# Employment Equity Regulations – Reporting salary – IPG-107

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## Subject

Reporting salary under the Legislated Employment Equity Program (LEEP).

## Issue

Employers subject to LEEP must report salary ranges and pay gap information using specific salary information. The following guidelines show how to use salary information to calculate annual salaries and pay gap information.

## Background

The LEEP covers federally regulated private-sector employers, including Crown corporations and other federal organizations, that are subject to the *Employment Equity Act* (the Act).

The *Employment Equity Regulations* (the Regulations) require LEEP employers to include pay gap and salary information, in their annual employment equity reports due by June 1.

## Policy

Employers must report the following information in Form 2 Parts A-G:

- salary ranges
- mean and median hourly wage gaps
- mean and median bonus pay gaps
- mean and median overtime pay gaps
- mean and median overtime hours gaps
- proportions of employees who have received bonus pay
- proportions of employees who have received overtime pay

Employers must use the following elements to identify salary ranges and pay gap information:

- salary, excluding any bonus pay and overtime pay
- period over which the salary is paid
- number of hours worked that can be attributed to the salary
- bonus pay paid in the reporting period
- overtime pay paid in the reporting period
- number of overtime hours worked that can be attributed to the overtime pay
- workforce representation data

Employers should report the following pay gaps as the percentage differences between 2 groups of employees:

The percentages reported should be rounded to the closest decimal place, for each of the following:

- within the organization overall
- by industrial sector
- by geography
- by employment status, and
- by Employment Equity Occupational Group (EEOG)

Overtime hours gaps are expressed as differences in number of hours, rather than percentages.

The subject and comparison groups for which pay gap information is calculated are set out in Form 2 Parts D-G. The groups compared are:

- women compared to men
- Aboriginal peoples
^{Footnote 1}compared to non-Aboriginal peoples - Aboriginal men compared to non-Aboriginal men
- Aboriginal women compared to:
- all men (Aboriginal and non-Aboriginal)
- Aboriginal men
- non-Aboriginal women
- persons with disabilities compared to persons without disabilities
- men with disabilities compared to men without disabilities
- women with disabilities compared to:
- all men (with and without disabilities)
- men with disabilities
- women without disabilities
- members of visible minorities compared to non-visible minority members
- visible minority men compared to non-visible minority men
- visible minority women compared to:
- all men (visible minority members and non-visible minority members)
- visible minority men
- non-visible minority women

### Important information

The Workplace Equity Information Management System (WEIMS) automatically performs the calculations for:

- annual salaries
- hourly wage
- hourly wage gaps
- bonus pay gaps
- overtime pay gaps
- overtime hours gaps
- proportions of employees who receive bonus pay
- proportions of employees who receive overtime pay

## Definitions

### Salary

Salary means remuneration paid for work performed, before deductions, in the form of:

- basic pay
- pay for piecework
- shift premiums
- bonus pay
- overtime pay

Additional information has been published to clarify what employers must include as salary for their annual employment equity reports.

*Employment Equity Regulations* – Definitions and interpretations for reporting salary – IPG-106

#### Important information

When completing any part of Form 2 Parts A-G, employers must** not include** “bonus pay” and “overtime pay” in the annual salary and hourly wage calculations, as they are used separately for employment equity reporting purposes.

### Hours worked

The number of hours worked that can be attributed to the salary refers to the number of hours an employee is paid, including hours on paid leave and excluding overtime hours for which they received overtime pay.

#### Important information

For employees whose hours of work are not recorded, an alternative approach to identify a representative number of hours may be used, such as:

- conversion formula, or
- alternate record of hours (such as from a logging device or logbook)

An employer may use an alternative approach only if they are not required under the *Canada Labour Code, Part III* (or other legislation) to keep a record of hours worked for an exempt class of employees (such as managers).

In selecting an alternative approach, an employer should ensure that the approach provides a consistent and balanced representation of the employees’ hourly wage.

In addition, records of the calculations should be kept to provide to the Canadian Human Rights Commission in the event of a compliance audit.

### Overtime hours

Overtime hours means the hours worked by an employee, in excess of the standard hours of work, for which the employee received overtime pay.

### Period over which the salary is paid

The period over which the salary is paid refers to the number of full weeks – 2 being the minimum – at the end of which the salary was paid to the employee.

#### Important information

The salary paid is required to determine the annual salary and the hourly wage for each employee. This information is used to calculate and report salary ranges and hourly wage gaps. WEIMS performs this automatically, but for WEIMS to determine an annual salary or an hourly wage, employers should enter the salary paid:

- over a period of 52 full weeks, or
- any other number of full weeks – 2 being the minimum, using the most recent representative pay period on or before December 31

## Salary ranges

Reporting salary ranges in Form 2 Parts A-C requires the calculation of the employee’s annual salary, as of December 31. This is required for all permanent (full-time and part-time) employees that are employed as of December 31.

