations to small business was provided because updating the pay equity plan is a key part of the pay equity regime and the information provided through the annual statement is required to measure the impact of the regime on the gender wage gap.
Small business lens summary
- Number of small businesses impacted: 3,584
- Number of years:10 (2024-25 to 2033-34)
- Base year for costing: 2019
- Present value base year: 2024
- Discount rate: 7%
| Activity | Annualized value | Present value |
|---|---|---|
| Establish the process for updating pay equity plans where there are no predominantly male job classes | $30,194 | $212,068 |
| Total compliance cost | $30,194 | $212,068 |
| Activity | Annualized value | Present value |
|---|---|---|
| Submitting additional information in annual statements to the Commissioner to facilitate measuring the impact of the pay equity regime on the gender wage gap | $81,895 | $575,198 |
| Total administrative cost | $81,895 | $575,198 |
| Totals | Annualized value | Present value |
|---|---|---|
| Total cost (all impacted small businesses) | $112,089 | $787,266 |
| Cost per impacted small business | $31.27 | $219.66 |
One-for-one rule
The one-for-one rule applies, as there will be an incremental increase in administrative burden on businesses with 10 or more employees who have wage adjustments. The Regulations impose additional administrative requirements on those employers to provide additional information to the Commissioner in their annual statement and trigger the one-for-one rule under Element A.
Using the methodology required by the Red Tape Reduction Regulations, it is estimated that the total administrative costs imposed on affected federally regulated private sector employers by the requirement to submit additional information in annual statements to the Commissioner will be $298,837 or $42,548 in annualized terms. Of these costs, $131,040 (or $18,657 annualized) will stem from the requirement to submit information on the date(s) and dollar amount of increases to the hourly rate of pay for each predominantly female job class receiving an increase in compensation. Meanwhile, $128,384 ($18,279 annualized) will stem from the requirement to submit information on the number of women and the total number of employees in each job class receiving a pay increase. Also $39,413 ($5,611 annualized) will stem from requirement to submit information on the legal name of the employer, the business number of the employer, where available, and the name, telephone number and email address of a senior official of the employer to whom questions may be directed respecting the pay equity plan.
The Regulations do not trigger Element B for the one-for-one rule, as they do not introduce a new regulatory title to the Labour Program’s existing regulatory stock.
Regulatory cooperation and alignment
This regulatory initiative is not part of a formal bilateral agreement.
Ontario and Quebec have had proactive pay equity legislation in place for several decades. Their pay equity regimes were identified as models that would serve as the basis for the development of the federal pay equity regime. The Act was broadly developed using aspects from both provincial regimes and then adapted to fit and serve the federal jurisdiction.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
A gender-based analysis plus (GBA+) was conducted for the Regulations. The analysis suggested that the Regulations will primarily benefit women workers in federally regulated workplaces. More specifically, research indicates that racialized women (including visible minority, immigrant, and Indigenous women,footnote 2 women with disabilities,footnote 3 and women with lower levels of educationfootnote 4 are likely to disproportionately benefit, as these groups are more likely to face a larger gender wage gap. Because all employees in predominately female job classes will receive the same pay equity increases as women, the Regulations are also expected to benefit men, 2SLGBTQIA+ and gender non-conforming people employed in these job classes.
Implementation, compliance and enforcement, and service standards
Implementation
The Regulations come into force upon registration. Employers subject to the Act since it came into force will be required to publish their first pay equity plans by September 3, 2024.
The Commissioner, housed in the CHRC, is responsible for administering and enforcing the Act and the Pay Equity Regulations. The Commissioner’s role includes assisting workplace parties in understanding their rights and fulfilling their obligations, including through the development of tools and education materials, investigating complaints, and considering applications, and facilitating the resolution of disputes.
Costs to the CHRC for the Regulations will be funded through existing resources earmarked for the establishment and enforcement of the pay equity regime.
Compliance and enforcement
The Commissioner is equipped with a broad range of enforcement tools to encourage compliance, address complaints, and settle disputes. These enforcement tools include investigations, proactive audits, order-making powers, and the authority to impose AMPs. The Regulations ensure that the AMPs system is operational.
Contact
Muhammad Ali
Executive Director
Workplace and Labour Relations Policy Division
Labour Program
Department of Employment and Social Development
Place du Portage, Phase II, 10th Floor
165 de l’Hôtel de Ville Street
Gatineau, Quebec
J8X 3X2
Email: ESDC.PayEquity-EquiteSalariale.EDSC@labour-travail.gc.ca