By Legacy Bowes on Monday, 21 October 2024
Category: Business Advisory

Federal Pay Equity Act: Obligations and deadlines

As the first compliance deadline for Canada's proactive Pay Equity Act has passed, federally regulated employers should be preparing to meet key obligations aimed at closing the gender wage gap. Passed in 2018 and enacted in August 2021, this legislation places the onus on employers to proactively assess and adjust pay practices at set intervals, ensuring that employees in roles commonly held by women receive equal pay for work of equal value. By requiring employers to regularly review their compensation systems, the Act represents a significant move toward lasting pay equity in the workplace. 

The deadline of September 3rd has now passed for federally regulated employers covered by the Pay Equity Act to post their final pay equity plans. The next obligation of employers was to increase compensation to correct pay gaps by September 4th or the day after the final pay equity plan was posted. An employer who fails to pay an amount when required will be required to pay interest on the amount owing.

Some employers may have been allowed to phase in these pay increases if the amount represented 1% of the employer’s preceding year’s payroll costs. The Act does not provide the Pay Equity Commissioner with the power to waive interest amounts or extend the deadline therefore increases in compensation, lump sums and interest payments are still calculated based on the September 4th date.

The next task for employers is to submit the first annual statement to the Pay Equity Commissioner no later than June 30 following the third anniversary of becoming subject to the Act (e.g. employers who became subject to the Act on August 31, 2021, must submit their first annual statement no later than June 30, 2025).

At this time, there are no instructions or guidelines provided on where or how to file annual statements. Subsequent annual statements must be filed each year, no later than June 30th of the calendar year following the calendar year in which the previous annual statement was filed. Please note that only the annual statement needs to be submitted to the Commissioner. The Pay Equity Plan does not have to be submitted, but it must be created in compliance with the Act. The commissioner may conduct a compliance audit or order an employer or bargaining agent to conduct an internal audit.

Employers have an obligation to maintain pay equity in their workplaces; therefore, they need to update their pay equity plan every five years. An updated plan must be posted on the fifth anniversary of the date they posted the final version of the previous pay equity plan.

It is important to review the pay equity plan because workplaces change over time. For example, company reorganizations or mergers may occur; jobs can be created and new tasks and responsibilities assigned to existing positions. The Pay Equity Regulations set out a specific procedure for updating the pay equity plan.

It is very important to note that an employer, a bargaining agent or another person that contravenes sections of the Act or its Regulations is liable to pay a penalty under the future Administrative Monetary Penalties Regulations. However, these violations cannot be prosecuted under the Criminal Code. The maximum penalty for an employer with 10 to 99 employees or a bargaining agent representing some or all of those employees is $30,000.00. The maximum penalty is $50,000.00 for an employer with more than 100 hundred employees or a bargaining agent representing some or all of those employees.

The Commission can publish the name of an employer or bargaining agent determined to be responsible for a violation, the type of violation, the amount of the penalty imposed, and any other information specified in the Pay Equity Regulations.

For more information, please visit: https://www.payequitychrc.ca/en/publications/know-your-pay-equity-obligations-and-deadlines