Pay Equity Act comes into force

Summary#

This Order (SI/2021-36) fixes August 31, 2021 as the day certain sections of the Budget Implementation Act, 2018, No. 2 come into force. In practice, that brings the new proactive Pay Equity Act and related changes to other federal workplace laws into effect for federally regulated employers.

What it does#

• Brings into force parts of the Pay Equity Act on August 31, 2021, meaning the new proactive pay-equity rules start to apply in federally regulated workplaces.
• Requires employers in the federal jurisdiction with 10 or more employees to develop and update a pay equity plan. Plans must identify and correct pay gaps between predominantly male and female job classes.
• Requires larger employers and employers with unionized staff to set up pay equity committees made up of employer and employee representatives.
• Gives employers up to 3 years after they become subject to the Act to develop a pay equity plan and sets rules on how pay adjustments are phased in and reported.
• Establishes the position of Pay Equity Commissioner, housed in the Canadian Human Rights Commission (CHRC), to provide guidance, investigate, audit, make orders and impose administrative monetary penalties (AMPs).
• Amends the Canadian Human Rights Act and the Parliamentary Employment and Staff Relations Act (Part II.1) to reflect the new regime and tailor enforcement in parliamentary workplaces.
• Stops the CHRC from accepting new pay-equity complaints that are covered by the Act once it is in force, and adjusts how existing complaints are handled under the Budget Implementation Act, 2009.
• Expands the Canadian Human Rights Tribunal membership from 15 to 18 and adds pay-equity knowledge as a selection criterion.
• Requires a formal legislative review of the Act and related parliamentary provisions after 10 years, and every 5 years after that.

Who's affected#

• Federally regulated employers in the private and public sectors, including the Prime Minister’s and ministers’ offices, particularly those with 10 or more employees.
• Employers with unionized staff and larger employers who will need to form pay equity committees.
• Employees in federally regulated workplaces, especially women in female‑predominant job classes who may see pay increases.
• The Pay Equity Commissioner, the Canadian Human Rights Commission (CHRC), the Canadian Human Rights Tribunal, and the Federal Public Service Labour Relations and Employment Board (which will hear some appeals in parliamentary settings).
• Indigenous-owned federally regulated private-sector businesses are subject to the Act; First Nations band councils are not automatically covered and will be consulted separately.
• It is unclear from the order exactly how small employers, or certain unique public bodies, will be treated in every case.

Why it matters#

• This changes the system from a complaint-based approach to a proactive one: employers must look for and fix pay gaps rather than waiting for employees to file complaints.
• Many women and groups concentrated in female-dominated jobs could receive pay increases, which may help reduce the gender wage gap.
• Employers will face new administrative work and costs to develop plans and to pay any required increases.
• The enforcement approach shifts: a new federal Commissioner will have powers to audit and impose penalties, rather than relying mainly on individual complaints under the old system.
• There may be broader labour-market effects (for example, potential impacts on employment in affected occupations), and the change is timed against a context where women’s employment was especially affected by the COVID‑19 pandemic.