Canadian HR Reporter

www.hrreporter.com 3 work or [will find] that in going through this process, they may not currently be achieving pay equity as that term is defined and contemplated in the federal pay equity legislation." As a result, employers should take advantage of the three-year period to comply and start as soon as possible, "because, in all likelihood, there's prob- ably something that will be revealed through this process that the employer will be required to address," he says. Many employers, for the purposes of compensation practices and issues, generally aren't required to look at their job classes or their workforce and their compensation levels, through the frame- work and lens that pay equity will require them to, says Wong. "I'd be surprised if there are that many employers who have actually spent the time to do a quantitative analysis in a form such as the one that is required through pay equity, and a gender-neutral comparison too." "When you're putting on union reps and you've got multiple unions… [it] not only gets to be cumbersome but it also gets to be political too." Steps to pay equity The first step in establishing a pay equity plan is to identify the job classes found within the workplace, according to the act. Next, the employer or pay equity committee must determine the gender predominance (meaning female- or male-predominant, or gender neutral) of each of those job classes. Then, the employer must deter- mine the value of work and calculate the compensation associated with each gender-predominant job class. Next, the employer must compare the compensation associated with female- and male-predominant job classes of similar value to determine which female-predominant job classes require an increase in compensation. After comparing compensation, the employer sets out when the increases in compensa- tion are due. Finally, the employer or pay equity committee must post a draft pay equity plan and allow employees to provide comments on the draft plan. A lot of employers looking into pay equity in the provinces thought their pay practices were compliant with the applicable legislation, says Daniel Wong, partner at WeirFoulds in Toronto, "and it was only [when] going through the process did they realize that they weren't or that they weren't as compliant as they thought." "I suspect that many private sector, federally regulated employers may find themselves having to do a little bit of Classification challenges A lot of employers confuse compensation planning with equity planning, so they may think their whole compensation matrix is fair and doesn't have any bias built into it, says Lawson. "[But] pay equity, whether it's provin- cial or federal, changes that lens, because you have to look at your workplace with the view of job classes, and it can have a real impact upon all the compensation structuring that has been in place for many years that may be very orderly and very neutral." There's a real mindset change that has to take place, he says. "There's now two components to compensation. One is compensation principles, generally about who gets paid what and how they get paid; and then [two is] applying those equity principles and saying, 'OK, how does that impact upon what we'd understood to be our compensation structure, which we've engaged consultants and experts to help develop for us?'" While the criteria around the female and male job classes align with the provincial equity acts, the one odd thing about the federal regulation is around gender predominance, says Lawson. Usually if 60 per cent of the people in a job class are female, then that's consid- ered to be a female job class, and the same is true if it's 60 per cent males, it's considered a male job class. "But the statute has this provision that says it may not be just the percentages, because if that job class historically is gender predominant or commonly asso- ciated with women — sort of like 'occu- pational stereotyping' is the wording they use in the statute — then you have to GENDER WAGE GAPS IN CANADA IN 2018 "For many organizations, this will be the very first time they've ever done a pay equity exercise." Cynthia MacFarlane, Mercer consider that job class to be a female job class," he says. For example, if there's a group of administrative assistants where half are male, it could be considered a female job class if historically that job class title is commonly associated with women, says Lawson. "The committee has to make that determination." The act also requires that employers take all the compensation inputs and turn those into an hourly rate. Even executives aren't immune from this, as their pay, compensation, benefits and incentives have to be distilled down to an hourly rate for comparability purposes, he says. "This statute defines compensa- tion broadly." Employers will have to find one common way to evaluate all of their jobs. But many organizations have different job evaluation plans in place for different groups, and most don't include executive compensation, says MacFarlane. "We see that as one of the biggest chal- lenges — employers either have to take one of the job evaluation systems that they have today and make it apply to all of the jobs, so expand it, or they might decide 'Let's get a new one and start $26.92 Average hourly wage of female employees aged 25 to 54 compared to $31.05 for men (a difference of $4.13) $2.62 Unexplained portion of the difference ($1.85 was due to different occupations/industries and $0.38 was due to more women in part- time work) 18.8% Gender wage gap in 1998 compared to 13.3% in 2018 (decrease of 5.5 percentage points) Source: Statistics Canada A rally for pay equity on Parliament Hill in Ottawa in 1998. Credit: PSAC

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