“Because it’s the smart thing to do!”

“Because it’s 2015!” When the Canadian Prime Minister took office, he established gender parity in appointing his cabinet as if it were the most natural thing in the world – so at least since 2015, Canada has been a shining example to the world in matters of equality and diversity. But how do things look with regard to fair pay in the country that is the second largest in terms of geographical size? Is it doing justice to its forward-looking reputation? In the latest stop of our journey around the world via around 80 laws on pay transparency, we take a closer look behind the scenes in Canada.

Even if Canada, known for its gigantic forests and almost endless wilderness, trails sadly behind in matters of sustainability and environmental protection internationally, overall it counts as one of the world’s most modern countries. Particularly regarding matters of equality and diversity, it has an extremely progressive reputation. But does it also live up to this reputation in matters of fair pay?

For there is still a need for action, as Prime Minister Justin Trudeau found. Upon taking office, he established gender parity in his cabinet when he appointed 15 women and 15 men, with the famous words: “Because it’s 2015!” Despite this clear message, even Canada has yet to close the pay gap between men and women. According to the World Economic Forum’s 2021, Canada has a gender pay gap of 17.6 percent, putting them in 24^th position internationally in the Global Gender Gap Report 2021.

Pioneering policies in the provinces

As has been seen in so many other countries, Canada has met this challenge with equal pay laws that address the gender pay gap. Since 2018, Canada has been a member of the Equal Pay International Coalition (EPIC), and since 1971, there has been a federal Office, and now Department with its own Minister dedicated to gender equality throughout Canada. In addition, all provinces and territories in Canada have similar structures to promote gender equality. In January 2021, Canada was the first country to make wage gap information for women, Indigenous people, persons with disabilities, and members of visible minorities working in federally regulated workplaces publicly available. The objective: to raise awareness of wage gaps in federally regulated workplaces and to give employers the opportunity to show leadership in reducing them. Employers in the federal jurisdiction will soon be required to include aggregated wage gap information in their annual reporting on employment equity. This information will be publicly available.

In Ontario, the country’s second-largest province, the Pay Equity Act became law in 1987. The Pay Equity Act obliges companies with ten or more employees to eliminate pay inequity between women and men who perform work that is of comparable value to their organization. A commission is responsible for the administration of the Ontario Pay Equity Act. This commission can mediate disputes, issue orders, conduct audits to determine compliance, and impose penalties if the statutory requirements are not observed.  Female predominant work is compared to male predominant work of equal or comparable value. Gender predominance is established when more than 60% of the jobs are occupied by women or by men. The value of jobs is established using a gender-neutral job evaluation system whereby the activities are evaluated on the basis of skill, effort, responsibility, and working conditions. The compensation of female and male predominant jobs of comparable value must be equivalent.

Since 1997, there has also been similar pay equity legislation and a similar commission in Quebec, Canada’s largest province, which adapted the process from Ontario to suit its own needs. Here too, companies with 10 or more employees are obliged to evaluate male and female predominant jobs, determine differences in pay, close pay gaps and report annually to the Quebec government. In addition, every five years the plan must be updated. When a company has more than 100 employees, the employer must establish a pay equity committee for each pay equity plan that needs to be completed. The pay equity committee must be composed of representatives of employers, employees, and accredited associations (unions) if applicable. Such a committee is recommended for a company with 50 to 99 employees but is compulsory for companies with 100 or more employees. The costs of the pay equity process must be borne by the companies themselves.

Pay Equity legislation comes to the Federal Jurisdiction

At the federal level, in December 2018 a new federal Pay Equity Act was passed, and a Pay Equity Commissioner was appointed in October 2019 to lead the establishment of the Office of the Pay Equity Commissioner within the Canadian Human Rights Commission. The Act was declared in force as of August 31, 2021. It applies to the federal government, banks, inter-provincial transportation companies, federal Crown corporations and telecommunications companies, among others. The federal Pay Equity Act requires companies with ten or more employees to actively ensure pay equity by undertaking a pay equity analysis similar to the process described above that is required by the Ontario and Quebec Pay Equity Acts. That is, federally regulated employers must demonstrate that work of comparable value done by men and women is paid the same and they must maintain this equitable compensation structure over time. The law affects around 1.3 million employees in Canada and applies to roughly 4,600 employers in Canada.

“Because it’s the smart thing to do!”

Canada is consequently showing itself to be extremely progressive, and in international comparison, it is counted amongst the particularly consistent pioneers in equal pay. And in doing so, the country is acting in its own interests. In his keynote speech at the World Economic Forum 2018, Prime Minister Trudeau declared his conviction that equality and economic growth are inseparably linked: “I’d like to focus on a fundamental shift that every leader in this room can act on immediately. (...) I’m talking about hiring, promoting, and retaining more women. And not just because it’s the right thing to do or the nice thing to do, but because it’s the smart thing to do.”

This article was first published in November 2019 and updated to reflect the current state of affairs in September 2021. We would like to thank most sincerely Karen Jensen and her team for fact-checking and revising it. Karen has been the Federal Pay Equity Commissioner at the Canadian Human Rights Commission until October 2022.