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.
Let’s start by saying what pay equity is not. Pay equity does not mean:
Pay equity means that people working in jobs predominantly held by women have the right to earn as much as those in jobs predominantly held by men—when those jobs are of equal value within the same business.
For example, if the job of an administrative assistant has the same value as that of a machinist in a factory, they should receive equal pay.
Jobs predominantly held by women are often underpaid due to gender discrimination. The purpose of the Pay Equity Act is to redress differences in compensation caused by gender discrimination within the same business. The Act helps ensure that jobs commonly held by women are valued fairly.
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.
First, employers must calculate the number of employees (in French only) in their business. The Pay Equity Act applies to every business employing an average of 10 or more people.
Once this threshold is reached, employers typically have 4 years to complete the first major step: the initial pay equity exercise (in French only). This process involves evaluating and comparing jobs predominantly held by women and those predominantly held by men. If any wage gaps are found, the wages for jobs predominantly held by women must be increased to eliminate them.
Five years after completing the initial pay equity exercise, employers must conduct a pay equity audit (in French only) in their business to ensure that no new wage gaps have emerged over time. If wage gaps are found, the employer must eliminate them by adjusting compensation.
Finally, employers must file the Employer’s Statement on Pay Equity (DEMES) with the CNESST to confirm that they have met their obligations.
How do I calculate the average number of employees in my business?
When does the initial pay equity exercise need to be carried out?
I have determined that my business is subject to the Act. What do I do now?
Steps to follow to complete the initial pay equity exercise
Conducting the pay equity audit
Useful resources
To determine the average number of employees (in French only) in your business (in French only), calculate the average number of employees listed on your payroll for each pay period over a calendar year. To do this, you first need to identify your reference period (in French only).
The simplest method is to add up the number of employees for each pay period over the 12 months of your reference period (e.g., 390). Then divide that total by the number of pay periods in your 12-month reference period (e.g., 390 ÷ 26 = 15).
If your business has fewer than 10 employees on average during your reference period, you have to calculate your average number of employees every year until it reaches 10.
Once you reach that mark, you no longer have to calculate your number of employees.
For more information, see the CNESST web page on calculating the number of employees in your business (in French only).
Once the 10-employee average has been reached, your business must complete the pay equity exercise within a period of 4 years, starting on January 1 of the next year.
For instance, if you had an average of 10 employees in 2018, your deadline to complete the initial pay equity exercise would have been December 31, 2022.
The CNESST has created a deadline calculator (in French only) to help you calculate the correct time frame for your business.
Please note: Our focus here is on the obligations of businesses with fewer than 50 employees on average. If you have more than 50 employees, you have additional obligations. For more information, contact your CFIB advisor or visit the CNESST web page on conducting the initial pay equity exercise (in French only).
The CNESST provides a free online tool called MonÉquitéSalariale (in French only) to guide employers through the process. It’s available to anyone who is registered for clicSÉQUR Entreprises.
We suggest that you gather the following information and have it handy to facilitate your pay equity exercise:
You should also have a good understanding of the tasks and prerequisites associated with each job (qualifications, responsibilities, effort involved, and working conditions).
Step 1: Make a list of your job classes
The first step is to draw up a list of job classes. Later in the exercise, this information will be crucial because it is these job classes that will be evaluated and then compared.
A job class may include a number of positions as long as they share all the following characteristics:
For instance, a mechanical workshop foreman will not be in the same class as mechanics, even though the foreman may perform mechanical work. The responsibilities are not similar because the foreman also has a supervisory role.
If you are not sure, it would be advisable to create separate job classes.
For more guidance, contact a CFIB advisor or visit the CNESST web page on identifying job classes (in French only).
Step 2: Determine the gender predominance for each job class
The goal of pay equity is to compare predominantly female job classes with predominantly male job classes. This means that you must assign a predominance to each class based on the following 4 factors:
You then need to determine which of these criteria should carry the most weight, based on the nature of the job class and your specific context. All 4 criteria must be considered, as gender predominance may vary depending on how each one is applied.
For more guidance, contact a CFIB advisor or visit the CNESST web page on identifying job classes (in French only).
Step 3: Determine the value of each job class
There are several methods for analyzing the value of job classes. The method you choose must allow you to evaluate the characteristics of both traditionally female- and male-dominated job classes, and it must be applied consistently to all classes in your business.
