Quebec Pay Equity - The Important Details
The Pay Equity Act of Québec was passed into law on November 20, 1996. The Act requires that female employees be paid equally to male employees for doing work of equal value. Most employers with 10 or more employees in Québec had to comply within a period of five years, i.e. by November 20, 2001
Fourteen years later, many private companies in Québec have done what the Act requires, but not all
Failure to act before now has NOT been forgiven - any Québec employer that was supposed to have completed its Pay Equity Plan by Nov 2001 and did not comply, was given some new parameters and a new due date - Dec 31, 2010 - to complete its obligations. However, if adjustments to females’ salaries are required, those adjustments must be made retroactively, including to the employees who have since left the company.
There are some new compliance rules for companies that started in business after November 1996. The rules are a little complex but they are consistent with the original Act and its goals.
Maintaining Equity - any Québec company that has already prepared a Pay Equity Plan must do a maintenance review at least every 5 years, counting from its original due date. Maintenance means reassessing the company’s situation and developing a new plan to fix any problems that have arisen since the original Plan was done – including any retroactive payments.
The Commission de l’équité salariale also requires an annual filing for all companies with six (6) or more employees, declaring its Pay Equity status. This filing can only be done on line, but it is quite simple.
Employers that do not meet their deadline may be subject to penalties ranging up to a maximum of $45,000. In practice such fines are rare, but the possibility exists.
Complying with the Act can become complex. It requires approaches that are new to many managers, particularly owners/operators of small businesses. Many managers, Human Resource generalists and union representatives are unfamiliar with the subtleties surrounding the requirements of the law and the processes needed to comply. The Act and regulations, however, do set out the elements of a process in some detail, and the Commission has available both software tools and advice (there is not much available in English and no one at La Commission's help line speaks English).
The Act also sets out penalties for non-compliance – fines up to $45,000. Until recently, employers that chose to ignore the law were unlikely to be audited, and fines were seldom imposed. Experience suggests that La Commission is not anxious to get heavy-handed – but they do insist that the law be respected. Non-compliance will definitely attract unwanted attention from the authorities.
The purpose of the Act is to assure that female workers in Québec are paid fairly relative to their male counterparts in the same company. The Act goes beyond the simple concept of “equal pay for equal work” and requires “equal pay for work of equal value”. This means that not only must a man and woman doing the same job be paid equitably (considering service, the internal value of the job, etc.), but a man and woman in quite different jobs – where the jobs are of equal value – must also be paid equitably.
This immediately raises the question “How do we determine whether two very dissimilar jobs are of equal value?” Much research has been done into the subject of determining the value of dissimilar jobs. The science – and art – of job evaluation provides tools that enables human resource specialists to value jobs based on a set of generic criteria, and to tune the criteria to suit the internal values and needs of each business. The Act recognizes that not all businesses have the same internal values, and it makes allowances. Companies must assure that there is male/female pay equity internally. No external comparisons need to be considered.
The Act recognizes that there are many stakeholders interested in the outcome of the process. Therefore it mandates that a Pay Equity Plan be developed and a Pay Equity Committee be formed to oversee the process for all companies with 100 or more employees. Companies with 50 to 99 employees must develop a Pay Equity Plan but can proceed without a Committee, and smaller companies with fewer than 50 employees must go through the Pay Equity process but the reporting requirements are a little less extensive. Companies with less than 10 employees must develop a plan when their average payroll count exceeds this threshold. Bargaining units or Associations must participate in the process, and have the right to make certain choices during the process.
The Act also recognizes that there are many legitimate reasons why two individuals doing work of equal value might be paid differently. What the individual brings to the table – experience, education/skills, performance, etc. – are legitimate reasons for paying someone more or less than an otherwise similar colleague. For this reason, the law focuses on pay policies rather than actual pay. Equity is achieved when the company’s pay policy is equal for female and male employees doing work of equal value.
The Act and regulations have some built-in leeway and flexibility in terms of interpretation. It appears that the legislation is not out to make life difficult for employers. In fact, most reasonable and fair employers may not have any problems – intentional gender discrimination in pay policies (the focus of the law) has been almost non-existent for a long time, at least in our experience. The law wants to assure that there is no accidental discrimination.
Where a pay difference exists between males and females doing work of equal value, an action plan is required to eliminate the inequity by raising female salaries (retroactively if appropriate) over a period of not more than five years. Lowering males’ pay is not legally acceptable.
The Act requires a two-step posting of the Plan – normally a posting on a central bulletin board or something similar is required.
The first posting will identify the job classes that are predominantly male or female, and set out a very simple outline of the method and process used to determine the value of the job classes.
The legislation also requires the inclusion in the posting of an outline of employee rights and how they can exercise those rights, including general remedies available through La Commission de l'équité salariale.
Communicating with employees may be key. Since they could be directly affected, it is wise to be open but low key. The required postings briefly inform all employees of the nature of the Act, the process that will be followed to assure compliance, and the options to ask questions or complain. It is best to be open about the process, so that no disappointment and mistrust arises from misunderstanding about the intent of the Act and the procedures the company uses to comply.
The second posting* explains the method the company used to determine differences in compensation between male and female job classes, and what pay equity adjustments are required (if any). It also sets out the planned approach to making required adjustments to female pay.
This review is an executive summary of the requirements of The Pay Equity Act of Québec. We urge all Québec employers to look at the issue on an active basis – complying can occasionally be a long and complex process, and experience suggests that there is no serious argument for delaying.
A. Michael Hiles & Associates Inc. can advise clients on the best strategy for complying with the Pay Equity Act, and can either manage the process leading to compliance or advise clients as they work towards implementing the terms of the Act. We have experience in assessing the impact of the legislation, developing and implementing a plan of action and communicating results to employees. We focus on complying with the Act while minimizing the cost and impact on our client's business.
