Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies): SOR/2026-75

Canada Gazette, Part II, Volume 160, Number 9

Registration
SOR/2026-75 April 23, 2026

CANADA LABOUR CODE

P.C. 2026-381 April 23, 2026

Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, makes the annexed Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies) under paragraphs 182.4(a)footnote a, (b)footnote a and (c)footnote a and 203.5(a)footnote b, (b)footnote b and (c)footnote b and subsections 264(1)footnote c and 270(1)footnote d of the Canada Labour Code footnote e.

Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies)

Canada Labour Standards Regulations

1 The Canada Labour Standards Regulations footnote 1 are amended by adding the following after section 11.1:

Equal Treatment

11.2 (1) The following definitions apply in this section.

full-time,
in respect of an employee, means that the employee is considered to be full-time under the terms of the collective agreement that applies to them or, in the absence of such an agreement, of their contract of employment. However, if the collective agreement or contract of employment, as the case may be, does not address the issue, it means
  • (a) that the employee is considered to be full-time under the terms of a policy of their employer that has been communicated to them; or
  • (b) if paragraph (a) does not apply, that the employee
    • (i) is scheduled to work an average of 30 or more hours per week, if they are subject to an averaging plan under subsection 169(2) or 171(2) of the Act or a modified work schedule under section 170 or 172 of the Act, or
    • (ii) usually works 30 or more hours per week, if they are not subject to such a plan or schedule. (Ă  temps plein)
part-time,
in respect of an employee, means that they are not full-time. (Ă  temps partiel)
permanent,
in respect of an employee, means that their contract of employment provides that they are employed for an indeterminate period. (permanent)
temporary,
in respect of an employee, means that their contract of employment provides that they are employed for a fixed term or on a seasonal, casual or irregular basis. (temporaire)

(2) For the purposes of subparagraph (b)(i) of the definition full-time in subsection (1), the average number of hours of work per week is the total number of hours scheduled under the averaging plan or modified work schedule, as the case may be, divided by the number of weeks in the plan or schedule.

(3) The following definitions apply for the purposes of Division III of the Act.

employment status
means an employee’s status as a full-time, part-time, permanent or temporary employee. (situation d’emploi)
system
means a system
  • (a) that applies to all employees whose rates of wages are comparable by reason of subsection 182.1(1) of the Act; and
  • (b) whose particulars have been communicated to those employees in writing or are readily available for examination by them. (rĂ©gime)

11.3 For the purposes of Division III of the Act, all branches, sections and other divisions of federal works, undertakings and businesses that are located in a region established under paragraph 54(w) of the Employment Insurance Act are designated as industrial establishments.

11.4 For the purposes of paragraph 182.1(1)(a) of the Act, if an employer has more than one industrial establishment, an employee is considered to work

11.5 For the purposes of paragraph 182.1(1)(e) of the Act, it is a factor that the employees’ wages for the performance of a job function are calculated using the same type of rate of wages, such as

11.6 For the purposes of paragraph 182.1(2)(d) of the Act, the criteria are

2 The Regulations are amended by adding the following after section 16:

Temporary Help Agencies

16.1 For the purposes of Division VI.1 of the Act, system means a client’s system, as defined in subsection 11.2(3) of these Regulations, whose particulars have been communicated in writing to an employee who performs a work assignment for the client or are readily available for examination by that employee.

16.2 For the purposes of Division VI.1 of the Act, all branches, sections and other divisions of federal works, undertakings and businesses that are located in a region established under paragraph 54(w) of the Employment Insurance Act are designated as industrial establishments.

16.3 For the purposes of paragraph 203.2(1)(a) of the Act, if a client has more than one industrial establishment, an employee is considered to work

16.4 For the purposes of paragraph 203.2(1)(e) of the Act, it is a factor that the employees’ wages for the performance of a job function are calculated using the same type of rate of wages, such as

16.5 For the purposes of paragraph 203.2(2)(d) of the Act, the criteria are

3 Subsection 24(2) of the Regulations is amended by adding the following after paragraph (f):

4 Schedule II to the Regulations is amended by replacing “Equal wages” with “Equal treatment”.

5 Schedule II to the Regulations is amended by adding the following after “Multi-employer employment”:

Temporary help agencies

6 Schedule II to the Regulations is amended by replacing “Sick leave” with “Medical leave”.

7 Schedule II to the Regulations is amended by replacing “https://www.canada.ca/en/employment-social-development/programs/employment-standards/federal-standards.html” with “https://www.canada.ca/en/services/jobs/workplace/federal-labour-standards.html”.

Administrative Monetary Penalties (Canada Labour Code) Regulations

8 Part 1 of Schedule 2 to the Administrative Monetary Penalties (Canada Labour Code) Regulations footnote 2 is amended by adding the following after item 28:
Item

Column 1

Provision

Column 2

Violation Type
28.1 182.1(1) C
28.2 182.1(3) C
28.3 182.2(1) B
28.4 182.2(2) B
28.5 182.2(3) C
28.6 182.3 C
9 Part 1 of Schedule 2 to the Regulations is amended by adding the following after item 42:
Item

Column 1

Provision

Column 2

Violation Type
42.1 203.1(1)(a) B
42.11 203.1(1)(b) B
42.12 203.1(1)(c) B
42.13 203.1(1)(d) B
42.14 203.1(1)(e) B
42.15 203.1(1)(f) C
42.16 203.1(2) B
42.17 203.2(1) C
42.18 203.2(3) C
42.19 203.3(1) B
42.2 203.3(2) B
42.21 203.3(3) C
10 Division 1 of Part 2 of Schedule 2 to the Regulations is amended by adding the following after item 31:
Item

Column 1

Provision

Column 2

Violation Type
31.1 24(2)(f.1) A
31.2 24(2)(f.2) A
31.3 24(2)(f.3) A

Coming into Force

11 These Regulations come into force on the day on which section 451 of the Budget Implementation Act, 2018, No. 2, chapter 27 of the Statutes of Canada, 2018, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Budget Implementation Act, 2018, No. 2 (BIA 2018), introduced new provisions to the Canada Labour Code (the Code) that are intended to ensure equal treatment for employees regardless of their employment status and provide protection from unfair practices to temporary help agency employees (“the equal treatment and temporary help agency provisions”). Amendments to the Canada Labour Standards Regulations (CLSR) and the Administrative Monetary Penalties (Canada Labour Code) Regulations (AMPs Regulations) are needed to support the implementation of the equal treatment and temporary help agency provisions and ensure they can be enforced.

Background

Application of the Canada Labour Code

The Code sets out the rights and responsibilities of employers and employees in federally regulated workplaces and is divided into four parts: Part I (Industrial Relations); Part II (Occupational Health and Safety); Part III (Labour Standards); and Part IV (Administrative Monetary Penalties).

Part III of the Code establishes basic labour standards (e.g. payment of wages, protected leaves) for persons employed in federal Crown corporations and federally regulated private-sector industries, such as

Part III of the Code does not apply to the federal public service. All other workplaces, which make up over 90% of the Canadian workforce, are under provincial or territorial labour jurisdiction.

New amendments to the Code and regulatory authority

Amendments contained in the BIA 2018 will add new provisions to the Code that prohibit employers from paying employees different rates of wages because of a difference in their employment status, if they perform substantially the same kind of work, requiring substantially the same skill, effort and responsibility, and do so in the same industrial establishment and under similar working conditions. However, this prohibition does not apply when the difference in the rate of wages is due to a system based on seniority, merit, the quantity or quality of each employee’s production or any other criteria prescribed by regulation. Employers will also be prohibited from reducing an employee’s rate of wages to comply with this new requirement.

A new division VI.1 titled “Temporary Help Agencies” is also being added to Part III of the Code to extend similar protections to employees of temporary help agencies. This division provides that temporary help agencies are prohibited from paying employees working for one of their clients a lower rate of wages than what a client pays its own employees when they perform substantially the same kind of work under similar working conditions, requiring substantially the same skill, effort and responsibility, and do so in the same industrial establishment. This prohibition does not apply when the difference in the rate of wages is due to a system based on seniority, merit, or the quantity or quality of each employee’s production, or any other criteria prescribed by regulation.

In addition, amendments to the Code also prohibit temporary help agencies from

If an employee believes that their rate of wages does not comply with the Code’s equal treatment and temporary help agency provisions, they may request that the employer review the rate. The employer must, within 90 days after receiving the request, conduct the review and provide the employee with a written response that includes either a statement that the employer has increased their rate of wages to comply with the Code, or a statement, including reasons, explaining that the employee’s current rate of wages complies with the provisions.

The legislative amendments also grant the Governor in Council the authority to make regulations that define terms for the purposes of the new provisions; add other factors under which rates of wages must be equal; add other exceptions that justify differences in rates of wages for employees who meet these conditions; and modify the provisions or provide an exemption from the provisions for any class of employees.

