Pay Equity Act Compliance: Plain-Language Pay Equity Plan Roadmap

Building a pay equity plan under the federal Pay Equity Act starts with confirming whether the Act applies to your organization and reviewing the Act and regulations directly. The Pay Equity Act is a real federal statute listed on Justice Laws, and shows it came into force on August 31, 2021, by SI/2021-36. The Justice Laws source also lists the Act as amended by 2018, c. 27, s. 417. The Justice Laws source confirms that the federal Pay Equity Act is in force and that related instruments include the Pay Equity Regulations (SOR/2021-161), the Application of the Pay Equity Act to Ministers’ Offices Regulations (SOR/2024-117), the Ministers’ Offices for the Purpose of a Pay Equity Plan, Order Grouping (SOR/2024-116), and the Order Designating the Minister of Labour as the Minister for the Purposes of that Act (SI/2020-24). The Pay Equity Act confirms that the Minister of Labour is designated for the purposes of the Act under SI/2020-24. They do not, however, reproduce the statutory provisions describing the Pay Equity Commissioner’s powers, duties, complaint process, audit powers, or penalty powers. The heart of the legislation is the pay equity plan . Below is the end-to-end process, broken into the stages the Act contemplates. Stage 1 — Determine Coverage and Deadlines Employers that were already in operation and had 10 or more employees when the Act came into force on August 31, 2021, had three years from that date to post their completed pay equity plan. New employers that subsequently reach the 10-employee threshold have three years from the date they first meet the threshold. Stage 2 — Establish a Pay Equity Committee (If Required) For employers with 100 or more employees—or where the Commissioner directs it—a pay equity committee must be formed. The committee's composition must meet the following requirements under the Act: At least two-thirds of committee members must be non-management employees or bargaining agent representatives. At least 50 percent of committee members must be women. Each bargaining agent representing employees of the employer must have at least one representative on the committee. The employer must have at least one representative on the committee. The committee is the engine of the plan. It identifies job classes, determines gender predominance, selects the compensation comparison methodology, and calculates any required increases. Stage 3 — Identify Job Classes A job class is a grouping of positions with similar duties, responsibilities, qualifications, and compensation. The committee (or the employer, if no committee is required) must identify every job class in the workplace. This step requires a thorough review of organizational charts, job descriptions, and actual work performed. Practical tip: Do not rely solely on job titles. Two positions with different titles but substantially similar duties and pay structures should be grouped into the same job class. Stage 4 — Determine Gender Predominance Each job class must be categorized as female-predominant , male-predominant , or gender-neutral . The Act and Regulations set out the following criteria for determining predominance: 70 percent threshold: A job class is female-predominant if 70 percent or more of the incumbents are women, and male-predominant if 70 percent or more are men. Historical incumbency: If current composition does not meet the 70 percent threshold, the committee may look at historical patterns of incumbency. Gender stereotype: A job class may be considered gender-predominant if it is commonly associated with women or men due to gender-based occupational stereotyping. Gender-neutral job classes (those that do not meet any predominance criterion) are excluded from the compensation comparison but remain part of the overall workforce analysis. Stage 5 — Determine the Value of Work The committee must evaluate the value of work performed in each gender-predominant job class using a consistent, gender-neutral methodology. The Act requires that value be assessed based on a composite of: Skill — education, experience, interpersonal abilities, and technical knowledge required. Effort — physical, mental, and psychological demands of the work. Responsibility — accountability for resources, people, and outcomes. Working conditions — environmental and hazard-related factors. These four factors must be applied without gender bias. For example, physical effort in a warehouse role must not be weighted more heavily than the emotional labour in a client-facing care role simply because of historical norms. Stage 6 — Calculate Compensation Compensation for the purposes of the Act is broadly defined and includes: Salaries and wages Commissions, bonuses, and incentive pay Overtime and premium pay Employer contributions to pensions, health benefits, and other benefit plans Paid leave entitlements Any other advantage received directly or indirectly from the employer The committee must calculate the total compensation associated with