Temporary employees, as defined in the Regulations, must also be included:

- as of the date in the calendar year on which the number of temporary employees was the greatest, and
- where they constituted 20% or more of the employer’s workforce at any time during the reporting period

Each employee’s annual salary is determined based on the information presented above and using the following formula:

**annual salary = salary × (52 ÷ period over which salary is paid)**

For example, if an employee is paid a salary of $3,200 every 2 weeks, as of December 31 of the reporting period, then that employee’s annual salary is $83,200 because 52 ÷ 2 (period over which salary is paid) = 26 and $3,200 (salary) x 26 = $83,200:

**$83,200 = $3,200 × (52 ÷ 2)**

Note that WEIMS automatically performs this calculation.

## Pay gap information

Reporting pay gap information in Form 2 Parts D-G requires the calculation of:

- mean and median hourly wage gaps
- mean and median bonus pay gaps
- mean and median overtime pay gaps
- mean and median overtime hours gaps
- proportions of employees who have received bonus pay
- proportions of employees who have received overtime pay

These calculations must use the following information:

- salary, excluding any bonus pay and overtime pay
- number of hours worked that can be attributed to the salary
- bonus pay
- overtime pay
- number of overtime hours
- workforce representation data

Note that WEIMS automatically performs these calculations.

### Means and medians

The gaps reported in Form 2 Parts D-G use 2 ways to find the middle in a group of values: means and medians.

#### Mean

A mean is calculated by dividing the sum of a set of terms by the number of terms:

**mean = sum of a set of terms ÷ number of terms**

##### Example

To calculate the mean hourly wage for a group of women (see Step 1: Calculate the hourly wage of each employee), follow these 4 steps:

- identify the hourly wage of each woman:
- Mary: $15 per hour
- Fatima: $18 per hour
- Rosa: $18 per hour
- add the hourly wages of these women:
- $15 per hour + $18 per hour + $18 per hour = $51 per hour
- identify the number of women: 3 (Mary, Fatima, and Rosa)
- apply the formula for calculating a mean to the hourly wages of these women:
- mean hourly wage = sum of hourly wages for all women ÷ number of women
- mean hourly wage = $51 per hour ÷ 3
**mean hourly wage = $17 per hour**

In this example, the mean hourly wage of these women is $17 per hour.

#### Median

A median is calculated using the following steps:

- list all values in order from smallest to largest
- if there is an odd set of values, the median is the value in the middle. For example, if the hourly wage values are:
- $14 per hour, $15 per hour, $16 per hour, $17 per hour, $18 per hour
**The median value is $16 per hour**- if there is an even set of values, the median is the mean of the 2 middle values in the ranked order. For example, to calculate the median hourly wage of a group of four women:
- identify the hourly wage of each woman:
- Mary: $15 per hour
- Fatima: $18 per hour
- Rosa: $18 per hour
- Olivia: $17 per hour
- list these hourly wages in order from smallest to largest:
- $15 per hour, $17 per hour, $18 per hour, $18 per hour
- find the 2 middle values:
- $17 per hour and $18 per hour (as 1 hourly wage is more or equal to these two values ($18 per hour) and 1 is less than them ($15 per hour))
- calculate the mean hourly wage of these two middle values using the following formula:
- mean hourly wage = sum of hourly wages for middle values ÷ number of middle values
- mean hourly wage = ($17 per hour + $18 per hour) ÷ 2
- mean hourly wage = $35 per hour ÷ 2
- mean hourly wage = $17.5 per hour

**Therefore, the median hourly wage for these 4 women is $17.5 per hour.**

### Hourly wage gaps

Reporting hourly wage gaps in Form 2 Parts D-G is a 2-step process.

#### Step 1: Calculate the hourly wage of each employee

The hourly wage is calculated using this formula:

**hourly wage = salary ÷ number of hours**

For example, if an employee is paid a salary of $1,600 every 2 weeks and this employee works 80 hours every 2 weeks, then that employee’s hourly wage is $20 per hour because $1,600 ÷ 80 hours = $20 per hour.

#### Step 2: Calculate the hourly wage gaps

Once the hourly wages of all employees have been determined, hourly wage gaps are calculated using these formulas, where:

- w = hourly wage
- g1 = 1 of the relevant comparison groups (see Policy section)
- g2 = 1 of the relevant subject groups (see Policy section)

**mean hourly wage gap (%) = (mean w for g1 - mean w for g2) ÷ mean w for g1 × 100**

**median hourly wage gap (%) = (median w for g1 - median w for g2) ÷ median w for g1 × 100**

For example, calculate the hourly wage gaps between women and men as follows:

Where:

- mean w for g1 = mean hourly wage for men = $20 per hour
- mean w for g2 = mean hourly wage for women = $19 per hour

**mean hourly wage gap (%) = ($20 per hour - $19 per hour) ÷ $20 per hour × 100 = 5%**

And where:

- median w for g1 = median hourly wage for men = $18 per hour
- median w for g2 = median hourly wage for women = $15 per hour

**median hourly wage gap (%) = ($18 per hour - $15 per hour) ÷ $18 per hour × 100 = 16.7%**

### Bonus pay gaps

Only include employees who received bonus pay in the reporting period in the bonus pay gap calculations.

