Steps to Pay Equity
The Pay Equity Program, which is part of the Labour Program, recommends that employers take a collaborative approach to implementing pay equity in their establishments. We have therefore developed these guidelines to help you, as an employer, identify and eliminate gender-based wage discrimination in your establishment.
The Labour Program wishes to emphasize that effective communication with employees is crucial to the success of the pay equity process.
The seven steps outlined here provide a framework for understanding how "equal pay for work of equal value" works. These steps are not comprehensive, since compensation systems may vary from establishment to establishment, but they do take into account the concepts set out in the Canadian Human Rights Act.
The seven steps are:
- Start the Pay Equity Process
- Determine the Establishment and Occupational Groups
- Analyze and Document the Jobs
- Evaluate the Jobs
- Identify any Wage Gaps
- Implement Pay Equity
- Maintain and Review Pay Equity
1. Start the Pay Equity Process
The first step in the pay equity process is to inform employees and bargaining agents of your intention to proceed with implementing a pay equity plan. It may also involve developing ground rules for the method of analysis that will be used to determine any pay gap in a project plan. At this time, you may want to decide whether you will be using an external pay equity consultant.
We recommend that you work collaboratively with employees and employee representatives on the pay equity process from the beginning of the planning stage. This will help ensure the process is open and honest, and that its results are acceptable.
Please review the initial compliance monitoring questions for employers before undertaking any activity so that you will have a good idea of where to start, and so you can think about developing a communications strategy.
Establishing Ground Rules in a Project Plan
The pay equity process can be lengthy and complex. The Labour Program recommends that parties prepare a project plan in advance, outlining flexible ground rules for the key steps and objectives of implementing pay equity in their establishment. You should also develop a Communications Strategy to inform employees about the process.
As part of the project plan, the parties should agree, in general terms, on a method and schedule for dealing with any wage gaps that may be identified at the end of the process, as well as the length of time over which a gap will be closed. A project plan might also include a statement of objective and an outline of the composition of a job evaluation committee and selection process for its members, as well as their roles and responsibilities.
You may also want to consider establishing a mechanism for dealing with questions on the process and for addressing any concerns resulting from the job evaluation process or its results. Internal processes for dispute resolution allow parties to resolve problems before filing a complaint with the Canadian Human Rights Commission.
After a project plan has been prepared, it should be approved by senior management or, in small establishments, by an individual with the authority to make compensation decisions.
Initial Compliance Monitoring Questions for Employers
- How many men do you employ?
- How many women do you employ?
- Are any of your employees unionized?
- Do you have job descriptions or questionnaires for each position in your organization?
- Do you have a job evaluation plan?
- Does the job evaluation plan cover the four factors of skill, effort, responsibility and working conditions?
- How is the starting wage/salary of a new employee determined?
- How do you decide the amount of any wage increases?
- Are there any differences in how pay is determined for part-time employees?
- Are benefits available equally to men and women?
- Are benefits available to your part-time employees?
- If you are based in Ontario and Quebec, did you undertake any activities in response to the provincial pay equity legislative initiative?
Developing a Communications Strategy
Good communication is crucial to the success of a pay equity program. Employers should decide on an effective employee communication strategy in advance. The methods you choose to inform employees of the process and results will vary depending on the size and culture of the organization. For example, communication may be:
- electronic; or
There are advantages and disadvantages to each style.
The following are examples of topic headings that might be included in a comprehensive pay equity communications plan:
- Date of Posting and Pay Equity Adjustments
- Definition of Establishment
- Occupational Groups
- Job Evaluation Method
- Job Evaluation Results
- Reasonable Factors
- Pay Equity Adjustments
- Contact Information for Pay Equity
We recommend that you make it clear to employees from the outset that pay equity:
- will not lead to reductions in salaries, and
- may lead to pay equity adjustments for some employees.
It should also be emphasized that equal pay for work of equal value is not intended to close the entire wage gap between men and women. Other programs, such as employment equity, may address issues such as occupational distribution or barriers in employment systems that can contribute to wage differences between men and women. It should be made clear that management and unions are committed to the process and achievement of pay equity within their establishment.
2. Determine the Establishment and Occupational Groups
The next step in the pay equity process is to decide how the employee population will be analyzed so that all pay inequities based on gender can be identified and eliminated. Determining the extent of the employer's establishment, identifying occupational groups and determining their gender-predominance are essential steps before deciding which jobs to evaluate.
