If you operate your business in Ontario, you’ve likely been paying close attention to some of the changes coming out of the Changing Workplaces Review. Bill 148, which became the Fair Workplaces, Better Jobs Act, was a hot topic in 2017. Employers and employees are still waiting to see what the lasting effects of these new labour laws will be, and the new provincial government has vowed to undo some of the changes.
Another piece of legislation on your radar is likely the Pay Transparency Act, or Bill 203. What is the Pay Transparency Act?
This Act is a new law set to come into effect on January 1, 2019. It will promote gender equality and equal compensation between men and women by enforcing increased transparency around compensation.
What Does the Pay Transparency Act Do?
The Act is designed to promote gender equality by increasing the amount of information available to employees about their compensation. Although Canada nominally has gender equal pay laws, they’ve been difficult to enforce because of a lack of transparency around compensation.
Traditionally, it’s considered poor form for employees to discuss their compensation with each other or to discuss their colleagues’ compensation with their employers. Silence around the subject has allowed employers to pay diverse employees different wages. Usually, this is justified by the employer as a difference in experience, training, or ability, but there is concern bias may come into play.
The Act is designed to lift the silence around the subject of compensation. With more information in hand, employees can more easily challenge discrepancies in pay, especially where there appears to be no just cause.
Is It Necessary?
Many critics of the Pay Transparency Act suggest it’s not necessary. Canada has gender equal pay laws, which require employers to pay employees the same regardless of sex and gender. To pay someone more or less than another employee in a similar position with similar training, experience, and performance is a form of discrimination. This is prohibited under the Canadian Charter of Rights and Freedoms, and under various provincial legislation as well.
While these laws are in place, it has been difficult to challenge discriminatory practices where they exist. A lack of information and a culture of silence around pay mean many employees aren’t aware their employers may be discriminating against them.
There are, of course, concerns that the Act will be abused by some individuals, and challenges will be made in cases where the employee feels entitled to more pay but their performance record suggests otherwise. Nonetheless, more information simplifies the process of applying existing laws, with the goal of truly enforcing gender equal pay legislation already on the books.
What Will Employers Need to Do?
Beginning January 1, 2019, job postings in Ontario will need to include a salary range. This creates a public statement of compensation for any position in the province, which employees can then refer to. Employers will also be prohibited from asking candidates about their past compensation. This prevents adjustments to the salary range “in line” with what the candidate had previously earned.
In addition, employers will be prohibited from acting against employees who disclose or discuss compensation. Those employers who include non-disclosure clauses in their employment terms will need to revise their employment contracts.
Finally, large companies with more than 100 employees will be required to establish a reporting framework to track, report, and post compensation gaps based on gender and other characteristics. This reporting will begin in May 2020.
Ontario is the first province to enact pay transparency legislation, and some question how much it is needed. As an employer, you’ll need to be prepared for the changes this new law will bring.