While at present there are few temporary help agencies subject to Part III of the Code, there are still compelling reasons to implement these changes. Given evolving jurisprudence and changes in the economy, more federally regulated temporary help agencies may appear in the future; it is best to have clear rules in place if that occurs. Furthermore, having federal rules in place sets a model that other jurisdictions with less stringent provisions can follow.

While “industrial establishment” is defined in section 166 of the Code, this definition is not precise enough for the purposes of the new equal treatment and temporary help agency provisions. A separate definition of “industrial establishment,” used for the application of group termination provisions of the Code, is based on a detailed list of establishments enumerated in Schedule 1 of the CLSR for some employers, but a different categorization for others. In the context of the new equal treatment and temporary help agency provisions, it is necessary to determine whether two employees work in the same “industrial establishment,” a condition for their rates of wages to be comparable. A new definition of “industrial establishment” that applies specifically to the equal treatment and temporary help agency provisions in Divisions III and VI.1 of Part III of the Code is therefore being added to the CLSR.

The term “employment status” is not defined for the purposes of the equal treatment provisions in the Code. The term only applies to differences in terms of employment (i.e. whether the employment is temporary or permanent), and does not always include differences between part-time and full-time work. For example, paragraph 190(f) in Division IV (Annual Vacation) refers to seasonal or temporary employees, while paragraph 227(a) in Division IX (Group Termination) refers to employees employed on a seasonal or irregular basis. The Regulations Amending Certain Regulations Made Under the Canada Labour Code (Equal Treatment and Temporary Help Agencies) [the Regulations], which are the subject of this Regulatory Impact Analysis Statement, will define what “part-time” and “full-time” employees are, to ensure clarity about whose wages are comparable for the purposes of the equal treatment and temporary help agency provisions.

There are other pay differences that are legitimate and justifiable but are not included as exceptions in the equal treatment and temporary help agency provisions of the Code, such as the practice of “red-circling,” which refers to the maintenance of an employee’s previous rate of wages following a reclassification or demotion to a lower-paying position. Other exceptions include differences in rates of wages that are aimed at addressing hiring difficulties during a labour shortage, accommodating for geographical differences (e.g. northern bonuses) and compensating employees who are on travel status. The amendments to the CLSR will provide for these additional exceptions.

Before the legislative amendments can come into force, corresponding amendments are needed to the CLSR and the AMPS Regulations to align them with the Code. The date for coming into force of the legislative amendments is set in a separate order of the Governor in Council, which fixes the 180th day after the day on which the order is made as the day on which sections 451, 452, 461 and 493, subsections 498(1) to (3) and sections 501, 518 and 520 of the BIA 2018 come into force.

Amendments to the Canada Labour Standards Regulations

The CLSR specify how the labour standards of Part III of the Code are to be met and observed. To support the implementation of the new equal treatment and temporary help agency provisions in the Code, new sections will be added to the CLSR to define the terms “industrial establishment,” “employment status,” “full-time,” “part-time,” “permanent” and “temporary.” The Regulations are needed to outline how to interpret an employee’s employment status in cases where an averaging agreement or a modified work schedule is in place. The CLSR will outline how to determine the industrial establishment to which an employee is attached, as well as specify additional cases in which pay differences are justified and legitimate. A clarifying provision will be added to ensure an “apples to apples” comparison of the wages and working conditions of comparable employees, providing that employees can only be compared if they are paid the same type of rate of wages. Minor adjustments to record-keeping provisions will also be made.

Definition of “industrial establishment”

A new definition of industrial establishment is required to clarify whether two worksites of an employer are part of the same industrial establishment, to account for the realities of remote work, and to provide a means of determining to which industrial establishment each employee belongs. This new definition will also provide clarity for atypical workers in industries such as road, maritime, rail and air transportation, as well as for employees who have telework agreements. Consequently, a new definition of “industrial establishment” that applies specifically to provisions regarding equal treatment and temporary help agencies will be added to the CLSR. This definition will offer greater precision and include objective criteria for making determinations.

To ensure that equal treatment and temporary help agency provisions of the Code can operate effectively and efficiently, every federally regulated employee must be considered to work in one — and only one — industrial establishment. As there is not one common term used to describe the location of work for all types of transportation employees in legislation or collective agreements applicable to federally regulated industries, determining attachment to an establishment that acts as a reporting office will be useful to establish an attachment to a location of work.

Employers will benefit from this more specific definition, as it will provide clarity concerning which employees are working in the same industrial establishment. Employees will also benefit from this definition, as it will allow those working in irregular job sites, multiple job sites, or with flexible work arrangements to benefit from the protections afforded by the Code’s equal treatment and temporary help agency provisions.

Definition of “employment status”

For the purposes of the equal treatment and temporary help agency provisions of the Code, the term “employment status” will be defined in the CLSR to include differences between full-time and part-time workers, as well as between temporary (e.g. fixed-term, casual, seasonal, on call) and permanent employees. Without specifying this through regulation, the lack of certainty around the term could have impeded the implementation of the Code’s equal treatment and temporary help agency provisions.

Employers and employees will benefit from the inclusion of a definition of “employment status.” This definition clarifies that differences in hours worked per week and in the degree of permanence of a term of employment are both elements characterizing a person’s employment status, neither of which justifies wage discrimination. Recognizing that employment contracts or collective agreements may define these terms between parties, the following baseline definitions will be provided.

Definition of “full-time” and “part-time”

The terms “full-time” and “part-time” in relation to an employee were not previously defined in the Code or in regulations. To ensure clarity, definitions of these terms will be added to the CLSR. These definitions, which largely draw on existing classifications used by Statistics Canada, will be mutually exclusive to eliminate any confusion regarding the number of hours of work per week considered full-time employment.

Definition of “system”

Based on stakeholder feedback following prepublication in the Canada Gazette, Part I, the Regulations now include a definition of the term “system” that applies for the purposes of equal treatment and temporary help agency provisions of the Code. Under subsections 182.1(2) and 203.2(2) of the Code, exceptions to the equal treatment and temporary help agency provisions are permitted if wage differences are due to a system based on seniority, merit, quantity or quality of production, or any other criterion prescribed by regulation.

Employers and employees will benefit from the inclusion of this definition, as it will clarify what constitutes a “system” and whether one has, in fact, been established by an employer.

This definition will ensure that any system invoked by an employer (or a temporary help agency) to justify wage rate differentials is legitimate and transparent. A closely related secondary rationale, which is described in greater detail below in the “Description” section, is to avoid adding significant administrative burden for employers or putting in question existing pay systems.

Additional factor — calculation using the same type of rate of wages

The CLSR will set out an additional condition that must be met for the prohibition on differences in wage rates set out at subsections 182.1(1) and 203.2(1) of the Code to apply, namely that the employees’ pay is calculated using the same type of rate of wages. In other words, for the purpose of determining whether two employees should be paid the same rate of wages, only identical types of compensation will be comparable, for example a mileage rate, piece rate, pay per load or commission rate.

Based on stakeholder feedback following prepublication in the Canada Gazette, Part I, the Regulations have been adjusted to broaden the comparability of employees whose wages are calculated based on time. The previous draft of the Regulations had proposed only comparing the wages of employees paid at “an hourly rate.”

As a result of this change, all employees who are paid a rate based on time — whether through hourly, daily, weekly, monthly or annual salaries, or other time-based structures — can have their wage rates compared.

The rates of compensation for extra-duty services provided to employees, such as wages related to overtime, shift work, being on call, being called back to work, and working or travelling on a day that is not a working day, can also be compared. The term “rate of wages” will be understood as the established rate at which, and conditions under which, an employee earns any applicable type of compensation.

This approach aims to address policies or practices that disadvantage employees with one employment status from qualifying for the same rates of wages as those with a different employment status.

Additional criteria justifying difference in rate of wages (exceptions)

As previously noted, the new equal treatment and temporary help agency provisions of the Code will allow for differences in rates of wage if this difference is due to a system based on seniority, merit, the quantity or quality of each employee’s production, or any other criterion that may be prescribed by regulation.

The Regulations will add exceptions to these provisions, to include exceptional circumstances in which employers are permitted to pay employees a different wage rate. These exceptions include “red-circling,” a practice where an employee is reassigned to a lower classification but retains their previous higher salary; increasing rates of wages due to difficulty in recruiting or maintaining employees during a labour shortage; “northern bonuses,” related to geographical regions and hardship locations; and travel status pay for those employees on travel status compared to those not travelling.

Based on stakeholder feedback following prepublication in the Canada Gazette, Part I, the proposed exception for employees in an employee development or training program being paid a rate of wages that is different than the rate paid to an employee doing the same work in a position outside the program has been removed. This change ensures that the Regulations remain aligned with the intent of the Code’s provisions, which aim to guarantee that employees performing substantially the same work under similar working conditions receive the same rate of wages, regardless of employment status. As a result, if an employee in training performs substantially the same work as a non-training employee, they will be entitled to the same rate of wages. If, on the other hand, the employee in training is not performing substantially the same work (e.g. if they are shadowing, observing, or performing limited tasks), they will not be covered by the equal wage requirement.