Section 11 of the Canadian Human Rights Act requires that comparisons of jobs be made within the same establishment. Section 10 of the Equal Wages Guidelines, 1986 will help you define your establishment. For further assistance in determining the scope of your establishment, please refer to Basic Pay Equity Concepts or contact us.
Sections 12 to 15 of the Equal Wages Guidelines, 1986 refer to an "occupational group" but do not provide a definition of this term. This leaves some flexibility in determining which jobs should be classified together for the purpose of comparing male-predominant and female-predominant groups.
Occupational groups may be defined narrowly or broadly, as appropriate for the size and nature of the establishment concerned. The following criteria will help an employer identify suitable groups for the analysis:
- Jobs characterized by work of a similar nature including skills and responsibilities, such as financial analyst and financial accountant
- Jobs that have the same basic qualifications
- Similar career patterns and interchangeability of personnel
- Jobs already grouped together for compensation purposes, such as management and administrative jobs
If an occupational group does not meet the criteria for gender predominance under section 12 of the Guidelines, it should be set aside for pay equity comparison purposes, and not used when comparing gender-dominant groups.
3. Analyze and Document the Jobs
The legislation does not require that employers document jobs through job descriptions or questionnaires. However, as part of the process of implementing pay equity within an establishment we recommend that you have some form of documentation that describes the requirements of all of the jobs within your establishment for the purposes of determining their relative value.
Job documentation involves collecting information about the jobs within an establishment. Job information forms the basis of job evaluation and, therefore, collecting information that is:
- accurate; and
- uses consistent language is important to ensure gender-neutrality.
There are many approaches to collecting job information; however, to manage bias, we recommend that you use analytical tools such as:
- job descriptions;
- questionnaires; and
- structured interviews.
Verify the accuracy of job documentation with the supervisor and the employee performing the work.
Existing job documentation can be used or modified for pay equity purposes, but it is most effective when it is current, accurate and consistent in format and style. Job documentation should also use gender-neutral language and describe job requirements using the four criteria required to measure value as listed in subsection 11(2) of the Canadian Human Rights Act: skill, effort, responsibility and working conditions.
Job documentation should also take into account all the requirements necessary to perform the work in a fully satisfactory manner, and should not consider the attributes of the person occupying a particular job. For example, in capturing the job information for a junior technician position, only those skills required to perform the work of a technician should be considered, even if the incumbent has skills that exceed the requirements of the job.
Attention should be given to the jobs predominantly occupied by women. Certain aspects of these jobs are frequently overlooked, such as responsibility for protecting confidentiality, prolonged standing or stress from multiple demands. It is also important to manage bias in job descriptions.
Examples of Frequently Overlooked Content in Jobs Traditionally Performed by Women
- Scheduling appointments
- Writing correspondence and standard letters, taking minutes, proofreading and editing for others
- Operating and maintaining office machines
- Hand-eye coordination and fine motor skills such as rapid finger dexterity (for example, typing, giving injections)
- Establishing and maintaining filing and scheduling systems and data retrieval
- Training and orienting new staff
- Balancing multiple demands
- Calming and gathering information from upset, ill or dissatisfied people
- Eyestrain from reading handwritten material or from using computers
- Providing care and emotional support to people
- Frequent bending or lifting
- Prolonged concentration
- Responsibility for accidental damage to equipment
- Acting on behalf of absent supervisors
- Representing the employer in communications with the public
- Developing and coordinating work schedules and planning meetings
- Communication stress
- Frequent distractions or interruptions
- Exposure to disease, dirt, dust, human waste
- Working in an open-office setting without privacy or with constant noise, crowding
- Sitting or standing in the same position all day with little opportunity for movement
Managing Bias in Job Descriptions
The objective of writing job descriptions is to obtain the most factual, consistent and accurate information about jobs to evaluate them. The following recommendations may help you to control bias in your establishment's job descriptions.
1. Use consistent and accurate job descriptions
To ensure consistency, consider using a questionnaire to gather job facts. Questionnaires ask the same questions about different kinds of work in the same way. A well-designed questionnaire will produce complete, accurate and reliable data. It will control, to some extent, the tendency of some people to over-describe or under-describe the work they do.
