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Equal Pay for Equal Work: It’s No April Fool’s Joke and Could Cost You If You Aren’t Ready

As we all know, the majority of the sweeping legislative changes to the Employment Standards Act, 2000 (“ESA”) and to the Labour Relations Act, 1995 (“LRA”) ushered in with passing of the Fair Workplaces, Better Jobs Act – commonly referred to by its Legislative Number, Bill 148 – have already taken effect starting in January of this year.  However, in addition to a couple of changes happening next year – in 2019 minimum wage goes to $15.00, and scheduling restrictions come into play – there is one significant amendment that is mere days away from taking effect.  With the April 1 deadline approaching, we thought it would be a good time to discuss the “Equal Pay for Equal Work” amendments to the ESA.  

Of course, for our unionized employers, it is important to note that anyone with a Collective Agreement in force prior to April 1, 2018 will not be affected until the earlier of: the expiry of that Collective Agreement or January 1, 2020.

However, all other employers – regardless of the size or composition of the workforce – will be subject to the new sections of, and modifications to, the ESA on April 1.  While Section 42 of the ESA currently addresses equal pay for equal work with respect to discrimination on the basis of sex, Bill 148 brings us some new provisions that also address equal pay for equal work in a different context.  Sections 42.1 and 42.2, will now prohibit employers from discriminating in pay rates on the basis of employment status:

• Section 42.1 essentially decrees that part-time, full-time, casual employees all have to be paid the same when doing the same job
• Section 42.2 provides that same protection to temporary or assignment employees as well – I note that there are additional amendments that have already taken effect with respect to Temporary Help Agencies, of which Employers should also be aware but for our purposes today we don’t need to address

In addition to these provisions, a new definition has been added to ESA at section 41.2 which broadens the definition previously related to the Equal Work provisions, by stating that the work has to be “substantially the same but not necessarily identical”.

However, as with any legislation – and especially new legislation – the interesting aspects come with the exceptions to these new rules.  Section 42.1(2) specifically allows employers to maintain pay differences where those differences are based on:

(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 or employment status.

While the first three of these items are fairly straightforward, the last “catch-all” factor could prove interesting.  In our view, this “any other factor” analysis is going to hinge largely on the wording of Section 42.1 where it sets out the prohibition against differential pay:  

(1) No employer shall pay an employee at a rate of pay less than the rate paid to another employee of the employer because of a difference in employment status 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.  

Specifically, subsection b) is where I think employers will be able to hang their respective hats.  Although the definition of “substantially the same” is expanded, we know that there are going to be jobs where the same type of responsibility, in particular, will not be assigned to casual or temporary employees as would be to a permanent employee.

Of course, we have yet to see much, if anything, in the way of challenges – and more importantly decisions on those challenges – from employers to the applicability of any of the Bill 148 amendments, because they are still so new.  However, after April 1, 2018 we expect this particular change will provide fertile ground for dispute since it seems to provide some significant grey area.  Fortunately, the lawyers at CCPartners are ready to help you strategize and line up your operations to ensure not only compliance with the legislation but also realize any efficiencies you can.

Be sure to listen to Episode 8 of the Lawyers for Employers Podcast where the Equal Pay for Equal Work provisions are discussed in further depth.  Find us on iTunes, or online at www.ccpartners.ca/podcasts or www.soundcloud.com/ccpartners.