To give employers sufficient flexibility while still adhering to the intent of the legislation, the exceptions mentioned above will be incorporated into the CLSR as additions to the list of exceptions set out in the Code.

New sections — temporary help agencies

New sections under the heading “Temporary Help Agencies” will be added to the CLSR to provide the same clarifications and exceptions for employees working for a federally regulated temporary help agency.

Additional record-keeping requirements

Under the record-keeping provisions of the CLSR, employers are currently required to keep information on the details of rates of pay, hours worked, actual earnings and payments for each employee for a period ending 36 months following the termination of employment.

Additional record-keeping requirements will be added to the CLSR to enable the Labour Program to investigate complaints when they are received, and to ensure that employers are in compliance with the new equal treatment and temporary help agency provisions.

Schedule II of the CLSR

The CLSR mandates employers to post certain notices. Schedule II specifies the content of one such notice, which includes a list of the minimum labour standards covered by Part III of the Code, a link to a website providing further information and a statement that inquiries will be treated confidentially. This schedule will be updated to reflect the coming into force of the equal treatment and temporary help agency provisions as well as other recent changes to the Code.

Administrative Monetary Penalties

On January 1, 2021, Part IV (Administrative Monetary Penalties) of the Code was brought into force to promote compliance with requirements established under Part II (Occupational Health and Safety) and Part III of the Code. The AMPs Regulations designate and classify violations of provisions under the Code and its regulations, making them subject to an administrative monetary penalty (AMP) in cases of non-compliance. Only those violations that are designated can be subject to an AMP.

When amendments are made to Part III of the Code and its associated regulations, Schedule 2 of the AMPs Regulations must be updated to incorporate any new requirements that may be violated. To ensure that AMPs can be imposed if an employer violates the new equal treatment and temporary help agency provisions in the Code, these provisions must be designated and classified in Schedule 2.

The AMPs Regulations specify the method used to determine the amount of an AMP in each situation when issuing the notice of violation. The baseline penalty amount applicable to a violation varies depending on the type of person or department believed to have committed a violation and the classification of the violation. For violations under Part III of the Code, each designated violation is classified as either type A, B, C, or D, in order of increasing severity, according to the level of risk and/or the impact and significance of the violation as outlined in Table 1.

Table 1: Classification method for violations under Part III of the Code
Type  Description 
A Related to administrative provisions.
B Related to the calculation and payment of wages.
C Related to leave or other requirements, which could have an impact on the financial security, or health and safety, of an individual or group of individuals.
D Related to the employment and protection of employees who are under the age of 18.

Objective

The objective of the Regulations is to support the implementation and enforcement of the new equal treatment and temporary help agency provisions, by providing additional clarity to terms used in the legislation, further defining criteria for justified pay differences, providing clarification on the comparison of wages, setting out record-keeping requirements for employers, and ensuring that the AMPs regime can be used to promote compliance and enforce the provisions.

Description

The Regulations will clarify the legislative and regulatory provisions by defining terms, adding exceptions, setting out new requirements, designating the new legislative and regulatory obligations as violations under Schedule II of the AMPs Regulations, and address miscellaneous technical amendments resulting from the new equal treatment and temporary help agency provisions of the Code.

Definition of “industrial establishment”

For the purposes of the equal treatment and temporary help agency provisions, “industrial establishment” will constitute the physical or general location where work is being carried out. Two or more worksites of the same employer will be considered part of the same industrial establishment if they are in the same Employment Insurance (EI) region, as defined in Schedule I of the Employment Insurance Regulations.

Under paragraph 27(a) of the CLSR, EI regions are already used to determine what constitutes an industrial establishment for the application of group termination requirements to most federally regulated employers. This measure helps account for the different economic realities of each region. Using EI regions in the context of equal treatment and temporary help agency provisions will provide a clear and objective way for employers and Labour Program Officers to determine which employees work in the same industrial establishment when the employer has more than one worksite.

If an employer has two or more industrial establishments, the Regulations set out clear and objective criteria to determine to which one an employee belongs. They provide a general rule applicable to most employees, with more specific rules for transportation employees and remote workers.

The general rule is that an employee is considered to work in the industrial establishment of the employer where the employee most often reports to work in person.

An employee whose main duty of employment is the transportation of goods or passengers by motor vehicle, train, aircraft, or ship is considered to work in the industrial establishment where their home terminal, base, station or port is located.

With respect to employees who perform all their work hours remotely, they are considered to work in the industrial establishment in which they most often reported for work before their remote work agreement took effect, unless the nature of their duties, or those carried out there, have since changed. If this primary indicator does not apply or is insufficient to determine the industrial establishment to which an employee is attached, the Regulations specify the indicators, considered together, that must be used to determine where the employee is deemed to work. These take into consideration the establishment in which

Definition of “employment status”

For the purposes of the equal treatment and temporary help agency provisions of the Code, the Regulations define “employment status” to include differences in the number of hours normally worked (such as full-time and part-time) as well as differences in the term of employment (such as being permanent or temporary, which includes having a fixed-term contract, or employment on a seasonal, casual or irregular basis).

Definition of “system”

As mentioned earlier, in response to stakeholder feedback received following prepublication in the Canada Gazette, Part I, a definition has been added to the Regulations to clarify what is meant by an employer’s “system.” This definition is important in delineating the exceptions to the equal treatment requirements specified in subsections 182.1(2) and 203.2(2) of the Code, which state that differences in wage rates are permissible if they are due to a system based on seniority, merit, quantity or quality of production, or any other criterion prescribed by regulation. For the purpose of the equal treatment and temporary help agency provisions, “system” means a system that applies to all employees whose rates of wages are comparable because they work in the same industrial establishment, perform substantially the same kind of work (which requires substantially the same skill, effort and responsibility), perform work under similar working conditions and satisfy any other criterion prescribed by regulation.

However, it is important to note that this definition of system is only relevant for an employer that wishes to apply one of the exceptions. In practical terms, it clarifies that in order to invoke an exception, an employer must have a system that applies to all employees whose rates of wages are comparable under subsection 182.1(1) or 203.2(1) of the Code. The particulars of this system must also be communicated to these employees in writing or made readily available for their examination.

The intent of this measure is to ensure that exceptions are not cited arbitrarily while at the same time avoiding the imposition of new administrative obligations on employers to produce standalone documents outlining their pay system. According to the new definition in the Regulations, an employer’s system may be documented in various written formats, such as contracts, pay policies, employment statements, or other relevant materials, as long as employees are informed in writing or the information is made readily available.

Additional criteria justifying differences in rates of wages (exceptions)

The Regulations specify additional circumstances under which differences in rates of wages are allowed in the list of exceptions already provided for under the Code’s equal treatment and temporary help agency provisions. Mirroring similar exceptions that apply with respect to requirements of the Pay Equity Act, these will allow differences in rates of wages due to a system based on one of the following criteria:

Comparing rates of wages

The Regulations clarify that, for the purpose of determining whether two employees are paid the same or a different rate of wages, only the same types of wages can be compared (e.g. calculations based on time, mileage rate, piece rate, commission rate, overtime rate, or a rate applicable to other types of wages). This will allow the Labour Program to ensure that equal treatment and temporary help agency provisions are applied equitably through like-for-like comparisons.

An update to the Regulations since the prepublication in the Canada Gazette, Part I, now specifies that the rates of wages of any employees who are paid a rate based on time may be compared, even if these rates use a different quantum (e.g. hourly, daily or weekly rate, annual salary). The previous proposal had been to allow only employees paid an hourly rate to be compared.

This change will ensure that employees paid a rate based on larger increments of time are also considered comparable. For example, the wage rate of an employee who is paid on an hourly basis can now be compared with an employee who is paid an annual salary, so long as they are performing substantially the same work. Since both rates are based on time, they can be measured using a common denominator.

Record keeping (new system criteria covered by record-keeping requirements)

The Regulations introduce new record-keeping requirements to the CLSR, stipulating that all employers must keep the following records related to each review of rates of wages requested by an employee under the new equal treatment and temporary help agency provisions:

An employer that is a temporary help agency must also keep

Notices to be posted and other amendments

The CLSR requires federally regulated employers to post, in readily accessible places in their establishments, a list of the labour standards provisions contained in Part III of the Code. The notice, which is outlined in Schedule II of the CLSR, will be modified to add the new equal treatment and temporary help agency provisions to the list of labour standards, as well as to update the link to a website containing additional information. One technical amendment will also be made to replace “Sick leave” with “Medical leave,” reflecting a terminological change in the Code.

Designation and classification of new Code provisions

The Regulations will amend Schedule 2 of the AMPs Regulations to designate the following violations. These are classified as type C, since they could have an impact on the financial security of an individual or group of individuals:

The following violations will be designated as type B in Schedule 2 of the AMPs Regulations, as they address the calculation and payment of wages:

The following violations will be designated as type A in Schedule 2 of the AMPs Regulations, as they address the new record-keeping regulatory provisions and are administrative in nature:

Regulatory development

Consultation

The Labour Program held two consultations with stakeholders on the proposed regulatory package.

