Equal Treatment – IPG - 122

Effective date: October 20, 2026

On this page

• Subject
• Issue
• Interpretation
• Criteria
• Exceptions
• Prohibition
• Request for review
• Examples

Subject

This Interpretation, Policy and Guideline (IPG) aims to clarify sections 182.1 and 182.2 under Division III of Part III of the Canada Labour Code (Code). Section 182.1 prohibits employers from paying one employee a rate of wages that is less than the rate paid to another employee due to a difference in their employment status if:

1. (a) they work in the same industrial establishment
2. (b) they perform substantially the same kind of work
3. (c) the performance of that work requires substantially the same skill, effort and responsibility
4. (d) their work is performed under similar working conditions and
5. (e) any other factor that may be prescribed by regulation is present

The regulations provide that, to be comparable, the employees' wages must be calculated using the same type of rate of wages, such as:

1. (a) a rate based on time
2. (b) a mileage rate
3. (c) a piece rate
4. (d) a per load rate; or
5. (e) a commission rate

The Code provides for exceptions if the difference in employees' rates of wages is due to a system based on:

1. (a) seniority
2. (b) merit
3. (c) the quantity or quality of each employee's production or
4. (d) any other criterion that may be prescribed by regulation

The system in question must apply to all employees whose rates of pay are comparable. Its particulars must also have been communicated to these employees in writing or be readily available for examination by them.

Issue

The following provisions have been added to the Code:

• Equal treatment

There is a need to ensure a consistent approach to determining if, when and how these provisions apply. To this end, this IPG will address the following:

• Interpretation - Equal treatment provisions
• Criteria for applying the Equal treatment provisions
• Exceptions where a difference in the rate of pay is permitted
• Prohibition on reducing rates of wages
• Request for review of rate of wages
• Examples of the application of Equal treatment provisions

Interpretation

Effective October 20, 2026, federally regulated employers are prohibited from paying their employees at different rates of wages based on their employment status. Specific criteria and exceptions must be considered when comparing employees' rates of wages to determine whether they are being treated equally.

Criteria

For the rates of wages of two employees to be considered comparable, and for equal treatment requirements to apply, all of the following criteria must be met:

(a) they work in the same industrial establishment:

• Employees must work within the same "industrial establishment", which is defined in the regulations as all branches, sections and other divisions of federal works, undertakings and businesses that are located in the same Employment Insurance economic region. In other words, even if they work in different locations, employees are considered to work in the same industrial establishment if their workplaces are situated in the same EI economic region.

(b) they perform substantially the same kind of work:

• To determine whether the work performed by two employees is substantially the same, the actual work performed by each employee should be considered. Two identical job titles do not necessarily mean the work performed will be "substantially the same". The same applies for generic job descriptions.
• "Substantially" is defined as "being largely but not wholly that which is specified"
• That means that two jobs do not have to be identical to be considered "substantially the same kind of work". Where the main duties of the work are the same but minor differences are found, it is likely that the work will be considered substantially the same.
• This includes situations where most but not all tasks are the same or where the tasks, while not identical, are so alike that they can be considered "substantially the same".

(c) the performance of that work requires substantially the same:

• skill:
  • Refers to the capabilities required by an employee to perform the work. This includes judgment and communication skills, knowledge (such as prior work experience, education, knowledge of a particular domain) and physical abilities (including strength, endurance, dexterity and precision)
  • When determining the skills required to perform the job, it is the requirements of the job that must be considered. Whether one employee is more skilled than another does not change the skills requirement to perform the work
• effort:
  • Refers to the amount of effort required by an employee to perform the work, including both mental and physical effort. Mental effort encompasses the amount of concentration as well as the analytical and critical thinking needed to perform tasks. Physical effort is about the energy spent and muscular activity deployed required to perform tasks
  • When evaluating the effort required to perform the job, it is essential to focus on the requirements of the job rather than an individual employee's potential effort and capabilities. The fact that one employee is putting in more effort into their job than another does not change the amount of effort required to perform the work
• responsibility:
  • Refers to the amount, nature and impact of the tasks required to perform the work. This can include elements such as the degree of authority, supervision of tasks or personnel, liability for the safety of others, level of independence, accountability, administration of budgets, and the potential for decision-making to impact the business
  • Where two employees hold the same job title but the responsibilities of their work are different, the performance of their work may not require substantially the same level of responsibility

(d) their work is performed under similar working conditions:

• The conditions under which the work is to be performed must be similar in nature. Conditions could include:
  • the environment (noise level, varying temperatures)
  • the shift on which the employee works
  • exposure to hazardous substances

Similar means that the conditions under which two employees perform work resemble each other - they do not need to be identical.

