Pay Equity Ontario (Canada)

Basic Summary

Ontario has two complementary pay equity regimes: the long-standing Pay Equity Act (1987) requiring equal pay for work of equal value, and the new Pay Transparency Act (2023) mandating salary range disclosure and pay gap reporting. Together, they create comprehensive pay equity and transparency obligations.

Key Legislation

Pay Equity Act (1987)

One of Canada's first proactive pay equity laws, requiring employers to:

• Establish pay equity plans
• Compare female-predominant job classes to male-predominant job classes
• Adjust compensation where work is of equal value

Scope: Public sector employers and private sector employers with 10+ employees.

Pay Transparency Act (2023)

Royal Assent: March 28, 2024 Phased implementation: 2024-2026

Requires:

• Salary range disclosure in public job postings
• Prohibition on pay history inquiries
• Annual pay gap reporting (phased by employer size)

Pay Equity Act (1987)

Employer Obligations

Public Sector

All public sector employers must establish pay equity plans.

Private Sector

• 10-99 employees: Must achieve pay equity but no formal written plan required
• 100-499 employees: Must post pay equity plan
• 500+ employees: Must establish pay equity committee with employee/union representation and post plan

Pay Equity Process

Step 1: Identify Job Classes

Group positions into job classes with:

• Similar duties and responsibilities
• Similar qualifications
• Same compensation structure

Step 2: Determine Gender Predominance

Classify job classes as:

• Female-predominant: 60%+ women, or historically female-associated
• Male-predominant: 60%+ men, or historically male-associated
• Gender-neutral: Neither

Step 3: Value Jobs

Use a gender-neutral comparison system assessing:

• Skill: Education, training, experience
• Effort: Physical, mental, sensory
• Responsibility: Supervisory, financial, decision-making
• Working conditions: Hazards, environment

Assign points to each job class.

Step 4: Compare and Adjust

• Compare female job classes to male job classes of equal value
• Where female job class is paid less, increase compensation to match male comparator
• Cannot reduce male pay to achieve equity

Permissible Differences

Pay differences allowed based on:

• Seniority
• Merit (objective performance evaluation)
• Red-circling (temporary protections for employees whose jobs are downgraded)
• Skills shortages (temporary market adjustments)

Pay Equity Plans

Content:

• Job classes and gender predominance
• Job valuation methodology
• Comparisons and wage adjustments
• Timeline for adjustments
• Maintenance provisions

Posting: Must be posted for employee review; unions/employees can file objections.

Maintenance Obligation

Pay equity is ongoing. Employers must:

• Monitor for changes (new job classes, changes in predominance, compensation adjustments)
• Maintain pay equity over time
• Post maintenance updates

Pay Transparency Act (2023)

Salary Range Disclosure

Effective: Phased (anticipated 2024-2025)

Requirement: Employers must include expected salary range in every publicly advertised job posting.

Scope:

• Applies to all employers (no size threshold)
• "Publicly advertised" = posted online, print, or any public medium (excludes internal-only postings initially, but may expand)

Salary range = minimum to maximum the employer reasonably expects to pay.

Prohibition on Pay History

Employers cannot:

• Ask job applicants about their past or current compensation

Exceptions: Public sector compensation that is publicly disclosed under other laws.

Pay Gap Reporting (Phased)

Requirement: Large employers must annually calculate and report gender-based and other pay gaps.

Phased by employer size:

• 500+ employees: First reporting (anticipated 2025)
• 250-499 employees: Phase 2 (anticipated 2026)
• Potential expansion to smaller employers in future

Metrics (to be specified in regulations):

• Mean and median gender pay gaps
• Pay quartile distribution
• Potentially: gaps by race, disability, and other characteristics

Publication: Report submitted to government; potential public disclosure.

Enforcement

Pay Equity Commission and Ministry of Labour, Immigration, Training and Skills Development will oversee compliance.

Penalties (to be specified):

• Administrative fines for non-compliance
• Potential orders to comply

Pay Equity Commission

Administers both the Pay Equity Act and Pay Transparency Act.

Powers:

• Review pay equity plans
• Investigate complaints
• Order employers to comply
• Provide guidance and tools

Complaint process:

• Employees or unions can file objections to pay equity plans
• Commission reviews and can order changes

Employment Standards Act

Reinforces pay equity principles:

• Prohibits pay discrimination based on sex
• Employees have right to discuss wages
• Employers cannot retaliate for wage discussions

Best Practices

Pay Equity Act Compliance

1. Conduct job evaluation: Use recognized, gender-neutral methodology (e.g., Hay, Mercer)
2. Engage unions/employees: Collaborate on plan development (500+ employers)
3. Document thoroughly: Maintain records of job classes, valuations, comparisons, and adjustments
4. Monitor continuously: Review annually for changes
5. Post and communicate: Ensure transparency with employees

Pay Transparency Act Compliance

1. Establish salary ranges: Develop good-faith ranges for all positions before posting
2. Update job templates: Include salary ranges in all public postings
3. Train recruiters: Remove pay history questions from applications and interviews
4. Prepare for reporting: Collect gender and pay data; implement HRIS capabilities
5. Analyze gaps: Conduct internal pay gap analysis ahead of mandatory reporting

Resources

• Pay Equity Commission: https://www.payequity.gov.on.ca
• Ministry of Labour: https://www.ontario.ca/page/ministry-labour-immigration-training-skills-development
• Pay Equity Act (full text): https://www.ontario.ca/laws/statute/90p07
• Pay Transparency Act (Bill 149): https://www.ola.org/en/legislative-business/bills/parliament-43/session-1/bill-149

Compliance Calendar

Date	Action
Ongoing	Maintain pay equity under Pay Equity Act
2024-2025	Begin including salary ranges in public job postings
2024-2025	Stop asking about salary history
2025+	Annual pay gap reporting (500+ employers first)
Annual	Review and update pay equity plans for changes

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Disclaimer: This guide is for informational purposes only and does not constitute legal advice.