Modern employment standards consultation — 2019

In June 2019, the Labour Program held consultations on modern labour standards. A discussion paper pertaining to several amendments to Part III of the Code, including those concerning equal treatment and temporary help agencies, was shared with over 600 federally regulated stakeholders from the employer and employee communities, including Labour Standards Advisory Committee members, as well as with Indigenous partners, community organizations, and think tanks. Written submissions were received from 68 stakeholder groups but only a small number of comments were provided on the topic of equal treatment and temporary help agencies.

All stakeholders agreed that certain terms in the equal treatment and temporary help agency provisions need to be clearly defined. Some stakeholders cautioned that the language used in defining terms should not circumvent the intent of the new Code provisions. For example, employer representatives recommended that the term “merit” be defined to give the employer the ability to justify differences in wage rates, noting that merit and performance are critical to business operations and should remain as an exception to the prohibitions on wage discrepancies. Employee representatives and stakeholders within the non-profit sector advocated that the term “merit” be evaluated based on skills to do the job and not how well someone does the job; and that the term “seniority” should be defined as “date since hire or length of service” and not be based on the numbers of hours worked. Adding a definition to “wage” that would take into consideration different forms of income, such as bonuses, was also suggested.

Feedback also showed some confusion about how the equal treatment and temporary help agency provisions would apply to employees working in different geographical locations. Employers requested that it be permissible to pay employees differently based on the physical location of their work: for example, employees living in the north may be given a retention bonus or additional pay to accommodate the increased cost of living.

Online consultation — 2022

Between December 21, 2021, and February 21, 2022, the Labour Program held additional online consultations to obtain further stakeholder input on the proposed Regulations. Stakeholders were asked to provide feedback via an online consultation entitled “Discussion Paper: Fall 2021 Labour Program External Consultations - Regulatory Initiatives under the Canada Labour Code.”footnote 3 Nine written submissions related to the proposed Regulations were received from employer associations representing various federally regulated industries, employee associations, unions, and community organizations.

Employer representatives advocated that the list of exceptions to the prohibition on differences in rates of wages in the legislation be expanded through the proposed Regulations to justify different rates of wages. For example, small businesses’ ability to negotiate individually with their non-unionized employees could be impacted by the equal treatment legislative provisions. Accordingly, they suggested that the regulations introduce an exception to allow for different rates of wages based on employee preferences (e.g. flexibility over higher pay). They also suggested that the regulations allow for different rates of wages based on employee reclassification and labour shortages to mirror the Pay Equity Act.

Employers also suggested exceptions be added to accommodate classes of employees or to exempt unionized workplaces with pre-existing collective bargaining agreements from the Code’s requirements. Some employers highlighted the long history of collective bargaining within their sector, such as longshoring, and noted that the term “seniority” is a collective bargaining concept that falls within the purview of unions. It was further recommended that differences between employees’ rates of wages be allowed where employees’ remuneration is based on a system that relies on existing, predetermined salary ranges. Employers also suggested that an exception be added to allow for different rates of wages for summer students and students employed through a post-secondary co-op or internship program, since their positions are primarily designed for educational purposes.

Submissions from unions, employee associations, and community organizations expressed disagreement with the proposals to introduce further exceptions. They suggested that such measures would create additional opportunities for employers to justify pay differences based on what could be construed as subjective assessments. They were not supportive of exemptions that could create further wage disparities.

Feedback from employee representatives focused primarily on the definitions of terms used in the proposed regulatory provisions. For example, the phrase “same industrial establishment” was considered too restrictive, as it might allow large employers with multiple workplaces to discriminate based on the workplace to which an employee is assigned. Employee representatives recommended broadening the definition to encompass the same geographical regions. Furthermore, they suggested that terms in the legislative provisions, such as “substantially the same kind of work” and “seniority,” be defined in the proposed Regulations.

Unions and labour groups also provided feedback relating to provisions related to temporary help agencies. Employee representatives expressed support in particular for regulations that address the phenomenon of “perma-temp” employees. Perma-temp employment refers to employees working for the same temporary help agency for a prolonged, possibly indefinite period. Perma-temp employees often work the same schedules and hours as employees of clients and are often required to take client training and attend client meetings. However, employee representatives raised concerns about the seniority exception, considering it problematic, as most temporary help agency workers will have lower seniority relative to client employees. This is due to the nature of work assigned to temporary help agency employees, which is usually over periods of short duration. As a result, existing disparities could be reinforced. They were also of the view that allowing for differences in rates of wages based on geographic location would be problematic, as it might incentivize employers to outsource work to temporary help agencies located in lower-cost jurisdictions.

The proposed Regulations, which were prepublished in the Canada Gazette, Part I, were adjusted based on stakeholder feedback received during those consultations. While initially a definition of the term “seniority” was to be included in the proposed Regulations, it was removed as a result of stakeholder input at that time. The concept of seniority pertains to a set of specific provisions set out in collective agreements that define how seniority is earned and retained, as well as its associated value. These provisions can differ significantly from one collective agreement to another. (The final Regulations still do not provide a definition of seniority as a result of that feedback.)

The original definition of the term “industrial establishment,” which was presented in the aforementioned discussion paper, was also expanded in the prepublished Regulations. The Regulations (both at prepublication and in final form) now provide clear and objective criteria, using geographic regions specified in the Employment Insurance Regulations, to determine whether two or more locations where the same employer operates can be considered part of the same industrial establishment. This updated definition offers additional clarity for employment sectors, in which jobs typically require travel or involve multiple job sites, particularly in the road transportation, rail, aviation, and marine sectors. In addition, the definition accommodates modern realities of employment, such as telework, and ensures that employers cannot evade the Code’s requirements by claiming that remote workers belong to a different industrial establishment, as would be the case if their civic address were to be considered the location of their work.

Additional exceptions to the prohibition on wage discrimination were also incorporated into the prepublished Regulations from those that were presented in the online consultation discussion paper, in part to address stakeholder concerns about the existence of other legitimate reasons for employers to pay one employee more than another, but also to ensure consistency with other federal legislation, such as the Pay Equity Act.

Prepublication in the Canada Gazette, Part I: Stakeholder engagement and feedback summary

The regulatory proposal was prepublished in the Canada Gazette, Part I, on February 22, 2025, initiating a 30-day public comment period. To ensure stakeholders had sufficient opportunity to provide feedback, comments were accepted until April 23, 2025, effectively extending the comment period to 60 days. During that time, the Labour Program received a total of 11 written submissions: 3 from employer organizations, 3 from employee organizations or advocacy groups, and 5 from individuals, including 3 anonymous submissions. In addition to written feedback, the Labour Program held two meetings with Indigenous partners and one meeting with a union representative from the air transportation sector to discuss the regulatory package.

Key messages from employer organizations

The key messages received from employer organizations were that

Key messages from employee organizations and advocacy groups

Feedback from employee representatives focused on strengthening protections for workers:

The following provides detailed responses to the comments received after prepublication, organized by subject matter.

Stakeholder feedback: the proposed definition of “industrial establishment”

Employer stakeholders objected to the use of EI regions in defining “industrial establishment” under the equal treatment and temporary help agency provisions. It was argued that this approach could misalign with local labour markets and an alternative methodology was proposed: using census metropolitan areas (CMAs) and census agglomerations (CAs), as is used in the Refusal to process a Labour Market Impact Assessment application policy under the Temporary Foreign Worker Program (TFWP).

In response, the Labour Program reviewed the TFWP policy in question and assessed the viability of using CMAs and CAs for defining an industrial establishment instead of using EI regions.

After careful consideration, it was determined that no changes to the definition of industrial establishment in the Regulations are necessary. This decision is supported by the exception in the Regulations stating that equal treatment and temporary help agency provisions do not apply as long as the difference in employees’ rates of wages is due to a system based on the geographic area in which an employee works. To support the implementation of these provisions, the equal treatment and temporary help agency interpretations, policies, and guidelines (IPGs) clarify that a single industrial establishment may include multiple geographic areas. IPGs are guidance documents which the Labour Program makes publicly available to assist stakeholders in their interpretation and implementation of relevant legislation and regulations. This flexibility enables employers to maintain regionally responsive wage systems without altering the regulatory framework.

Additionally, CMAs and CAs do not cover all regions of Canada, making them unsuitable for defining industrial establishments nationwide.

Stakeholder feedback: workers who are in training or development

In reaction to the proposed exception that would have allowed paying employees in training or development a lower wage rate, an employee advocacy group emphasized that such employees should be fully covered by the provisions. Employer representatives also expressed the need for clearer definitions of what constitutes training or development.

To address these concerns, the exception related to employees in training or development has been removed from the Regulations. This change aligns with the intent of the provisions: to ensure equal pay for employees performing substantially the same work.