Note that an employee in training who is performing the same work as an employee who is not in training must be paid the same rate of wages. However, if the employee in training is performing substantially different work-such as work requiring more supervision or having fewer responsibilities-they would not be entitled to the same rate of wages.

Exceptions

A difference in the rate of wages paid to two employees is permissible if the difference is due to a system based on:

(a) seniority:

• This exception applies when an employer has a seniority system in place that specifies the rate of wages to be paid to employees, based on their length of service or periods worked.

(b) merit:

• This exception applies when an employer has a merit system in place that determines the rate of wages of its employees. A merit system is one in which rates of wages are at least partially established based on objective evaluations of employees' performance or achievements.
• ''Merit'' is defined as qualities and actions that indicate what a person deserves to receive.

(c) the quantity or quality of each employee's production:

• This exception applies when an employer has a performance-based system in place that takes into account the quantity or quality of an employee's production when determining their rate of wages. Under such a system, the rate of wages of the employees being compared is at least partially based on achieving or surpassing a set threshold, after which they earn a higher rate of wages.

(d) any other criterion that may be prescribed by regulation:

The regulations specify the following additional criteria:

• maintaining an employee's rate of wages following their reclassification or demotion to a position that has a lower rate of wages (also known as "red circling")
• increasing rates of wages to recruit or retain employees during a labour shortage:
  • in certain circumstances, differences in rate of wages may be permitted where they are linked to legitimate considerations related to the recruitment or retention of employees during a labour shortage. Where a compliance issue is raised, an assessment of the relevant facts and information will be conducted to determine whether the circumstances justified such a difference, in accordance with the applicable provisions
  • a labour shortage may exist where an employer experiences ongoing difficulty recruiting or retaining qualified workers under existing employment conditions, having regard to labour market conditions, skill requirements, and operational needs. The existence of a labour shortage is assessed on a case by case basis, taking into account the relevant facts and circumstances
• paying employees a different rate of wages based on the geographic area in which they work, or in which they work while on travel status:
  • in relation to the exception tied to the geographic area where an employee works, it is possible for a single industrial establishment to contain multiple geographic areas
• paying an employee who is on travel status a different rate of wages than someone who is not on travel status

Prohibition

An employer is not allowed to reduce the rate of wages of an employee to comply with equal treatment requirements. An employer can only address disparities in rates of wages by increasing the rate of the employee who was paid less due to their employment status.

Request for review

An employee who believes their rate of wages is lower than that of another employee due to a difference in their employment status may request that their employer review their rate of wages. The employer must conduct such a review within 90 days of receiving the request and provide the employee with a written response. This response must include either a statement, including reasons, that the employee's current rate of wages complies with the Code, or a statement that the employer has increased the employee's rate of wages to comply with equal treatment requirements.

An employee who requests a review of their rate of wages cannot file a complaint with the Labour Program until one of the following occurs:

• the 90-day period for the employer to conduct the review and provide a written response has expired, or
• the employee receives the employer's response following the request for a review

Examples

Please note that the examples below are provided for illustrative purposes only. The facts of each case must be assessed carefully to determine if a contravention has occurred or not.

Example 1

Lara is employed by a chartered bank as an IT Specialist. She works full-time for 40 hours per week. William performs the exact same job, under the same conditions, for the same company, in the same establishment. William was hired to work part-time for 25 hours per week. Lara earns $50/hour, while William earns $45/hour.

After requesting a review from his employer and receiving no response within 90 days, William files a complaint with the Labour Program, claiming that he is paid at a lower rate than Lara due to a difference in their employment status. During the investigation, the employer presents evidence that the difference in rates of wages is based on an established seniority system outlined in a written policy provided to all employees. William was hired in October 2022, while Lara was hired in January 2010. Under the pay system, anyone in that position hired on the same date as Lara, including a part-time employee, would also earn $50/hour. William's lower rate of wages is therefore the result of having less seniority than Lara.

In this case, there is no contravention of equal treatment provisions. The difference in rates of wages is justified by the employer's established seniority system.

Example 2

Ahmad works for ABC Trucking as a truck driver. He transports dangerous goods. His regular route runs through the mountains in Alberta and British Columbia. Ahmad has an indeterminate position and earns $0.60/mile. Jeff also works for ABC Trucking as a truck driver. He transports non-perishable goods and his regular route is concentrated around Calgary. He has a fixed term position, only working during the spring and summer months, and earns $0.50/mile.

