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Pay Equity exercises and audits: a step-by-step guide

Are you required to conduct a pay equity exercise or audit for your business in the near future? Not sure where to start? No need to panic! Just take one step at a time – and know that we are here to support you throughout the process! 

Even if you already had a pay equity exercise, this article is still relevant because of the Pay Equity Act amendments that came into effect on April 10, 2019.

What exactly is pay equity?
Let’s start by saying what pay equity is not. Pay equity does not mean:

  •  Paying employees at the same rate regardless of their performance or seniority
  • Comparing the pay of men and women who are working in the same job.

The Pay Equity Act seeks to redress the historical wage gaps between jobs that are typically male and those that are typically female. The comparison is made between jobs and not between the individuals in those jobs. Pay equity forces us to review the value of every job in the business to ensure that it is being paid what it’s worth.

I have determined that my business is subject to the Act. What do I do now?
Please note: Our focus here is on the obligations of businesses with fewer than 50 employees. If you have more than 50 employees, you face additional obligations. Please contact us for further information. 

Before you start
We suggest that you gather the following information and have it handy to facilitate your pay equity exercise.

  • A list of your employees, including the following information for each one:
    • gender;
    • hourly wage;
    • job description;
    • list of monetary value benefit entitlements (group insurance, RRSPs, vehicles, cell phones, etc.)
  • A list of all jobs within the business;
  • You also need to be well versed in the tasks and prerequisites associated with each job (qualifications, responsibilities, effort involved and working conditions).

Conducting the pay equity audit
The pay equity audit process helps to uncover any wage gaps that may have occurred in your business over the years. You will save a huge amount of time if you can easily and quickly access the data used during the pay equity exercise or for the previous audit.

The steps involved in the pay equity audit are the same as those you followed when carrying out your pay equity exercise. However, with the recent amendments to the Act, you are now subject to additional obligations. We highly recommend that you review the table below before undertaking your audit.

Amendments to the Pay Equity Act
The Pay Equity Act was amended on April 10, 2019. The main changes appear in the before/after table below:

  Before April 10, 2019 Since April 10, 2019
Correction of wage gaps Wage gap corrections applied only to the future Correction is retroactive and must be calculated from the date of the event leading to the wage gap. If one or more events created a gap that lasted for only a certain period of time, the gap must be corrected for this period.
Payment of adjustments As a single payment at the time  of the second posting of the results, depending on what was determined during the maintenance assessment.

Two types of adjustments are possible: 
1- Lump sum: employer can spread payment over a four-year period but must observe the following parameters:

  • The first payment must be made on the date of the new posting.
  • All payments must be in the same amount.
  • Payments must be made annually.
  • Interest must be added to the payments.

This method applies only to wage gap adjustments identified between the posting of the results for the initial pay equity work and the posting of the results for the maintenance assesment.

2- Pay adjustments: No change in how these adjustments are paid. This method applies to wage gap adjustments identified at the anniversary date.

Content of posting The posting of the results had to include a list of the events that led to the wage gaps. Listing the events is simply no longer sufficient. Now the posting must also indicate the event dates.
Anniversary date The anniversary date was the start date of the new posting for the initial pay equity exercise. The audit had to be carried out every five years from the anniversary date.

The anniversary date is the start date of the first posting for the initial pay equity exercise. The audit must be carried out every five years from that date.

This change does not come into effect at the same time for all businesses. The various scenarios are outlined below:

1. Your business completed its first pay equity audit prior to April 10, 2019: The change does not apply to you.

2. Your first pay equity audit was supposed to take place between April 10, 2019, and April 9, 2020: The change will apply only to your next audit.

3. Your first pay equity audit is due after April 9, 2020: The change will apply starting with the first audit.

Employee participation process Employee participation was optional.

It is mandatory to establish an employee participation process if:

  • You set up a pay equity committee when carrying out your last exercise.
  • Your business is unionized.

The participation process requires that the employer:

  • share information about the work in progress;
  • implement consultation measures so that employees can ask questions, share their concerns or offer suggestions.

The participation process must be completed no later than 60 days before the results are posted. 

Filing a complaint
A complaint form was available but was not mandatory.  Completing the appropriate complaint form is now mandatory. This also apply for complaint made toward the initial pay equity work.

Date of event leading to a wage gap
Of the various amendments made to the Act, the one that probably has the greatest impact concerns the dates of events that resulted in a wage gap. During the pay equity audit, you are now required to create a list of the events that migth have led to, increased or reduced a wage gap.

What events need to be taken into consideration?
Below are a few examples provided by the CNESST:

  • Creation or loss of jobs
  • Changes in existing jobs or in the requirements for these jobs
  • Negotiation or renewal of a collective agreement
  • Changes in the staffing or structure of the business

Keeping a running register
We strongly urge you to keep a register of events and to begin identifying them as soon as you have completed the previous exercise. You will be glad you did because, in three years, you will likely have forgotten the date when two positions were merged.

A register template, in French, is available on the CNESST website.

When do you have to carry out the pay equity audit?
The audit must be conducted every five years on your anniversary date. You will find information in our section on Pay Equity Act amendments to help you determine the anniversary date that applies to your situation.

Useful Resources!
As you have probably realized, conducting a pay equity exercise or audit is a time-consuming affair. The Act is complex and there is a great deal of information that needs to be collected and analyzed.

Fortunately, there are quite a few resources available. The CNESST has developed several indispensable resources that you can take advantage of:
•    A software package
•    A guide
•    Support service: 1 844-838-0808

CFIB members can count on the support of their Business Counsellors. We are here to answer your questions and to ensure that everything gets off to a good start! 

August 27, 2019