Creating a Pay Equity Plan

Strategic HR Consulting | Total Rewards Practice

The Pay Equity Act is new legislation that requires most organizations with federally regulated employees to create and maintain a pay equity plan. The goal of this act is to address and correct the gender pay gap in Canadian businesses. Starting November 1, 2021, affected employers are required to post a dated announcement stating the organization’s obligation to comply with the act and to create a committee to govern the work. Depending on your organization’s current policies and structure, the amount of work needed to comply with the legislation may vary. By September 1, 2024, all affected organizations will need to post a pay equity plan.

“Pay equity is equal pay for work of equal value.” – Canadian Human Rights Commission

It’s important to understand that pay equity is more than equal pay for the same job. The Canadian Human Rights Commission defines pay equity as “equal pay for work of equal value.” 

Pay equity plan requirements

To create a pay equity plan, federally regulated companies will need to create a committee of employees to guide the work to complete the following tasks:

  • Create job classes
  • Determine which job classes are predominantly female and which ones are predominantly male;
  • Determine the value of the work done in each job class;
  • Calculate total compensation in dollars per hour for each  job class;
  • Compare compensation to determine whether there are any differences in compensation between job classes of equal value;
  • Prepare the contents of the pay equity plan; and,
  • Post the final versions of the pay equity plan. 

Approaching your plan

Before starting the steps above, it’s important to understand the current roles and responsibilities of your workers and the demographics of who is working in those roles. We suggest you complete a job and workforce analysis to gather this important data.

  • Job analysis – review and update, revise, or create job descriptions based on work that is completed by employees.
  • Workforce analysis – analyze HR and employee self-disclosure data to generate a list of all positions held in your organization by employee demographic data.

The results from the job and workforce analysis will allow you to accurately evaluate each job, place jobs in proper classifications, and assess the internal/external pay equity. Internal equity is most often achieved through a formal job evaluation system where each position is evaluated against compensable factors that results in a value of a given role. External equity is established by assessing the roles to the external market through benchmarking.

There is a lot to consider when creating a fair and accurate pay equity plan. No matter where your organization is at in the process, our People First HR consultants can guide your organization, through facilitated consulting, to help ensure your organization complies with the act. We’ll partner with you to assess your organization’s current program against the requirements and customize our approach to fit your needs.

If your organization is required to comply with the new Pay Equity Act, or if you’re looking to create an equity plan, contact us to see how we can support you and employees through the process.