A point-factor method is generally preferred for pay equity exercises because it is neutral, analytical, and systematic.
The MonÉquitéSalariale online tool (in French only) uses job evaluation methods that comply with the Act.
If you choose to develop or adapt your own job evaluation method, there are several key steps to follow:
The evaluation method you use must assess each job class based on the following 4 factors:
The goal of the job evaluation process is ultimately to assign a point value to each job class. This makes it possible to compare job classes, even when the jobs themselves are different.
The evaluation must be based on the requirements of the job classes—not on who holds the job, their title, their rank within the company, or their current pay rate.
For more information, visit the CNESST web page on evaluating job classes (in French only).
Step 4: Calculate wage gaps
The goal is to determine whether there is a pay difference between predominantly female and predominantly male job classes of equal value. If 2 job classes receive the same point value, they should be entitled to the same pay.
If the comparison reveals wage gaps between predominantly female and predominantly male job classes, pay adjustments must be made to correct them.
These adjustments apply only to predominantly female job classes. The compensation for a predominantly male job class cannot be reduced to achieve pay equity.
Total compensation is made up of the following:
If all job classes have access to a particular monetary value benefit, there is no need to factor this benefit into your calculation because it will not affect the results.
Once you’ve determined the total compensation for predominantly female and predominantly male job classes, you must verify whether a wage gap exists between them. Wage gaps can be calculated using a global method, an individual method, or any other CNESST-approved method.
The MonÉquitéSalariale online tool (in French only) automatically estimates wage gaps using both the global and individual methods.
For more information, visit the CNESST web page on calculating wage gaps (in French only).
Step 5: Determine how to pay the adjustments
If wage gaps are identified for a predominantly female job class, employers must make pay adjustments to the affected employees.
Adjustments must be paid by the pay equity exercise deadline. Employers can choose to make the adjustments in a single payment or spread them out over time. If the decision is to spread the payments out, the following conditions apply:
If you complete your pay equity exercise after the deadline, pay adjustments must be calculated retroactively and will incur interest.
For more information, visit the CNESST web page on determining how to pay adjustments (in French only).
Step 6: Post the results
Posting the results of your pay equity exercise lets your employees know that the exercise has been carried out. Results must be posted in locations that are visible and easily accessible to all employees.
If results are posted only electronically (e.g., on the company intranet), you must ensure that all employees have easy access to a computer or other device that allows them to view the posting without restrictions or needing authorization.
The process of posting the results and the content required depend on the average number of employees during your reference period. For more information, visit the following CNESST web pages (in French only):
The MonÉquitéSalariale online tool (in French only) generates the required postings automatically.
You must conduct a pay equity audit (in French only) in your business every 5 years. This assessment ensures that employees in predominantly female job classes continue to receive pay equal to that of employees in predominantly male job classes of equal value in the business.
When conducting a pay equity audit, make sure you have the data from the initial pay equity exercise or your previous pay equity audit. We recommend you start the process a few months before your deadline to ensure you meet your obligations on time—it will save you considerable time in the long run.
The CNESST has developed a free online tool to guide employers through the process: MonÉquitéSalariale (in French only).
Steps to complete a pay equity audit:
The DEMES is an online form used to:
You must submit the DEMES every year until you confirm that your business has completed the initial pay equity exercise.
After that, you’re only required to submit the DEMES when completing a pay equity audit. Once you confirm that you have completed an audit, you won’t need to submit the DEMES again until the next assessment, 5 years later.
For more information on the DEMES and when to file it, visit the CNESST web page on the Employer’s Statement on Pay Equity (in French only).
And then what?
You must keep all data used in the pay equity exercise for 6 years. If your company is audited or receives a complaint, the CNESST may also request a copy of your posted results or supporting documentation.
As you have probably realized, conducting a pay equity exercise or audit is time-consuming.
Fortunately, there are many free resources available to help you. The CNESST provides essential tools (in French only) to guide you through the process, step by step:
You’ll also find many other tools and publications on the CNESST website. For more information, visit the CNESST web page on tools for completing the pay equity exercise (in French only).
As a CFIB member, you can count on support from our business advisors. We are here to answer your questions and to ensure that everything gets off to a good start!