Canadian HR Reporter

CANADIAN HR REPORTER JUNE 2018 EMPLOYMENT LAW 5 e new 'equal pay for equal work' provisions in Ontario Rules have potential to significantly impact how employers structure, pay workforce Bill 148 introduced significant amendments to Ontario's Em- ployment Standards Act, 2000 (ESA). One of the most dramatic is the introduction of the "equal pay for equal work" provisions. Prior to Bill 148, the ESA did not require an employer to com- pensate a part-time, temporary, casual or contract employee the same as a full-time employee do- ing substantially similar work. Bill 148 changed all of that. Effective April 1, 2018, section 42.1 of the ESA now provides that no employer shall pay an employ- ee at a rate of pay less than the rate paid to another employee of the employer because of a difference in employment status when: • they perform substantially the same kind of work in the same establishment; • their performance requires substantially the same skill, effort and responsibility; and • their work is performed under similar working conditions What is "difference in employment status"? Often misunderstood, "equal pay for equal work" does not require an employer to ensure wage par- ity among all similarly situated employees; only that there not be a difference in rates of pay be- cause of a difference in employ- ment status. "Difference in employment sta- tus" is defined in the ESA as (a) a difference in the number of hours regularly worked by the employ- ees, or (b) a difference in the term of employment, including a dif- ference in permanent, temporary, seasonal or casual status (such as part-time or full-time). For example, where an employ- er has two permanent, full-time employees, there is no difference in their respective "employment status" — both are permanent, full-time employees. As such, the equal pay provisions are not engaged. The exception is where the rate of pay differs only by reason of the employee's sex. at basis for a differential is still prohibited under the ESA even if the em- ployees have the same "employ- ment status." By contrast, if an employer has a full-time employee and a part- time employee, those employees have a different "employment sta- tus." e equal pay provisions are therefore engaged, subject to cer- tain exceptions set out in the ESA (see "Exceptions" below). Different locations An employer may believe it has satisfied the equal pay require- ments because it pays part-time and full-time employees the same rate of pay at a particular location. However, the definition of "es- tablishment" under the ESA can include multiple worksites. As such, an employer with multiple locations may need to compare rates of pay across locations. The ESA defines "establish- ment" as "a location at which the employer carries on business but if the employer has more than one location, separate locations constitute one establishment if (a) they are within the same municipality, or (b) one or more employees at a location have se- niority rights that extend to the other location under a written employment contract whereby the employee or employees may displace another employee of the same employer." "Rate of pay" Recall that section 42.1 provides "No employer shall pay an em- ployee at a rate of pay less than the rate paid to another employee of the employer because of a differ- ence in employment status." e ESA does not define "rate of pay." However, we believe it is likely to include an employee's hourly rate, salary, commission or overtime rate, but not benefits, vacation entitlement or similar "perks." Exceptions Rates of pay may differ on the ba- sis of: (a) a seniority system, (b) a merit system, (c) a system that measures earnings by quantity or quality of production or (d) any other factor other than sex or em- ployment status. A seniority system: Senior- ity is traditionally considered an employee's length of service with an organization. However, the Ministry of Labour has recog- nized that a wage grid providing for a pay increase based on hours worked, and not just years of ser- vice, will also be accepted as a "se- niority system" for the purposes of the ESA. is may be a model employers find attractive, depending on how they structure their work. A merit system: "Merit sys- tem" is not defined in the ESA. However, these words were given meaning under the pre-Bill 148 equal pay provisions (related to equal pay on the basis of sex). An employer seeking to rely on this exception will likely need to establish (a) all affected employ- ees are aware of the merit system plan, (b) objective appraisal crite- ria have been established under the merit system, and (c) the sys- tem is applied equally to employ- ees of all status. "Any other factor": "Any other factor" must be objective. For example, paying a full-time em- ployee more than a part-time em- ployee performing similar work because the full-time employee is better liked by management is not likely to be defensible. EMPLOYEES > pg. 12 Lisa Bolton and Gerald Griffiths Legal View JOINT VENTURE BY: e average hourly wage for part-time workers in Canada was $19.05 as of April 2018, compared to $28.76 for full-time workers. For permanent employees, the average hourly wage was $27.66 compared to $22.46 for temporary employees. Source: Statistics Canada, April 2018 Average hourly wages Men Women Canada $28.94 $25.08 Newfoundland/Labrador $27.04 $24.61 Nova Scotia $25.43 $22.32 New Brunswick $24.84 $21.81 Prince Edward Island $23.03 $22.22 Quebec $27.06 $23.75 Ontario $29.26 $25.87 Manitoba $26.07 $22.71 Saskatchewan $30.10 $25.27 Alberta $33.18 $27.96 British Columbia $29.43 $24.33 Closing the wage gap

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