Pay Equity Rights in Ontario

Ontario has three legal regimes which address gender wage discrimination: human rights laws against workplace discrimination, employment standards for "equal pay for equal work," and pay equity legislation for "equal pay for work of equal value."

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There are three different, partly overlapping legal regimes in Ontario aimed at achieving “pay equity” between men and women at work:

  1. The Ontario Human Rights Code protects against workplace gender discrimination;

  2. The Employment Standards Act, 2000, mandates “equal pay for equal work;” and

  3. The Pay Equity Act aims to achieve “equal pay for work of equal value.”

A brief review of each regime highlights some of the key differences and reveals the scope of pay equity rights in Ontario.

Human Rights Code Discrimination

The Human Rights Code provides every person with the right to equal treatment with respect to employment without discrimination because of sex (among other protected grounds including “gender identity” and “gender expression”). This includes protection against gender discrimination in compensation practices.

Such discrimination can take the form of,

  • “direct discrimination,”

  • “adverse effect discrimination,” or

  • “systemic discrimination.”

Direct Discrimination: “Direct discrimination” occurs when individuals are disadvantaged by being treated differently on the basis of characteristics protected by the code. In the context of wage discrimination, one example of “direct discrimination because of sex” is a case which involved an employer who wrongly withheld an employee’s earned bonus after she started a maternity leave, treating her as no longer “actively employed” for the purposes of the bonus plan.

Adverse Effect Discrimination: Even where a facially neutral rule applies to all employees, the rule can be considered discriminatory if it disadvantages some on the basis of a protected ground. For example, a hair salon with a pay policy which compensates employees for men’s cuts at a higher rate than women’s cuts may adversely affect the wages of the salon’s female stylists who work predominantly with female customers.

Systemic Discrimination: “Systemic discrimination” refers to circumstances where established procedures and practices reinforce attitudes, stereotypes, and outcomes which perpetuate the exclusion of a disadvantaged group. Systemic discrimination is sometimes regarded as the cumulative impact of a range of adverse effects through which “business as usual” perpetuates the marginalization of certain groups. For example, the Association of Ontario Midwives was recently successful in demonstrating to the Human Rights Tribunal that systemic discrimination was a factor which infected years of the Association’s compensation negotiations with the Ministry of Health and Long-Term Care in which unconscious attitudes about the value of “women’s work” resulted in a widening pay gap for midwives relative to comparable health professionals.

But not all differential treatment is discrimination. A discrimination claim for being paid less than a male coworker will be dismissed if there is no proven nexus between the applicant’s gender and the difference in pay. Gender must be a factor in the adverse effects suffered. Although, it does not need to be the only factor, and there is no requirement to prove an intention to discriminate.

The human rights regime is largely complaints-based. Individuals are afforded rights, and they can instigate a hearing process with the Human Rights Tribunal to seek compensation for violations.

Employment Standards - Equal Pay for Equal Work

Employment standards legislation provides another regime for employee pay equity rights.

Section 42 of the Employment Standards Act, 2000, mandates that no employer shall pay an employee of one sex less than an employee of the other sex when,

  • (a) they perform substantially the same kind of work in the same establishment;

  • (b) their performance requires substantially the same skill, effort and responsibility; and

  • (c) their work is performed under similar working conditions.

The work performed does not have to be identical, but a substantial difference in any of these criteria could justify a difference in pay.

The Act also provides exceptions to the basic prohibition. It does not apply when an employer can show that the difference in the rate of pay is made on the basis 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.

Because these broad exceptions could be open to abuse, they have been narrowly construed by adjudicators. For instance, the references to seniority, merit, and measurement “systems” have been interpreted as requiring formal, objective, documented systems which are gender-neutral and are applied equally to both sexes. The day-to-day impressions or opinions that a manager forms of workers are not sufficient.

An individual who feels their right to “equal pay for equal work” has been violated can file a complaint with the Ministry of Labour. An Employment Standards Officer will investigate the complaint and can make an order that the employer compensate the employee for any amount owing. Such orders can be reviewed by applying for a hearing at the Labour Relations Board.

Pay Equity Act - Equal Pay for Work of Equal Value

The final Ontario pay equity regime is the Pay Equity Act, which was first implemented in 1987. The stated purpose of the Act is to “redress systemic gender discrimination in compensation for work” performed by “female job classes.” The Act is concerned with reducing the gender pay gap by addressing the influence of societal biases which have historically undervalued “women’s work” and skewed the wage-setting process.

Unlike the other regimes, the Pay Equity Act’s focus is on groups of women workers rather than on individuals. It is not principally a complaints-based system. Rather, it is affirmative action legislation that imposes certain proactive measures on employers to identify and eliminate gender-based wage discrimination in their workplaces.

The Act applies to all public sector employers and all private sector employers with 10 or more employees. Employers are required to identify the predominantly male and predominantly female job classes in their establishment and compare male and female groups performing work of equal or comparable value. The employer must develop a gender-neutral basis for determining the value of different work as a composite of the skill, effort, responsibility, and working conditions normally associated with the work. Through this method, substantially different work performed by women can nevertheless be compared to work determined to be of comparable value performed by men in order to identify any wage inequality that exists within the employer’s establishment.

If a female job class is paid at a lower rate than a male job class performing work of comparable value, the employer must increase the pay for the female job class (by equal dollar amounts for all positions in the class).

The Act also requires larger employers to implement a formal “pay equity plan” detailing the methods of job class comparison and wage adjustments.

The Act was amended in 1993 to address situations where employers had no suitable male comparator within their establishment:

  • The “proportional value” method permits comparisons between male and female job classes of different value. The relationship of pay to value within one job class is compared with the relationship of pay to value in the other job class.

  • The “proxy method of comparison” was implemented for predominantly female workplaces with no male job classes at all. It permits a female job class to be compared with an analogous female job class in a different employer’s workplace where pay equity has already been achieved.

The proportional value and proxy comparison methods are only mandatory for public sector employers and large private employers of 100 or more employees.

The Pay Equity Commission was established to administer the Act. Employees can complain to the Commission about alleged “contraventions of the Act” in their workplace. But this complaints process does not provide individual compensation akin to the human rights or employment standards processes. It ensures compliance with the proactive measures imposed on employers for group job class comparisons and wage adjustments.

In all of the pay equity regimes discussed above, employers are prohibited from reducing employee pay in order to achieve compliance.



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