Order Fixing August 31, 2021 as the Day on Which Certain Sections and Subsections of that Act Come into Force: SI/2021-36

Canada Gazette, Part II, Volume 155, Number 14

Registration

SI/2021-36 July 7, 2021

BUDGET IMPLEMENTATION ACT, 2018, NO. 2

Order Fixing August 31, 2021 as the Day on Which Certain Sections and Subsections of that Act Come into Force

P.C. 2021-636 June 24, 2021

His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Labour, the Minister of Justice, the President of the Treasury Board and the President of the Queen’s Privy Council for Canada, pursuant to section 440 of the Budget Implementation Act, 2018, No. 2, chapter 27 of the Statutes of Canada, 2018, fixes August 31, 2021 as the day on which sections 1 to 171, 172, 173 and 174 to 184 of the Pay Equity Act, as enacted by section 416 of the Budget Implementation Act, 2018, No. 2, and sections 417 and 419 to 424, subsections 425(1) and (2) and 426(1) and (2), sections 427 and 428 and subsections 431(1) to (3) of the Budget Implementation Act, 2018, No. 2 come into force.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

To fix, pursuant to subsections 440(1) to (5) of the Budget Implementation Act, 2018, No. 2 (BIA 2018), August 31, 2021, as the day on which sections 416, 417, and 419 to 428 and subsections 431(1) to (3) of BIA 2018 come into force.

Objective

To introduce a proactive pay equity regime in federally regulated workplaces by bringing into force the Pay Equity Act (the Act), Part II.1 (Pay Equity) of the Parliamentary Employment and Staff Relations Act (PESRA) and all necessary related, transitional and consequential amendments to the Canadian Human Rights Act (CHRA) and Budget Implementation Act, 2009 (BIA 2009). This new pay equity regime will help address systemic gender discrimination in compensation practices and pay systems, and contribute to reducing the gender wage gap by addressing the portion of the gap due to the undervaluation of work done by women.

Background

Since 1977, the CHRA has provided women working in federally regulated sectors — in both the private and public sectors — with the right to be paid the same wages as men when their jobs are of equal value, as measured by an objective evaluation of the skill, effort, responsibilities, and working conditions of those jobs. Women working in a federally regulated workplace who believe that they are underpaid compared to equal valued male-predominant jobs are entitled to file a complaint under the CHRA.

While the right to equal pay for work of equal value has been enshrined in the CHRA for more than 40 years, many women continue to be underpaid. In 2020, for every dollar a man earned in Canada, a woman earned only 89 cents as measured in hourly wages for full-time workers. ^{footnote 1}

In 2004, a task force led by Dr. Beth Bilson (the Bilson Committee) published a report, entitled Pay Equity: A New Approach to a Fundamental Right (PDF), urging the federal government to adopt a proactive approach by replacing the complaint-based system with a requirement that all employers conduct a pay equity exercise to root out and correct gender-based pay inequities. Building off this report in 2016, the House of Common’s Special Committee on Pay Equity tabled a report, entitled It’s Time to Act, calling on the federal government to move away from the complaint-based system towards a new proactive pay equity regime for the federal jurisdiction.

On October 29, 2018, the Government of Canada introduced proactive pay equity legislation. On December 13, 2018, the Act received royal assent. The Act requires employers to take proactive steps to ensure that they are providing equal pay for work of equal value. It also establishes the position of Pay Equity Commissioner (the Commissioner) and allows the Governor in Council to make regulations prescribing key elements of the pay equity regime.

Implications

This Order in Council brings into force the Act, Part II.1 of PESRA and amendments to the CHRA and BIA 2009.

Pay Equity Act

The Act requires federally regulated private and public sector employers, including the Prime Minister’s and ministers’ offices, employing 10 or more employees to develop and update a pay equity plan for their employees. Larger employers, and any employer with unionized employees, will be required to form a pay equity committee made up of employer and employee representatives to develop and update their pay equity plans.

Pay equity plans must be developed within three years of the employer becoming subject to the Act. A pay equity plan would identify pay equity gaps that exist between predominantly male and female job classes of equal value, and determine any increases in compensation owed to employees in those female job classes that the employer must pay to close those gaps.

The Act establishes the steps an employer or pay equity committee must take in developing its pay equity plan and in updating that plan. It also sets rules around the timing and phasing in of pay equity increases, as well as the timing for updating the pay equity plan and for submitting annual reports to the Commissioner.

The Act will allow the Governor in Council to make the Pay Equity Regulations (which are expected to come into force with the Act) that will support the functioning of the Act by providing specific details on key elements of the pay equity process, while also ensuring that the process is transparent and fair.

The Act also establishes the duties and responsibilities of the Commissioner to administer and enforce the Act. Housed in the Canadian Human Rights Commission (CHRC). The Commissioner will assist workplace parties in understanding their rights and fulfilling their obligations, including through the development of tools and education materials, investigating complaints, considering applications, and facilitating the resolution of disputes. The Act provides the Commissioner with a broad range of enforcement tools, from investigations to proactive audits, order-making powers and administrative monetary penalties (AMPS). The Commissioner will also be required to report to Parliament on the administration and enforcement of the Act.

The Senate or House of Commons, or both, will also be required to form a committee to review the Act and the pay equity provisions in PESRA 10 years after they come into force and every 5 years after that.