As a result, if an employee in training is performing the same work as an employee who is not in training, they must be paid the same wage rate. However, if the employee in training is performing substantially different work — such as requiring more supervision or having fewer responsibilities — they are not entitled to the same rate of pay.

The proposed exception was deemed unnecessary because the existing provisions already do not apply when there are meaningful differences in the work performed. This clarification is reflected in the IPGs, which specify that employees in training who perform substantially the same work must receive equal pay, while those whose work differs significantly are not subject to this requirement.

Stakeholder feedback: comparable wages

A comment was received from an employee advocacy stakeholder concerning the rule that only the same types of rates of wages are to be comparable for the purposes of equal treatment and temporary help agency provisions. The argument was made that this rule could allow employers to evade the equal treatment requirements by paying two employees performing substantially the same type of work with different types of wage rates.

To address this concern, the Regulations have been changed to ensure that any calculations of wages, which are based on time, rather than only on an hourly basis, are considered comparable. The intention of these Regulations is not to overly restrict employer remuneration practices or to imply that similar types of work are substantially the same in cases where meaningful differences exist, which are best understood by employers and the employees performing the work. That said, ensuring that all wages based on time can be compared, rather than only those based on an hourly rate, strikes a balance by minimizing the potential for exploiting this provision without becoming overly prescriptive.

Stakeholder feedback: temporary foreign workers

A union representative expressed the need for clarity regarding the application of these provisions to temporary foreign workers. While it is acknowledged that the Temporary Foreign Worker Program applies a prevailing wage policy to protect vulnerable workers, that is not the same as paying the same wage rate as that received by an employee performing substantially the same kind of work in the same industrial establishment. Therefore, the application of these provisions to temporary foreign workers has been clarified in the supporting IPGs.

Stakeholder feedback: temporary help agencies charging fees

An employer representative argued that temporary help agencies should be allowed to decide when to charge fees for job preparation services. This comment is aimed at subsection 203.1(1) of the Code rather than the Regulations. Given that adopting this change would require reversing the current policy through a legislative amendment, this falls outside the scope of this regulatory exercise. Banning fees aligns with similar prohibitions that have existed under provincial legislation for many years.

Stakeholder feedback: various concerns related to the exceptions

Feedback on the exceptions was provided by employer representatives, employee representatives and employee advocacy groups. They expressed a wide range of concerns:

To address these concerns, the Regulations have been modified to clarify what constitutes a legitimate system, given that all regulatory exceptions under the new sections are contingent upon an employer having such a system in place.

The Regulations now require that an employer’s system applies to all employees whose rates of pay are comparable based on the criteria outlined in subsections 182.1(1) and 203.2(1) of the Code. This refers to employees who work in the same industrial establishment; perform substantially the same kind of work; perform work that requires substantially the same skill, effort, and responsibility; whose work is performed under similar working conditions; whose work is remunerated using the same type of wages; and satisfy other criteria set by regulation. The Regulations now also require that information about the system be communicated in writing to, or made readily available for examination by, any impacted employees.

By updating the Regulations to include a definition of what constitutes a valid system to justify the use of exceptions while remaining compliant with the Code, it will be more difficult for employers to invoke an exception on an ad hoc basis; it will reduce the risk of employers making subjective assessments and address concerns regarding the clarity of the exceptions.

Stakeholder feedback: temporary help agencies under federal jurisdiction

A comment was made that clarity is needed regarding when temporary help agencies fall under federal jurisdiction and whether this jurisdictional question was considered in the cost-benefit analysis in the RIAS.

There are few federally regulated temporary help agencies. Consequently, the cost-benefit analysis does not include costs and benefits for this aspect of the amendments. That said, additional federally regulated temporary help agencies may appear in the future. Therefore, it is best to have clear rules in place. When the Regulations take effect, any temporary help agency employee whose employer falls under federal jurisdiction will benefit from the new protections of the Code.

Stakeholder feedback: current economic and business environment

An employer representative raised the concern that the Regulations should not come into force until the current Canadian business environment becomes more stable. This comment has been taken into consideration. However, it must be noted that the implementation of these provisions, which were passed in 2018, has already been delayed by several years to accommodate employers affected by the pandemic and the economic uncertainty of recent years. Further postponement, as suggested, would mean depriving employees of important protections indefinitely. As an alternative, employers will be afforded an additional 180 days to finalize adjustments to their pay policies before the equal treatment and temporary help agency provisions of the Code come into force.

Stakeholder feedback: unionized environments

A comment was made suggesting that any existing collective agreement should be allowed to expire before equal treatment and temporary help agency provisions start applying to employees covered by that agreement. It has been determined that no further changes to the Regulations are required to address this concern. This is because transitional provisions in BIA 2018, namely sections 518 and 520, state that, if an existing collective agreement permits differences in wage rates based on employment status, and if there is a conflict between the agreement and the new provisions of the Code when they come into force, then the collective agreement’s rules will prevail — but only for the subsequent two-year period. As a result, the terms of any current collective agreement that allow pay practices prohibited by the Code can continue to apply for up to two additional years — beyond the 180-day implementation period — before equal treatment and temporary help agency provisions take effect in practice.

Indigenous engagement, consultation and modern treaty obligations

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, a modern treaty implications assessment was conducted. No impacts on modern treaties have been identified in relation to these Regulations.

In August 2022, national Indigenous organizations were provided with a discussion paper outlining the regulatory changes being contemplated and requesting their feedback. The Labour Program received two submissions from Indigenous non-governmental organizations. Both submissions objected to using seniority as a criterion for justifying differences in rates of pay and ranking employees, noting that merit and quality of work were preferable. In addition, one submission noted that equal pay should also apply to provincial, territorial, and non-profit employees receiving the same rate of pay as federal employees. Given that the criterion of seniority is set out in the legislation, and that Part III of the Code only applies to federal Crown corporations and federally regulated private-sector industries, no changes could be made to the Regulations in response to these submissions.

Instrument choice

The Regulations are required to support the implementation and enforcement of the new equal treatment and temporary help agency provisions in workplaces that are subject to Part III of the Code. The objective cannot be accomplished through other instruments, as the Regulations are necessary to clarify the application of the legislative provisions and to ensure they can be enforced.

Regulatory analysis

The monetized costs of the Regulations include the costs to employers of increased wages to employees who would be granted equal treatment under the provisions, costs to employers of record-keeping requirements, and costs to the Labour Program/federal government for evaluating equal treatment reviews. The total present value (PV) cost over 10 years is estimated to be $6,115,860.

The monetized benefits of the Regulations are increased wages to employees who would be granted equal treatment under the provisions. The total monetized PV of benefits over 10 years is estimated to be $1,428,172. Several benefits could not be monetized due to limitations on data and methodological challenges. These include increased employee efficiency and motivation with reduced turnover, and prevention of wage discrimination.

This results in a net monetized cost of $4,687,688 in PV.

Analytical framework

Benefits and costs are assessed by comparing the baseline scenario against the regulatory scenario. The baseline scenario depicts what is likely to happen in the future if the Government of Canada does not implement the Regulations. The regulatory scenario provides information on the intended outcomes of the regulatory proposal. Where possible, impacts are quantified and monetized. Monetized costs and benefits for the 10-year analytical period are discounted to the year of 2026 at a discount rate of 7%, and expressed in 2023 Canadian dollars. Only direct costs and benefits for stakeholders are considered in the cost-benefit analysis.

Baseline scenario

In the baseline scenario, the equal treatment and temporary help agency provisions and requirements of the Regulations are not in force. Employees do not have the right to request that their wages be reviewed or adjusted to match another employee working in the same industrial establishment and performing substantially the same kind of work (requiring substantially the same skill, effort, responsibility and under similar working conditions, and satisfying other criteria set by regulations per the “Description” section of this RIAS).

It is also important to note that the provisions do not apply to wage differences across different industrial establishments.

Regulatory scenario

In the regulatory scenario, equal treatment and temporary help agency provisions and requirements of the Regulations are in force. An employee who works in the same industrial establishment and performs substantially the same kind of work, requiring substantially the same skill, effort, responsibility and under similar working conditions as another employee and satisfies other criteria set by regulation (per the “Description” section of this RIAS), will now be able to submit a request for salary review.

With the new review mechanism, employers will need to keep records of each request for a salary review and the employer’s written response, including the justification used. This ensures that requests are addressed and that, if an employee files a complaint, a Labour Program officer can review the employer’s statement of compliance.

Data and assumptions

The analysis used data from the 2015 Federal Jurisdiction Workplace Survey (FJWS) to group non-permanent and part-time employees according to the weekly scheduled hours data provided per industry for all federally regulated private sector (FRPS) industries. The analysis estimated the number of part-time and non-permanent employees of the federal jurisdiction, including those employed in small businesses.

Similarly, the analysis used the 2015 FJWS to estimate the number of employers per industry for all FRPS industries and the number of small businesses impacted.

