Canada: Recent Federal Pay Equity Decisions Highlight Important Considerations For Deviating From Legislated Requirements

The federal Pay Equity Act (the "Act") requires most Canadian federally regulated workplaces with 10 or more employees to develop and implement a pay equity plan and address any pay equity gaps in their compensation structure within three years. For most employers, that deadline is September 3, 2024. See our previous blog post on this topic.

Sogetel Inc. (Re), 2024 PEC 3

The Act requires each employer to develop one pay equity plan for its workforce. However, in limited circumstances, the Commissioner may permit an employer to develop multiple pay equity plans for groups of employees. Sogetel Inc. (Re), concerns a request by Sogetel Inc. ("Sogetel") to develop two separate pay equity plans for its employees.

In a request for multiple pay equity plans, the employer bears the burden of showing that there are enough male comparators for a comparison of compensation to be made and that the proposed multiple plans are appropriate to address systemic pay-based gender discrimination. The employer must show there are exceptional circumstances that warrant deviation from the legislative requirements.

Sogetel is a telecommunications company in Québec and its employees fall into two divisions: its operations employees who provide services to customers and its executive employees. It proposed two plans to cover its employees, structured as follows:

• Plan 1: operational employees (310 employees, all non-unionized)
• Plan 2: executive employees (14 employees, all non-unionized)

This would effectively exclude senior management from being compared with the rest of the employees. While none of the non-unionized parties made official submissions, Sogetel filed four emails from its employee representatives on its pay equity committee indicating their support of its application.

The Commissioner found the proposed plans would have enough male comparators. However, the Commissioner found that it was not sufficiently established that the proposed plans would be appropriate to address systemic pay-based gender discrimination within the workplace.

For this stage in the analysis, Sogetel presented two arguments for excluding senior management from its pay equity plan.

First, it argued that the compensation was too different because, unlike its operational employees, the executives were not on a step program with a set salary. Executive salaries were linked to indexation and based on results.

Second, it argued that separate evaluation tools would be needed to value job classes for each group to account for the significant distinctions in the duties and responsibilities of the operational and executive employees.

Ultimately, the Commissioner found that neither of these arguments were unique to Sogetel and that most employers faced these difficulties. The Commissioner further commented that the Act allowed for sufficient flexibility in what compensation is included and how jobs were evaluated to address these concerns.

This case echoes the Commissioner's previous decisions on requests for multiple pay equity plans. Employers face a high bar to establish sufficient grounds to support multiple pay equity plans, even when the employer has employee support for the deviation from the legislative requirements.

Montreal Port Authority (Re), 2024 PEC 4

Montreal Port Authority (Re) concerns a request to vary the composition of the employer's pay equity committee.

Generally, a pay equity committee must meet the following criteria:

• at least two-thirds of the members must represent the employees;
• at least 50% of the members must be women;
• at least one member must represent the employer;
• each bargaining agent must select a representative to represent its employees; and
• at least one member must be a person selected by non-unionized employees, if any, to represent them.

Montreal Port Authority ("MPA") was requesting to vary requirement (d). MPA had five bargaining agents. Of those five bargaining agents, four nominated a representative for MPA's pay equity committee; however, the Seafarers' International Union of Canada ("SIU") did not.

MPA and SIU submitted a joint letter requesting the composition of the pay equity committee be varied such that a SIU representative was not required on the Committee.

SIU only had three employees in its bargaining unit who could serve as a committee representative, all of whom worked as a team which would be significantly impacted if it lost any of its members for any significant amount of time.

As with requests for multiple pay equity plans, the applicant bears the burden of demonstrating that the circumstances in its workplace warrant a different composition for the pay equity committee.

The Commissioner found that MPA used reasonable efforts to establish a pay equity committee per the legislative requirements. However, given the nature of the work done by SIU employees, MPA ultimately could not meet those requirements. It also found that this would impact only a small number of employees as the majority of MPA's employees were non-unionized and the majority of its unionized employees would be represented.

The Commissioner approved the alternate composition of the pay equity committee without a SIU representative. Even with union or employee support, an application to the Commissioner is still required to vary the legislated requirements for the composition of the pay equity committee.

Other considerations for employers

The deadline to post the final pay equity plan is quickly approaching. To allow for time to make an application to vary the requirements of the Act if necessary, employers should take steps to appoint and begin work with their pay equity committees as soon as possible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.