* If the company has between 10 and 49 employees, only one comprehensive posting is required.
Fourteen years later, many private companies in Québec have done what the Act requires, but not all
Failure to act before now has NOT been forgiven - any Québec employer that was supposed to have completed its Pay Equity Plan by Nov 2001 and did not comply, was given some new parameters and a new due date - Dec 31, 2010 - to complete its obligations. However, if adjustments to females’ salaries are required, those adjustments must be made retroactively, including to the employees who have since left the company.
There are some new compliance rules for companies that started in business after November 1996. The rules are a little complex but they are consistent with the original Act and its goals.
Maintaining Equity - any Québec company that has already prepared a Pay Equity Plan must do a maintenance review at least every 5 years, counting from its original due date. Maintenance means reassessing the company’s situation and developing a new plan to fix any problems that have arisen since the original Plan was done – including any retroactive payments.
The Commission de l’équité salariale also requires an annual filing for all companies with six (6) or more employees, declaring its Pay Equity status. This filing can only be done on line, but it is quite simple.
Employers that do not meet their deadline may be subject to penalties ranging up to a maximum of $45,000. In practice such fines are rare, but the possibility exists.
Complying with the Act can become complex. It requires approaches that are new to many managers, particularly owners/operators of small businesses. Many managers, Human Resource generalists and union representatives are unfamiliar with the subtleties surrounding the requirements of the law and the processes needed to comply. The Act and regulations, however, do set out the elements of a process in some detail, and the Commission has available both software tools and advice (there is not much available in English and no one at La Commission's help line speaks English).
The Act also sets out penalties for non-compliance – fines up to $45,000. Until recently, employers that chose to ignore the law were unlikely to be audited, and fines were seldom imposed. Experience suggests that La Commission is not anxious to get heavy-handed – but they do insist that the law be respected. Non-compliance will definitely attract unwanted attention from the authorities.
The purpose of the Act is to assure that female workers in Québec are paid fairly relative to their male counterparts in the same company. The Act goes beyond the simple concept of “equal pay for equal work” and requires “equal pay for work of equal value”. This means that not only must a man and woman doing the same job be paid equitably (considering service, the internal value of the job, etc.), but a man and woman in quite different jobs – where the jobs are of equal value – must also be paid equitably.
This immediately raises the question “How do we determine whether two very dissimilar jobs are of equal value?” Much research has been done into the subject of determining the value of dissimilar jobs. The science – and art – of job evaluation provides tools that enables human resource specialists to value jobs based on a set of generic criteria, and to tune the criteria to suit the internal values and needs of each business. The Act recognizes that not all businesses have the same internal values, and it makes allowances. Companies must assure that there is male/female pay equity internally. No external comparisons need to be considered.
The Act recognizes that there are many stakeholders interested in the outcome of the process. Therefore it mandates that a Pay Equity Plan be developed and a Pay Equity Committee be formed to oversee the process for all companies with 100 or more employees. Companies with 50 to 99 employees must develop a Pay Equity Plan but can proceed without a Committee, and smaller companies with fewer than 50 employees must go through the Pay Equity process but the reporting requirements are a little less extensive. Companies with less than 10 employees must develop a plan when their average payroll count exceeds this threshold. Bargaining units or Associations must participate in the process, and have the right to make certain choices during the process.
The Act also recognizes that there are many legitimate reasons why two individuals doing work of equal value might be paid differently. What the individual brings to the table – experience, education/skills, performance, etc. – are legitimate reasons for paying someone more or less than an otherwise similar colleague. For this reason, the law focuses on pay policies rather than actual pay. Equity is achieved when the company’s pay policy is equal for female and male employees doing work of equal value.
The Act and regulations have some built-in leeway and flexibility in terms of interpretation. It appears that the legislation is not out to make life difficult for employers. In fact, most reasonable and fair employers may not have any problems – intentional gender discrimination in pay policies (the focus of the law) has been almost non-existent for a long time, at least in our experience. The law wants to assure that there is no accidental discrimination.
Where a pay difference exists between males and females doing work of equal value, an action plan is required to eliminate the inequity by raising female salaries (retroactively if appropriate) over a period of not more than five years. Lowering males’ pay is not legally acceptable.
The Act requires a two-step posting of the Plan – normally a posting on a central bulletin board or something similar is required.
The first posting will identify the job classes that are predominantly male or female, and set out a very simple outline of the method and process used to determine the value of the job classes.
The legislation also requires the inclusion in the posting of an outline of employee rights and how they can exercise those rights, including general remedies available through La Commission de l'équité salariale.
Communicating with employees may be key. Since they could be directly affected, it is wise to be open but low key. The required postings briefly inform all employees of the nature of the Act, the process that will be followed to assure compliance, and the options to ask questions or complain. It is best to be open about the process, so that no disappointment and mistrust arises from misunderstanding about the intent of the Act and the procedures the company uses to comply.
The second posting* explains the method the company used to determine differences in compensation between male and female job classes, and what pay equity adjustments are required (if any). It also sets out the planned approach to making required adjustments to female pay.
This review is an executive summary of the requirements of The Pay Equity Act of Québec. We urge all Québec employers to look at the issue on an active basis – complying can occasionally be a long and complex process, and experience suggests that there is no serious argument for delaying.
A. Michael Hiles & Associates Inc. can advise clients on the best strategy for complying with the Pay Equity Act, and can either manage the process leading to compliance or advise clients as they work towards implementing the terms of the Act. We have experience in assessing the impact of the legislation, developing and implementing a plan of action and communicating results to employees. We focus on complying with the Act while minimizing the cost and impact on our client's business.
* If the company has between 10 and 49 employees, only one comprehensive posting is required.