The analysis applied an assumed employee count growth rate of 0.92%, and an assumed employer count growth rate of 0.84% for the 10-year analytical period.

To obtain the proportion of employees submitting requests for review for equal treatment, the Labour Program consulted internally with the Labour Standards operations team. They indicated that fewer than 0.3% of employees may submit requests for equal treatment reviews.

The Labour Program consulted the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST). The CNESST’s mission is to promote labour rights and obligations and ensure their respect, both among workers and employers in Quebec. Data provided by the CNESST showed that requests for equal treatment reviews were higher in the first year of launch compared to subsequent years. Additionally, the CNESST provided information on the number of pay equity reviews and their approval rates (15%), which the analysis estimated for the federal jurisdiction.

Based on internal and external consultations, the analysis assumes that 0.2% of all employees affected by the equal treatment and temporary help agency provisions would submit requests for reviews in the first year of implementation, and 0.1% in the subsequent years of the 10-year analytical period, with an assumed approval rate of 15%.

To determine the number of employees submitting requests for reviews, the analysis applied the 0.2% request rate for the first year of implementation and 0.1% request rate for subsequent years to the number of affected employees for equal treatment and temporary help agency provisions.

To determine the number of employees benefitting from a wage adjustment, the analysis applied an assumed approval rate of 15% to the number of employees submitting requests for reviews for the equal treatment and temporary help agency provisions. These are displayed in the tables below.

Table 2: Average number of employees affected
  Number of affected employees (A) Number of employees submitting requests for reviews (B)=(A)*0.2% (first year) and 0.1% (subsequent years) Number of employees benefitting from a wage adjustment (C) =(B)*15%
First year of implementation (2026) 187 549 375 56
Subsequent years after implementation (2027–2035) 196 392 196 29
Treatment of temporary help agencies

Temporary help agencies are included within the scope of the Regulations. However, there are few of them that are federally regulated. The Regulations for temporary help agencies are necessary for the following reasons (non-exhaustively): there is limited jurisprudence; the Regulations ensure the Code can be applied to existing and future temporary help agencies that fall under federal jurisdiction; and the Regulations ensure consistency with provincial systems.

Consultations with the Association of Canadian Search, Employment and Staffing Services (ACSESS), which represents approximately 85% of temporary help agencies in Canada, confirmed that none of their member agencies appear to operate in federally regulated sectors. As a result, it is expected there are few temporary help agencies that may be subject to these provisions. Consequently, the cost-benefit analysis does not include costs and benefits for this aspect of the Regulations.

Benefits and costs

Benefits
Benefit to employers

Productivity — Increasing employee efficiency and motivation with reduced turnover (qualitative)

Equal pay for temporary and part-time workers significantly boosts employee motivation and efficiency, leading to reduced staff turnover and absenteeism. This, in turn, enhances job performance, customer service, and work ethic. By offering higher wages, labour regulations can help safeguard innovations that drive overall improvement in labour productivity. Research published in the journal entitled Canadian Public Administration footnote 4 indicates that increased hourly wages and the resulting economic security can improve career satisfaction, motivation, and overall productivity. Additionally, the reduction in turnover rates may offset the expenses associated with higher salaries. Since many part-time and temporary workers earn wages below the poverty line, this measure could also help reduce poverty and reliance on government support.footnote 5

Benefit to employees

Benefits of increased wages to employees who would be granted equal treatment (monetized)

The Regulations are expected to result in benefits to those employees who will be granted equal treatment. The PV of the total benefits associated with increased salary for those employees who will be granted equal treatment is estimated to be $1,428,172.

Prevention of wage discrimination (qualitative)

Economic research demonstrates that part-time and non-permanent employees often receive lower hourly wages than comparable full-time or permanent employees. While some of these differences are explained by job type, experience, or occupation, research consistently finds a portion of the gap that cannot be explained by these factors. In labour economics, this remaining gap is considered a sign of possible unequal treatment.footnote 6,footnote 7

For part-time workers, studies in Europe and North America typically find that 20% to 50% of the wage gap remains unexplained after accounting for relevant job and worker characteristics.footnote 8 For temporary or non-permanent workers, research from Japan, the European Union, and New Zealand report unexplained wage gaps ranging from 8% to 17%.footnote 9,footnote 10,footnote 11

The Regulations help address these types of unexplained differences by giving part-time and non-permanent employees a clear process to request a wage review. Even though only a small number of employees are expected to use this process based on the behavioural assumptions in the cost-benefit analysis, having the mechanism in place encourages employers to maintain fair and transparent wage practices.

Monetized benefits

The monetized benefits are summarized in the following table:

Table 3: Monetized benefits summary
Benefit type Stakeholders affected Present value benefit
Increased wages to employees who will be granted equal treatment Employees $1,428,172
Costs

In summary, the total PV costs for the 10-year analytical period are estimated to be $6,115,860.

The costs of the Regulations can be divided into three broad categories:

  1. Costs to employers of increased wages for employees who will be granted equal treatment;
  2. Costs to employers of record-keeping requirements; and
  3. Costs to the federal government for implementing, monitoring compliance with, and enforcing the Regulations.
Cost No. 1: Costs to employers of increased wages to employees who will be granted equal treatment

These costs include the time spent by human resources (HR) managers to assess the requests for review submitted by employees and to produce statements to determine and justify if a wage adjustment is granted or if the employees’ current rate of wages complies with the provisions. It also includes the costs to employers associated with modifying employees’ pay rates in the pay system for employees who will have wage increases due to the Regulations, as well as the costs employers will incur to pay higher wages to workers that receive an upward wage adjustment.

It is assumed that the costs of the time spent by HR managers to assess the requests for review submitted by employees and to produce statements to determine and justify if a wage adjustment is granted or if the employees’ current rate of wages complies with the provisions apply to 0.2% of estimated part-time and non-permanent employees in the first year, and to 0.1% in subsequent years. Each review is expected to take one hour for the HR manager to review at a wage of $57.36/hour (2023 Can$).footnote 12

To estimate the costs to employers regarding modifying employees’ pay rates in the pay system for employees who will have wage increases due to the Regulations, it is assumed that of the employees who submit requests for review, 15% will be approved and these employees will have their wages increased in their pay system. The HR manager will dedicate 30 minutes per employee to modify their pay rates in the pay system, with an assumed wage of $57.36/hour (2023 Can$).

To estimate the costs to employers regarding higher wage payments for those employees that submitted requests for review and were approved, the higher wage payments were calculated using the midpoint of hours worked per week, which is assumed to be 15 hours, multiplied by the weeks worked per year, assumed to be 48, multiplied by the wage differentials per industry.

The economic literature on wage discrimination suggests that a large portion of the wage difference between full-time and part-time workers, and between permanent and non-permanent workers, can be explained by observable factors such as occupation, tenure, job characteristics, experience, and worker attributes. Correspondingly, only a small portion of wage differences are unexplained after accounting for such factors and can thus be considered as potentially discriminatory.

It is important to note that these empirical results do not necessarily reflect how wage adjustments will be applied in practice when wage reviews lead to increases under equal treatment and temporary help agency provisions. Once the amendments come into force, if a wage review results in a wage adjustment and no exceptions apply, employers will be required to eliminate any unjustified differences in wage rates. In such cases, wage increases are more likely to be determined through a direct comparison of job functions rather than through an employer-led econometric analysis that attributes portions of the wage gap to various explanatory factors. Given this, and for the sake of simplifying the analysis, it is assumed that wage adjustments resulting from approved reviews will correspond to the full observed wage difference.

To estimate wage differentials for each industry, annual wages from 2019 to 2023 available from Statistics Canada were used.footnote 13 The data were indexed to 2023 Canadian dollars and mapped using the FJWS industry classifications and the North American Industry Classification System (NAICS). This product was used to estimate the annual difference in the average hourly wage rate for full-time and part-time employees.

Table 4: Calculated wage differential per federal jurisdiction workplace survey (FJWS) Industry (indexed to 2023 Can$)
FJWS industry Wage differential
Transportation (air, rail, road, and maritime) $5.84
Banks $12.79
Feed, flour, seed, and grain $4.32
Telecommunications and broadcasting $16.03
Other (includes postal and pipelines, fisheries and oceans, nuclear industry and mines, and oil and gas extraction) $9.74

Similarly, to estimate the wage differentials between permanent and non-permanent employees, the analysis used the average usual hours and wages dataset from Statistics Canada,footnote 14 which displayed average hourly wages in current dollars for permanent and non-permanent employees from December 2020, 2021, 2022 and 2023. The analysis indexed these wage rates to 2023 Canadian dollars and used the difference between the average hourly wage rate for permanent employees and the average hourly wage rate for non-permanent employees to determine the non-permanent wage differential of $7.35.

Cost No. 2: Costs to employers of record-keeping requirements

These costs include the time spent by employers to keep records of the requests for salary reviews and the results of those reviews, including copies of the statements produced to justify the employer’s decision.footnote 15 Employers must also keep records of written notices of employment or promotion opportunities provided to employees.

