Canadian HR Reporter

CANADIAN HR REPORTER NOVEMBER 2019 NEWS 9 and now the federal government is playing catchup. "If you are federally regulated up to now, you've been governed by a number of different pieces of legislation. We think what the gov- ernment is doing now is just com- ing up with a very clear piece [of ] legislation that directly addresses pay equity, rather than taking from pieces of other legislation." Employer requirements In implementing the structures, employers will have to address a number of areas, says Sahdra. "Employers will need to be aware of the changes in their report- ing obligations. In some respects, such as the changes to salary cal- culation, the proposed regulatory amendments will resolve uncer- tainties that existed previously and provide a simplified process." In addition, employers will need to more fully disclose how employ- ees are paid, says Ian Cullwick, a partner at Mercer in Ottawa. "Formally, it's going to require pay equity with respect to total compensation so, in other words, not just base pay but total com- pensation in terms of benefits and pension." is is expected to be a much different outcome from what has happened in the past with federally regulated employers, says Garvin. "The current legislation in- volves a complicated system for calculating salary. To simplify salary reporting, the federal gov- ernment proposes to broaden the definition of salary and proposes to add definitions for the terms bonus pay, overtime hours and overtime pay. e proposed re- quirements for reporting salary is more aligned with accounting and human resources practices which will make it easier for organiza- tions to report accurate data of an employee's earnings." For employers, many of them will not face an onerous task to comply, says Cullwick. "Many, if not all the federally regulated employers are fairly sophisticated and quite progres- sive in terms of having gender- neutral job evaluations, classifi- cation and pay practices in place. is likely won't be too much of a surprise to them." But a successful implementa- tion includes learning about the new regime, says Sahdra. "Managers or HR profession- als in the federally regulated pri- vate sector would be ahead of the game at this point to make themselves aware and familiar with the proposed amendments. As these proposed amendments progress through our legislative process, they should consult with their legal counsel, as necessary, to prepare for the changes to their reporting obligations." During the consultation pro- cess, employers expressed con- cerns that the new reporting requirements would involve upfront costs around human re- source systems and internal pro- cesses, says Garvin. "e government has attempt- ed to rectify this issue by simplify- ing the reporting process by col- lecting salary data that employers will more likely have readily avail- able through payroll. Overall, the changes for employers should not be overly burdensome and are simply a matter of changing how information is collected and pro- vided to the ministry." Employers will also have to make public a formal pay equity plan, says MacFarlane. "You have to put the final draft out and actively solicit comments from your employees, from your management representatives [and] from your bargaining agents." Then companies must take those comments and publish; revise if necessary; and come up with a final plan, she says. Pay transparency efforts will have to be ongoing, which could create some new pitfalls. "One of the risks here is that a pay-equity gap could be identi- fied, and an employer can make a one-off pay equity adjustment or correction that could have a broader impact on broader inter- nal equity within an employer's overall compensation framework and the classification schedule. In that regard, we're encouraging our clients to look at both pay equity and internal equity at the same time," says Cullwick. "We would encourage federally regulated employers to examine their existing job evaluation, clas- sification and practices in terms of 'Are they viewed as being gender neutral and pay equity compliant?'". Even though the new rules are not yet in force, it makes sense for business to prepare, says Garvin. "ey act as a good reminder to employers to review their compensation policies and their efforts to combat wage disparity among their workforce, if any." But the reason for the delay is a valid one, says Cullwick. "To do this properly, and to their credit, they're thinking this through very thoroughly, and they're not rushing to imple- ment," he says. "ere's a need to set up the pay equity commission, to hire a commissioner, to get a team on board, to literally guide, man- age and administer some pretty complex processes for federally regulated employers," says Cull- wick. "We suspect that once that infrastructure is in place, there will be some sort of indication of the formal compliance dates and the timelines, and then everything becomes real when that happens." TRANSPARENCY < pg. 3 Legislation aims to simplify salary reporting In today's evolving economy, people are your biggest asset. Unleash their potential. January 22-24, 2020, Metro Toronto Convention Centre. Register now to attend Canada's largest HR conference & trade show hrpaconference.ca POWER UP HR Employers will need to more fully disclose how employees are paid.

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