The Act will not automatically apply to First Nations band councils as employers. The Labour Program will be conducting a separate collaborative engagement process with Indigenous partners to collect their views on the Act itself and see how it can be tailored to ensure positive results in an Indigenous context. However, Indigenous-owned federally regulated private-sector businesses will be subject to the Act upon its coming into force.

Parliamentary Employment and Staff Relations Act

Part II.1 requires parliamentary employers covered by that Part employing 10 or more employees to develop and update pay equity plans following the steps and meeting the requirements set out in the Act. While the Commissioner will oversee compliance in these workplaces, the enforcement regime will be tailored to respect parliamentary privilege, including

• requiring the Commissioner to notify the Speakers of the Senate or the House of Commons before entering a place under the authority of a parliamentary entity, and as soon as possible after beginning the investigation of a complaint or issuing an order or notice of contravention;
• the tabling in Parliament by the Speakers of any orders or other mandatory instruments not complied with by an employer in place of AMPS; and
• having appeals heard by the Federal Public Sector Labour Relations and Employment Board instead of the Canadian Human Rights Tribunal.

Canadian Human Rights Act

The amendments to the CHRA establish the position of the Commissioner, the Pay Equity Unit and the Pay Equity Division within the CHRC and set out their powers, duties, and functions. The Pay Equity Unit will support the Pay Equity Commissioner in carrying out their duties and responsibilities. The Pay Equity Division will have the authority to deal with complaints under section 11 of the CHRA. The Commissioner will be the presiding officer of the Pay Equity Division.

The amendments also increase the maximum number of members that can be appointed to the Canadian Human Rights Tribunal from 15 to 18, and add adequate knowledge and experience in pay equity matters as criteria for selecting Tribunal members. On the day the Act comes into force, the CHRC can no longer receive pay equity-related complaints from employees who are covered by the Act.

Budget Implementation Act, 2009

The amendments to BIA 2009 disallow public sector employees covered by the Act from making any new gender-based wage discrimination complaints under the CHRA (i.e. complaints that are referred to the Federal Public Service Labour Relations and Employment Board). However, the changes will allow the Federal Public Service Labour Relations and Employment Board to resolve any complaint of this nature that was made before the day the Act comes into force, but that is still unresolved on that day.

Considerations

Employers subject to the Act and Part II.1 of the PESRA will incur incremental costs to meet the requirements of the regime. The bulk of these costs will be related to the payment of increases to close pay equity gaps. However, these increases are also a benefit to employees receiving them.

In the federally regulated private sector, female employees are expected to receive the majority of these pay increases. Research also indicates that demographic groups facing larger wage gaps and concentrated in occupations traditionally occupied by women are likely to benefit more from proactive pay equity. These groups include women employed in jobs with lower salary ranges, those employed in non-unionized jobs, visible minority women, Indigenous women, working mothers, women with lower levels of educational achievement, and women with disabilities.

Other benefits include bolstering employee confidence that their right to pay equity is being respected which will, in turn, contribute to a sense of empowerment in the workplace, which can have positive impacts on the overall economy. However, the increased costs to employers as a result of increasing the compensation of employees in female-predominant job classes may lead to greater unemployment for employees working in those occupations.

Supporting women in the workplace and addressing the systemic discrimination they face is especially relevant in light of the COVID-19 pandemic, which has disproportionately impacted women. According to Statistics Canada data, the labour force participation rate among core-aged women (25 to 54 years of age) decreased between February 2020 (83.4%) and July 2020 (82%). ^{footnote 2} This reflected that women were involved in non-employment-related activities, such as childcare, at a higher rate than prior to the COVID-19 pandemic. In addition, women have experienced a higher rate of labour underutilization than men, meaning that more women who could have potentially been working are not working as much or not at all. While there have been employment gains since July 2020, women — particularly young women (18 to 24 years of age) — have experienced heavier employment losses and remain further from their pre-pandemic employment levels than men. ^{footnote 3}

Implementation of the new proactive pay equity regime will largely fall to the Commissioner. On October 16, 2019, Karen Jensen was appointed as a full-time member of the CHRC. She will become the first federal Pay Equity Commissioner when the Act comes into force.

Consultation

The Government of Canada consulted Canadians at key steps in the development of the legislative framework and the regulatory requirements that will come into force with the Act. These consultations include roundtable discussions with employer, employee and advocacy stakeholders on designing a proactive pay equity system in April 2017, and information sessions on the Act after it received royal assent. Regulatory consultations — including the circulation of a discussion paper and survey — took place in spring 2019 to solicit feedback on proposed regulatory requirements, and an extended 60-day consultation period was provided when the Regulations were prepublished on November 14, 2020, in Part I of the Canada Gazette. Throughout these consultations, all stakeholder groups have supported the principle of pay equity.

In advance of the coming into force of the Act, the Commissioner is leading the development of guidance material and tools for workplace parties to help them fulfill their obligations under the Act and complete their pay equity plans. To do this work, the Commissioner and her team have carried out a number of engagement activities, including consultative forums to support the development of tools and build relationships.

Contact

Lori Straznicky
Executive Director
Workplace and Labour Relations Policy Division
Labour Program
Employment and Social Development Canada
165 De l’Hôtel-de-Ville Street
Place du Portage, Phase II, 9th Floor
Gatineau, Quebec
K1A 0J2
Telephone: 613-462-1023
Email: ESDC.PayEquity-EquiteSalariale.EDSC@labour-travail.gc.ca