Canadian HR Reporter

October 2021 CAN

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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2 N E W S "So, this law is an important milestone in advancing gender equality." Systemic gender discrimination in compensation is a widespread problem and federally regulated employers are no exception, she says. " T h e y h av e b e e n u n d e r p ay i n g women's work for many years while getting the advantage of all the excel- lent skills which those doing women's work bring to their work. Time is up and women are entitled now to be paid without any gender penalty." HR to take charge While directed only at federally regu- lated employers, this adds up to 415,000 e m p l o y e e s i n t h e p u b l i c s e c t o r (including the Canadian Armed Forces and the RCMP) and 888,200 in the private sector (with major portions of the transportation industry, banks, tele- communications and broadcasting, and all federal Crown corporations). So, a lot of employers will have a lot of work to do, say experts. "Really, a lot of organizations just have never created a pay equity plan before," says Cynthia MacFarlane, prin- cipal of career consulting at Mercer in Ottawa. "There's always been pay equity legis- lation. It was there if you were federally regulated, but it was complaint based and it wasn't actively managed the way Quebec and Ontario have for so long. So, for many organizations, this will be the very first time they've ever done a pay equity exercise, so they're going to discover situations that they just didn't know were there." And HR will most likely be leading the way, she says. "They're the ones who would have all the compensation-related information, because you're going to have to access the first pay equity commissioner who will have the necessary resources to carry out her mandate, says Sharon DeSousa, national executive vice pres- ident at the Public Service Alliance of Canada in Ottawa. "It also sets out timelines for compul- sory reviews. And it requires employers to set aside funds to eliminate any wage gaps. And these are very, very important steps, whereas in the past, women and their unions in federal sector had to file their own pay equity complaints with the Canadian Human Rights Commission, which resulted in very expensive and long legal battles. And it forced the employers to provide equal pay for work of equal value. But what it did, it left behind non-unionized women with no realistic way to have their pay equity concerns addressed." As of Aug. 31, 2021, employers with 10 or more federally regulated employees will be required to: • establish a pay equity plan (within three years) that examines any differences in compensation between positions of equal value that are mostly held by women and those mostly held by men • eliminate differences in compensation identified in the plan (within three to five years) • revise and update the pay equity plan at a minimum of every five years to ensure that no gaps have been reintro- duced and to close them if they have. Forming a committee The act requires most federally regulated employers to form a pay equity committee responsible for developing a pay equity plan that will 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 info on cash compensation, benefits, pension or retirement arrangement… It's not just base salary, it's all compensation. And so, yes, I could see [HR] leading it in most cases, having the CHRO or VP of HR be a key sponsor of this kind of project." Much-needed change Despite having the right to pay equity protected under the Canadian Human Rights Act (CHRA) for over 40 years, many women continue to be underpaid relative to men. Additionally, ensuring that pay equity as a human right is respected is difficult when using the existing complaint-based system, says the federal government. "In some cases, women are simply not aware that they are being underpaid compared to men doing work of equal value or that their work is undervalued. In other cases, they are afraid or discour- aged by the idea of launching a human rights complaint against their employer. This process can be daunting, adminis- tratively burdensome and resource-in- tensive for all parties involved." Plus, the new law provides indepen- dent oversight and enforcement through classes that the employer must pay to close those gaps. Once the plan is developed and posted, these employers must form a committee within five years to ensure that pay equity was maintained and update that plan. Employers must include someone from every employee group on the committee, plus at least one from each unionized group, says MacFarlane. "[The government] doesn' t really say much more about what they have to do, except that you have to consult with the committee at every step of the way. So, we firmly believe you've got to spend some time upfront training the people on the committee as to what your responsibilities are, what steps are going to be involved." All of the employee representatives on the committee must make their decisions through consensus, she says. "They have one vote, so that's going to require a lot of discussion amongst them as well. So [employers] need to under- stand a lot of education of the committee members is going to be required up front." One challenge is that there are no geographical distinctions, so a larger employer spread across more than one province will have to put together a committee despite the distances, says Tim Lawson, a partner at McCarthy Tétrault in Toronto. Plus, employers must ensure that there's male-female parity on the committee, he says. "That's different than most other pay equity statutes." There's a lot of work to do, at least initially, to develop the comparison methods to go through the whole process the first time, says Lawson. ROBUST PAY EQUITY PRACTICES LACKING IN CANADA Source: Mercer "Time is up and women are entitled now to be paid without any gender penalty." Mary Cornish, Cornish Justice Solutions 70% Percentage of Canadian organizations who say that pay equity is part of their compensation philosophy 34% Percentage of employers who go beyond the minimum legal require- ments and apply robust statistical analysis to pay equity gaps 82% Percentage of employers who say that their organization's pay equity analysis addresses both base pay and incentives 34% Percentage of employers who have a formalized remediation process to address any pay equity risks Pay equity> pg. 1

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