To estimate the cost of maintaining records related to salary review requests, the analysis assumes that 0.2% of part-time and non-permanent employees will request reviews in the first year, and 0.1% in subsequent years. HR administrators are expected to dedicate 30 minutes per request to record the outcome and supporting statement, at a wage of $33.97/hour (2023 Can$).footnote 16

To estimate the cost of maintaining the required records for all employees, such as position title, job description, employment status, work conditions, and any criteria used to justify differences in wage rates, the analysis assumes that HR administrators will dedicate 5 minutes per employee at the same wage rate. This estimate reflects the fact that employers are most likely already maintaining this information in existing HR, payroll, job classification, and staffing systems. As a result, the only incremental activity under the Regulations is to record or upload the specific criteria or system used to justify wage differences when such criteria are relied upon.

Finally, to estimate the costs of keeping records of written notices of employment or promotion opportunities, the analysis assumes that HR administrators will dedicate 5 minutes per employer to save and record these documents, with an assumed wage of $33.97/hour (2023 Can$).

Cost No. 3: Costs to the federal government for implementing, monitoring compliance with, and enforcing the Regulations

The Labour Program consulted internally to determine the costs to the federal government for implementing the Regulations, and the labour costs and time required for the Labour Program officers to review and assess the equal treatment requests.

The Labour Program has prepared interpretation and guidance materials to support implementation and assist both employees and employers on their new rights and responsibilities. This includes taking the necessary time, before the Regulations come into force, to understand the compliance components required to conduct inspections and/or investigations in response to complaints.

Furthermore, costs to the Labour program for reviewing and assessing equal treatment requests by Labour Program officers assume that the population of employees affected is 0.2% of non-permanent and part-time employees requesting equal treatment reviews in the first year, and 0.1% for subsequent years. It is further assumed that the approval rate of these requests is 15%. The Labour Program officer’s wage is assumed to be $42.79, and it was determined that these officers will dedicate five hours to review each equal treatment request.

Costs of the equal treatment provisions
Table 5: PV compliance costs for the equal treatment provisions
Compliance cost PV total cost
Time spent by HR managers to assess employee requests for review and producing statements to determine and justify if a wage adjustment is granted or if the employees’ current rate of wages complies with the provisions $93,201
Modifying employees’ pay rates in the compensation system for employees who have wage increases $6,990
Paying higher wages for workers that received confirmation of a wage adjustment $1,428,172
TOTAL PV COMPLIANCE COSTS $1,528,363
Table 6: PV record-keeping costs for the equal treatment provisions
Record-keeping cost PV total cost
Time spent by employers to record requests for reviews and the statements produced to determine the decision of the employer $27,598
Time spent by employers to keep records of the industrial establishment, position title, job description, employment status, and work conditions of each employee, as well as any criteria used to justify a difference in employees’ rates of wage $4,087,073
Keeping records of notices of employment opportunities for employers carrying out a practice of informing employees of employment or promotion opportunities in writing $420,680
TOTAL PV RECORD-KEEPING COSTS $4,535,351
Table 7: PV costs to the federal government for the equal treatment provisions
Cost to federal government PV total cost
Reviewing and assessing the equal treatment requests for Labour Program officers. $52,145

The total present value costs of the equal treatment provisions are found in the table below.

Table 8: Total PV compliance, record-keeping, and Costs to the Federal Government

Compliance costs

Record-keeping costs

Costs to the federal government

Total PV costs

$1,528,363

$4,535,351

$52,145

$6,115,860

Please note that figures may not add up to totals due to rounding.

Cost-benefit statement
Table 9: Monetized benefits (PV in hundreds of dollars)
Impacted stakeholder Description of benefit 2026 2027–2034 2035 Total Annualized value
Employees Increased salary $3,081 $10,227 $974 $14,282 $2,033
All stakeholders Total benefit $3,081 $10,227 $974 $14,282 $2,033
Table 10: Monetized costs (PV in hundreds of dollars)
Impacted stakeholder Description of cost 2026 2027–2034 2035 Total Annualized value
Employers Costs complying with equal treatment provisions $3,297 $10,944 $1,042 $15,283 $2,176
Costs of the record-keeping requirements $5,512 $36,379 $3,462 $45,353 $6,457
Government Costs to Labour Program for reviewing and assessing complaints $113 $373 $36 $522 $74
All stakeholders Total costs $8,922 $47,696 $4,540 $61,158 $8,708

Please note that figures may not add up to totals due to rounding.

Table 11: Summary of monetized benefits and costs (PV in hundreds of dollars)
Impact 2026 2027–2034 2035 Total Annualized value
Total benefits $3,081 $10,227 $974 $14,282 $2,033
Total costs $8,922 $47,697 $4,540 $61,158 $8,708
Net impact -$5,841 -$37,470 -$3,566 -$46,876 -$6,674
Quantified (non-monetized) and qualitative impacts

Small business lens

The analysis used the same assumptions as outlined previously in the “Benefits and costs” section focusing on small businesses that employ 1 to 99 employees. This includes small businesses from all FRPS industries employing non-permanent and part-time employees in the federal jurisdiction.

There are several requirements relating to the retention of documents, which is often considered to be an administrative cost under the definition in the Policy on Limiting Regulatory Burden on Business. However, keeping records of the industrial establishment, position title, job description, employment status and work conditions of each employee, and of any criteria used to justify a difference in employees’ rates of wage is considered to be a compliance cost, as this information is essential for employers to make the comparisons necessary to comply with the equal treatment and temporary help agency provisions in the Code. Other document retention activities set out in the Regulations are intended to demonstrate compliance and have thus been recorded as falling within the policy definition of administrative burden.

The PV of the compliance and administrative costs for small businesses in all industries for the 10-year analytical period are summarized below.

Small business lens summary
Table 12: Benefits
Type of activity Description of benefit Present value Annualized value
Compliance Increased salary to employees $181,351 $25,820
Total Total benefits $181,351 $25,820
Table 13: Costs
Type of activity Description of cost Present value Annualized value
Administrative   Costs to employers to keep record of requests for reviews and the statements produced $3,480 $495
Costs to employers of keeping records of notices of employment opportunities $402,580 $57,318
Compliance Costs to employers to keep records of the industrial establishment, position title, employment status, and work conditions of each employee, as well as any criteria used to justify a difference in employees’ rates of wage $515,293 $73,366
Costs to employers associated with the time assessing, reviewing, and producing statements for the equal treatment requests $11,751 $1,673
Costs to employers associated with modifying employees’ pay rates in the pay system $881 $125
Costs to employers in terms of higher wage payments $181,351 $25,820
Total Total costs $1,115,336 $158,799
Table 14: Net impacts
Amount Present value Annualized value
Net impact on all impacted small businesses -$933,985 -$132,978
Average net impact on each impacted small business -$48.52 -$6.91

One-for-one rule

Element A of the one-for-one rule will be triggered, as there will be monetized increases in administrative costs to employers.

Element B of the one-for-one rule will not be triggered, as the proposal will not introduce a new regulatory title.

The record-keeping provisions of the amendments will increase the administrative burden under the one-for-one rule. The costs to keep records of the requests for review and the statements produced to determine the decision of the employer will be considered burden “in” under the one-for-one rule. The costs of keeping records of notices of employment opportunities will also be considered burden “in.”

As noted in the “Small business lens” section, the costs of keeping records of the industrial establishment, position title, job description, employment status and work conditions of each employee, and of any criteria used to justify a difference in employees’ rates of wage will not be considered an administrative burden because employers will need to collect this information to comply with the equal treatment and temporary help agency provisions in the Code.

Assumptions used to estimate the costs to keep records of the request for review and the statements produced to determine the decision of the employer are such that employers will dedicate 30 minutes per affected employee to keep records of equal treatment requests for review and to produce statements for the affected number of employees, following the assumptions of the request for review proportions, for the 10-year analytical period, performed by their internal HR administrative assistant with an assumed wage of $32.89/hour (2012 Can$, including overhead).

Furthermore, assumptions used to estimate the costs of keeping records of notice of employment opportunities are such that all employers will dedicate 5 minutes to performing this task for the 10-year analytical period, performed by their internal HR Administrative Assistant with an assumed wage of $32.89/hour (2012 Can$, including overhead).

Finally, it was determined using the Regulatory Cost Calculator that the annualized average administrative costs will be $20,608 or $1.06 per business (2012 Canadian dollars, 2012 discount base year).

Regulatory cooperation and alignment

The Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum.

Equal treatment legislation and regulations

The impetus for the creation of the federal equal treatment provisions stems in part because two provinces, Ontario and Quebec, had similar legislation in force in 2018, and there was a desire to bring the Code into alignment with provincial counterparts. The new equal treatment provisions in the new section 182.1 of the Code are based on section 42.1 of the Ontario Employment Standards Act (ESA),footnote 17 which was in force between April 1 and December 31, 2018. This section of the ESA was introduced to ensure that employees working in the same establishment and doing substantially the same work were not paid a lower wage due to their employment status. This section of the ESA was repealed on January 1, 2019.