Both are based in the same home terminal and are therefore considered to work in the same industrial establishment.

After requesting a review from his employer and not obtaining a reply within 90 days, Jeff files a complaint with the Labour Program stating that he is paid at a lower rate of wages than Ahmad due to his employment status. During the investigation, the employer provides evidence that the difference in the rate of wages is explained by the drivers' working conditions. Drivers transporting dangerous goods through mountainous areas earn higher wages than those who do not, as their working conditions are different.

There is no contravention of equal treatment provisions in this case, since the criterion that two employees are working under similar working conditions has not been met.

Example 3

Jeremy and Fatima work for XYZ Canada Bank, a chartered bank. They are both financial advisors. However, Jeremy works part-time while Fatima works full-time. They meet all the same criteria: they have the same job, work under the same conditions, for the same company, in the same establishment.

Jeremy did not submit a request for review of wages with the employer. Instead, he filed a complaint with the Labour Program alleging Fatima's rate of wages is higher due to a difference in their employment status.

During the investigation, the Labour Affairs Officer (LAO) determines that the employer has established a system that evaluates employees' work based on quality and assigns ratings from "A" to "E". Where an employee's work is almost without error, they receive an "A" rating. As errors accumulate, the rating decreases, with "E" indicating a failure to meet expectations. The employer provides evidence that this evaluation system has been in place for many years, that all financial advisors are evaluated on the same basis and that their rate of wages is set accordingly. Under this system, employees' base rate of wages is $35 per hour, applicable to ratings of "C" to "E". An employee whose work is rated "A" is entitled to $40 per hour, while for "B" rated work an employee earns $37.50 per hour.

For the current year, Fatima's work was rated "B" and she earns $37.50 per hour. Jeremy's work was rated "C" and he earns $35 per hour.

The LAO determines that there is no contravention of equal treatment provisions, since the difference in the rate of wages is based on a system based on the quality of each employee's production.

Example 4

Lory and Marco work for Heli Helicopter's Inc. Lory holds an indeterminate position while Marco has a fixed term contract. They are both engineers, working in the same establishment, under the same conditions. Lory is paid $110,000/year while Marco is paid $99,000/year.

Marco filed a complaint with the Labour Program following his employer's refusal to adjust his rate of wages to match that of Lory's, after he requested a review. Marco alleges that Lory is paid at a higher rate of wages based on her employment status. The employer refused to modify his rate of wages stating his current rate complies with equal treatment provisions. The employer provided reasons, in writing, in response to the request for review explaining that the two employees are not capable of the same exertion (effort). Lory is paid at a higher rate of wages because she can work outside in cold temperatures for 10 hours, while Marco is only capable of doing so for seven hours.

During the investigation, the employer admits that both jobs only require employees to work outside for up to seven hours. When looking at the effort required, the effort the employee is capable of exerting is inconsequential. The work requires the same effort from both employees.

In this scenario, there is a contravention of equal treatment provisions as all criteria have been met and no exception applies. The employer is required to pay both employees at the same rate, starting from the day on which Marco made his request for review.

Example 5

Ana and Naoko work as managers, supervising employees at Large Canadian Telecom Company Inc. They perform substantially the same kind of work, in the same establishment.

Ana is paid $30 per hour and works 28 hours per week. Naoko is paid $32 per hour and works 40 hours per week.

After requesting a review by her employer and not obtaining a reply within 90 days, Ana files a complaint with the Labour Program alleging that Naoko is paid a higher rate of wages because she works full-time.

During the investigation, the employer explains that Naoko is paid at a higher rate of wages because she works in the call-center, in a very noisy and distracting work environment. Ana works in billing, in a closed office, in a quiet environment.

There is no contravention of equal treatment provisions in this case since the criterion that two employees work under similar working conditions has not been met.

Example 6

Olga and Yuriy work at XYZ Telecom Inc. as network analysts and perform the same type of work. For the past two years, Olga has worked as a full-time employee in her permanent position and is paid $20.00 per hour. Yuriy was hired six months ago in a part-time position for a one-year renewable term and is paid $19.00 per hour. Yuriy files a complaint with the Labour Program alleging that Olga is paid a higher wage because she works full-time.

During the investigation, the employer claims that there is a seniority system in place that provides a higher wage to employees with longer service. However, upon further review, the LAO determines that the system was only established after Yuriy's complaint was filed with the Labour Program. The details of the seniority-based system were never shared with the employees or made readily available to them. Therefore, the exception does not apply and there is a contravention of equal treatment provisions.