Bonus pay gaps are calculated using these formulas, where:

- b = annual bonus pay
- g1 = 1 of the relevant comparison groups (see Policy section)
- g2 = 1 of the relevant subject groups (see Policy section)

**mean bonus pay gap (%) = (mean b for g1 - mean b for g2) ÷ mean b for g1 × 100**

**median bonus pay gap (%) = (median b for g1 - median b for g2) ÷ median b for g1 × 100**

For example, calculate the bonus pay gaps between Aboriginal peoples and non-Aboriginal peoples as follows:

Where:

- mean b for g1 = mean annual bonus pay for non-Aboriginal peoples = $10,000
- mean b for g2 = mean annual bonus pay for Aboriginal peoples = $2000

**mean bonus pay gap = ($10,000 - $2000) ÷ $10,000 × 100 = 80%**

And where:

- median b for g1 = median annual bonus pay for non-Aboriginal peoples = $8,000
- median b for g2 = median annual bonus pay for Aboriginal peoples = $500

**median bonus pay gap = ($8,000 - $500) ÷ $8,000 × 100 = 93.8%**

Employers must also report the proportion of employees in each subject group as well as among men who received bonus pay in Form 2 Parts D-G. Proportions are calculated using this formula:

**proportion of g with bonus pay (%) = number of employees in g with bonus pay ÷ number of employees in g × 100**

Where:

- g = 1 of the subject groups (see Policy section) or men

For example, calculate the proportion of Aboriginal employees with bonus pay as follows:

Where:

- g = Aboriginal peoples
- number of Aboriginal employees with bonus pay = 3
- number of Aboriginal employees = 5

**proportion of Aboriginal employees with bonus pay (%) = 3 ÷ 5 × 100 = 60%**

### Overtime pay gaps

Only include employees who received overtime pay in the reporting period in the overtime pay gap calculations.

Overtime pay gaps are calculated using these formulas, where:

- ot = annual overtime pay
- g1 = 1 of the relevant comparison groups (see Policy section)
- g2 = 1 of the relevant subject groups (see Policy section)

**mean overtime pay gap (%) = (mean ot for g1 - mean ot for g2) ÷ mean ot for g1 × 100**

**median overtime pay gap (%) = (median ot for g1 - median ot for g2) ÷ median ot for g1 × 100**

For example, calculate the overtime pay gaps between women with disabilities and all men as follows:

Where:

- mean ot for g1 = mean annual overtime pay for all men = $800
- mean ot for g2 = mean annual overtime pay for women with disabilities = $1,000

**mean overtime pay gap = ($800 - $1,000) ÷ $800 × 100 = -25%**

And where:

- median ot for g1 = median annual overtime pay for all men = $1,200
- median ot for g2 = median annual overtime pay for women with disabilities = $1,000

**median overtime pay gap = ($1,200 - $1,000) ÷ $1,200 × 100 = 16.7%**

Employers must also report the proportion of employees in each subject group as well as among men who received overtime pay in Form 2 Parts D-G. Proportions are calculated using this formula:

**proportion of g with overtime pay (%) = number of employees in g with overtime pay ÷ number of employees in g × 100**

Where:

- g = 1 of the relevant subject groups (see Policy section) or men

For example, calculate the proportion of women with disabilities with overtime pay as follows:

Where:

- g = women with disabilities
- number of women with disabilities with overtime pay = 1
- number of women with disabilities = 4

**proportion of women with disabilities with overtime pay (%) = 1 ÷ 4 × 100 = 25%**

#### Important information

When calculating overtime pay gaps, only take into account overtime paid in the reporting period. This excludes overtime worked for which the employee is compensated with time in lieu or banked hours.

### Overtime hours gaps

Only include employees who received overtime pay in the reporting period in the overtime hours gap calculations.

Overtime hours gaps are calculated using these formulas:

**mean overtime hours gap (%) = mean h for g1 - mean h for g2**

**median overtime hours gap (%) = median h for g1 - median h for g2**

Where:

- h = annual overtime hours
- g1 = 1 of the relevant comparison groups (see Policy section)
- g2 = 1 of the relevant subject groups (see Policy section)

For example, calculate the overtime hours gaps between visible minority women and non-visible minority women as follows:

Where:- mean h for g1 = mean annual overtime hours for non-visible minority women = 52 hours
- mean h for g2 = mean annual overtime hours for visible minority women = 26 hours

**mean overtime hours gap = 52 hours - 26 hours = 26 hours**

And where:

- median h for g1 = median annual overtime hours for non-visible minority women = 60 hours
- median h for g2 = median annual overtime hours for visible minority women = 38 hours

**median overtime hours gap = 60 hours - 38 hours = 22 hours**

#### Important information

When calculating the overtime hours gaps, only take into account overtime hours for which pay was received in the reporting period. This excludes overtime worked for which the employee is compensated with time in lieu or banked hours.

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