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Divisional Court Clarifies Employer Responsibilities under the Pay Equity Act and Tribunal’s Jurisdictional Limitations in Applying the Human Rights Code

The Divisional Court has released the much anticipated decision of Canadian Union of Public Employees (“CUPE”), Local 1999 v. Lakeridge Health Corp. (“Lakeridge”).  The case explains what it means to achieve pay equity under the Pay Equity Act (“PEA”), it confirms that the PEA is not discriminatory on its face and it clarifies the jurisdictional limits of administrative tribunals in applying the Human Rights Code (“the Code”).

Facts

At Lakeridge, a hospital in Durham Region, CUPE represents two separate bargaining units - a service unit and a clerical unit.  At the time of the decision, the majority of the employees in the service unit were male and the majority of employees in the clerical unit were female.  A pay-equity plan in place prior to litigation resulted in similarly valued clerical employees and similarly valued service employees having their top rate of pay equalized.  However, the wage grid for service unit employees was more compressed, meaning that males typically had higher rates early in their employment and advanced to the top pay rate sooner than females with similarly valued job class.  CUPE was unable to adjust the difference in wage grids through collective bargaining and thus applied to the PEHT for an order that pay equity under the PEA required wage grids for the similarly valued job classes to mirror one another.

Pay Equity Hearing Tribunal Decision (“PEHT”)

The PEHT found that the PEA does not call for the equalization of wage grids to attain pay equity.  Specifically, the PEA recognizes that there may be different job classes with more than one rate of compensation and that the goal of the legislation is achieved when similarly valued female and male job classes have an equivalent top rate of compensation.   Moreover, the PEHT found that the PEA has a comprehensive scheme for the redressing of systemic gender discrimination in compensation but to accept arguments based on the Code and the Canadian Charter of Rights and Freedoms (“the Charter”) would be to assume an inappropriate legislative role.

Divisional Court Decision

CUPE applied for judicial review of PEHT’s decision and claimed that the interpretation of the PEA by the tribunal was unreasonable and violated the Code which could not be permitted because of the primacy of the Code over all other legislation.

The Court commented that the PEA does not require the harmonization of wage grids and it is not designed to eliminate all gender-based wage discrimination.  Instead, the PEA’s purpose is to redress systemic wage discrimination in accordance with the detailed provisions of the legislation.  As a result, the PEHT made a reasonable decision in light of the legislative scheme it had to interpret.

With respect to the Code, the Court commented that the PEA is not discriminatory on its face as it does not require or authorize any discriminatory act.  While the PEA may not eliminate all wage differences between genders in the workplace that does not mean there is conflict between the Code and the PEA.  Moreover, the PEHT has jurisdiction to apply the Code to the extent that human rights issues arise directly in a complaint before it but it does not have authority to deal with independent violations of the Code.  CUPE’s arguments were an example of the latter as the complaint was an attack on the legislation.  Specifically, their argument was essentially that the PEA does not do enough to eliminate gender based wage discrimination.

As a result, the Court dismissed the applications for judicial review.   As an aside, the Court interestingly commented that the PEA may be vulnerable to a challenge under Section 15 of the Charter, equality rights.

Relevance for Employers

This decision makes clear that while employers must establish and maintain a Pay Equity Plan in accordance with the PEA that does not mean that wage grids must be equalized for similarly valued job classes though the top rates in these classes must be equal.   In addition, the Court makes clear that administrative tribunals do not have jurisdiction to deal with stand-alone violations of the Code, a significant point for employers appearing before administrative tribunals to bear in mind.   This may not be the last word on this case as it is expected that the Union will seek leave to further appeal this decision.

Consider consulting CCP counsel if you have any questions about this case, or if you require any assistance with pay equity issues in your workplace.    Lastly, continue to refer to our blog as we endeavour to keep you up to date on further case law or legislative developments that may alter employer responsibilities with respect to gender based wage differences and pay equity.

Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.