At present, Quebec is the only province with equal treatment legislation. Section 41.1 of the Act respecting labour standards footnote 18 prohibits an employer from paying an employee a lower rate of wages than another employee performing the same tasks in the same establishment solely because of the employee’s employment status. There are no supporting regulations for these provisions.

A cross-jurisdictional analysis was undertaken to assess protections for temporary and part-time employees, which included all members of the Organization for Economic Co-operation and Development (OECD) as well as Commonwealth countries that have legislation in force protecting employees with non-standard employment status. This included statutory regimes found in the United Kingdom, Germany, Australia, and New Zealand. The Code’s new equal treatment provisions align with equal treatment measures taken by other countries in the OECD, such as the United Kingdom, New Zealand, Japan, Germany, South Korea and Australia. These countries have legislation that addresses equal treatment of employees based on employment status.

For example, the Fair Work Act 2009 footnote 19, Australia’s core labour legislation, was recently amended to include a definition of “casual employment,” stronger rights for casual workers to convert to permanent work, and “same job, same pay” labour hire rules. Labour hire (also referred to as temporary staffing or contract labour) rules are designed to regulate the relationship between the temporary help agency, the employee, and the host business to ensure employees receive their legal entitlements.

Temporary help agencies legislation and regulation

The temporary help agency provisions of the Code are designed to ensure the equal treatment of temporary help agency employees under federal jurisdiction, and to bring federal legislation in line with existing provincial standards.

In the Labour Program’s estimation, most temporary help agencies in Canada are subject to provincial, rather than federal, jurisdiction. However, there is very little jurisprudence on this question. Accordingly, as case law on the matter evolves, more temporary help agencies may be found to fall under federal jurisdiction.

It is also possible that new federally regulated temporary help agencies will be established in the future, or that an existing agency will become subject to federal jurisdiction following significant changes to its structure or activities. Should that be the case, the Code’s temporary help agency provisions would apply to these federally regulated agencies.

Following the repeal of section 42.2footnote 17 of Ontario’s ESA in January 2019, Quebec is currently the only province in Canada that has equal treatment and temporary help agency provisions prohibiting temporary help agencies from paying their employees less than their clients’ employees. Section 41.2 of Quebec’s Act respecting labour standards footnote 18 prohibits a personnel placement agency from paying an employee a lower rate of wages than that granted to employees of the client who perform the same tasks, in the same establishment, solely because of the employee’s employment status, and in particular because the employee is remunerated by such an agency or usually works fewer hours each week.

Quebec also has regulations respecting personnel placement agencies and recruitment agencies for temporary foreign workers. However, these are related to Division VIII.2 “Personnel placement and temporary foreign workers,”footnote 18 of the Act respecting labour standards, which concerns the licensing of personnel placement and temporary foreign workers, rather than equal treatment for temporary help agency employees.

Many Canadian provinces have temporary help agency provisions in their respective labour standards legislation. However, many of these legislative provisions do not concern equal wages, but rather temporary help agencies charging fees to their employees. For example, section 12 of Alberta’s Employment Agency Business Licensing Regulation footnote 20 prohibits an employment agency business operator from directly or indirectly demanding or collecting a fee, reward or other compensation from individuals seeking employment. While Alberta’s regulations prohibit employment agencies from charging certain fees, such prohibitions are already included in the legislative amendments to the Code, and, therefore, do not need to be specified in regulations.

Section 15.1 of Manitoba’s Worker Recruitment and Protection Regulation footnote 21 specifies when a temporary help agency may charge fees. Such regulations at the federal level are not necessary, as subsection 203.1(1) of the Code will prohibit employers from charging fees once it is in force. The British Columbia Employment Standards Regulation footnote 22 has a provision that requires temporary help agencies to be licensed. This is different from what is contemplated in the Regulations, as it is not a requirement under the Code’s temporary help agency provisions. British Columbia does not have regulations related to prohibited fees or equal wages.

Australia’s Fair Work Act 2009 was recently amended to include provisions, which are now in effect, that ensure employers who supply employees to perform work for another employer pay these employees at the same rate of wages as employees of the host employer if they perform the same kind of work. These amendments also expanded the Fair Work Commission’s enforcement powers to address avoidance of these labour hire requirements to pursue businesses that attempt to avoid the new changes to labour hire arrangements. Temporary help agencies are also required to be licensed in some Australian jurisdictions.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a preliminary scan concluded that a strategic environmental and economic assessment is not required.

Gender-based analysis plus

Temporary employees (i.e. those employed on a fixed-term contract or on a seasonal, casual or irregular basis) and part-time workers are more likely to receive lower wages and have greater difficulty in gaining access to the labour market, and, therefore, depend on non-standard work arrangements.footnote 23 Data from the 2022 Survey of Employees under Federal Jurisdiction indicates that employees under federal jurisdiction occupying part-time positions tend to be women (12.4% compared to 9.5% for men).footnote 24 Although women represent a marginally higher proportion of part-time workers, they only represent 35% of employees in the federally regulated private sector compared to 65% who are men.

As for employees with temporary workplace arrangements, the 2022 Survey demonstrates that men constitute 55% of those under such arrangements compared to 45% of women. As previously mentioned, it is important to note that men represent a larger portion of employees under federal jurisdiction. According to Statistics Canada, women tend to undertake part-time work due to caring for children (27% of women in part-time work arrangements compared to 10% for men).footnote 25 Women are also more likely to work multiple jobs.footnote 26 Younger people tend to occupy part-time positions more than employees in older cohorts, often due to being in school or pursuing post-secondary education (34% of those between 15 and 24 years old).

Although the data for the federal jurisdiction is sparse, research has shown that immigrants in Canada were significantly more likely to be precariously employed (e.g. working on a part-time and/or temporary basis) than Canadian-born workers.footnote 27 This is due, in part, to language barriers, visible minority status, underutilization of immigrant skills, and a lack of access to professional networks.footnote 28 These factors give rise to immigrant populations occupying precarious employment positions.

The Regulations will benefit women, immigrants, and young people by supporting the legislative provisions. This will be achieved by defining terms used in the legislation to ensure a uniform application throughout the federally regulated private sector. The definition of “employment status,” for instance, considers the difference in the number of hours worked by an employee (part-time versus full-time) and the differences in the term of an individual’s employment contract (permanent versus temporary employee). The definition of “industrial establishment” ensures that the unique nature and work locations of employees working in industries under federal jurisdiction (rail, air, maritime, and trucking) are clearly established so that comparisons with other employees are easier.

This ensures that those employed in more precarious work are not paid less than those occupying permanent and/or full-time positions. Employees in these positions, such as women and immigrants, will be able to benefit from a higher salary than before if they perform substantially the same kind of work. Since women tend to more frequently hold multiple jobs, the increase in salary may reduce this need. It will also ensure that new employees will not be paid a lower rate of wages if they work part-time or on a temporary basis.

Implementation, compliance and enforcement, and service standards

Implementation

The Regulations will come into force on the day on which the equal treatment and temporary help agency provisions of the Code come into force. These amendments to the Code will come into force by Order in Council 180 days after the day on which that order is made.

The Labour Program has prepared IPGs for employees and employers on their new rights and responsibilities. These are available upon request and will be published shortly on the Canada.ca website.

With respect to equal treatment and temporary help agency provisions, these IPGs include guidance pertaining to

The guidance pertaining to temporary help agencies addresses

Furthermore, Labour Program officers and inspectors will receive training on the new provisions prior to their coming into force to carry out their compliance and enforcement duties.

Any inquiries, including how to access the IPGs, may be directed to the Labour Program at EDSCDMTConsultationNTModernesConsultationModernLSWDESDC@labour-travail.gc.ca.

Guidance materials for the inspectorate and information for stakeholders will be published prior to the coming into force of the legislation and accompanying regulations. However, work on these materials and information will remain iterative to allow any necessary adjustments to be made, as implementation issues are identified and operational guidance requests are received.

Compliance and enforcement

Labour Affairs officers identify non-compliance with requirements under Part III of the Code by conducting inspections or undertaking investigations in response to complaints. Compliance will be achieved using a variety of approaches along a compliance continuum. This may include educating and counselling employers on regulatory changes, including their record keeping obligations, seeking an assurance of voluntary compliance from the employer, or issuing a compliance order to cease the contravention and take steps to prevent its reoccurrence. To address more serious or repeated contraventions, an administrative monetary penalty under Part IV of the Code may be issued.

To learn more about how administrative monetary penalties may be issued, please consult the IPG document entitled Administrative Monetary Penalties - Canada Labour Code, Part IV - IPG-106.

Contact

Charleen Armstrong
Executive Director
Labour Standards and Wage Earner Protection Program
Labour Program
Employment and Social Development Canada
Email: EDSCDMTConsultationNTModernesConsultationModernLSWDESDC@labour-travail.gc.ca