2. Use all-inclusive job descriptions
In describing jobs, some aspects of work traditionally performed by women are often overlooked. Examples of frequently overlooked job content include responsibility for operating office equipment, caring for people who are sick and working with frequent interruptions or distractions. This section contains a list of tasks that are often overlooked.
3. Use updated job descriptions
Many factors, such as technology or reorganization of work, can make job descriptions obsolete. They should therefore be updated regularly. Use standardized questionnaires for all jobs.
4. Use accurate and non-gender-related job titles
Avoid using titles that are gender-related (for example, use cleaner instead of cleaning lady) or titles that are misleading (use waste collector instead of sanitation engineer).
5. The incumbent and the supervisor should review job descriptions
This will ensure more consistency and accuracy in the descriptions of duties and responsibilities.
6. Use gender-neutral language
Job descriptions should never refer to the incumbent's duties as "he does…" or "she does…" since this language tends to perpetuate stereotypes about work traditionally performed by women and work traditionally performed by men. Instead, use neutral expressions such as "This job requires…"
Selecting a Job Evaluation Plan
To be appropriate for pay equity purposes, a job evaluation plan must be reliable and gender-neutral. It must assess the four mandatory criteria of skill, effort, responsibility and working conditions as provided in sections 3 to 8 of the Equal Wages Guidelines, 1986. It should also:
- allow for the comparison of all positions within one establishment despite job dissimilarity or level in the organization; and
- measure the full range of each factor for each position in the organization.
A plan that meets these requirements is more likely to be used by the Canadian Human Rights Commission in the event of an investigation of a complaint about gender-based wage discrimination.
Although many types of job evaluation plans exist, those most widely used for pay equity purposes are point-factor plans. These plans attribute a numerical value to the work being performed. Points are assigned to jobs for each factor (skill, effort, responsibility and working conditions) and are summed up to establish the total value for the job. Jobs are then compared based on the overall point value.
There is no single pay equity plan that will suit the needs of every employer. This is because pay equity is technical in nature and establishments vary in size and complexity. In addition, each industry has different competitive challenges that will affect its human resources and compensation strategy, and there are often significant differences in pay practices between unionized and non-unionized organizations.
Most large and medium-sized employers use relatively sophisticated job evaluation systems that are often too complex for small employers who may have fewer jobs to evaluate and limited resources. To meet legislative pay equity requirements, small employers may wish to consider simpler systems that allow for reliable evaluation of the relative worth of jobs within their establishments. For example, a small employer might choose to use a simple ranking method that takes the four factors outlined above into account.
It is possible for your establishment to have more than one job evaluation plan. It is not necessary for an establishment using multiple plans to implement and maintain a single job evaluation plan; however, only one of the plans should be used to determine pay equity. If multiple plans are used on a regular basis, or there is no plan, we recommend that you carry out periodic studies to ensure that pay equity is being maintained.
Establishing a Job Evaluation Committee
The purpose of a job evaluation committee is to determine the value of jobs within the establishment and the size of any pay inequity that may exist. The committee can be helpful in guiding the pay equity process, controlling bias and increasing the credibility of results. Specifically, a job evaluation committee can contribute to the integrity of the process by:
- reducing personal bias and stereotyping of work performed by women; and
- providing increased consistency in assessing value and obtaining accurate results.
Once the initial job evaluation process is complete, review the job evaluations of all committee members to resolve anomalies and ensure the factors are applied uniformly.
The size of a job evaluation committee is an important consideration. If a committee is too large it will not be effective. In larger establishments, it may be necessary to have more than one sub-committee reporting to a master evaluation committee.
If you choose to establish a job evaluation committee, we recommend the following steps:
- Select a representative committee
- Provide adequate training
- Ensure sufficient information and resources
- Use experts and external consultants
Select a representative committee
A representative job evaluation committee should consist of members from different organizational levels. It should include women and men to ensure a range of insights about the jobs being evaluated. In addition, committee members should be:
- knowledgeable about the organization;
- respected by their peers;
- prepared to make decisions;
- able to dedicate the time required for the process; and
- willing to participate in future related activities.
A committee of well-chosen members can improve the process and ensure a range of insights about jobs.
Provide adequate training
Ensure that committee members receive sufficient training on the principles of job evaluation for pay equity purposes. This will help to sensitize committee members to issues of gender bias and ensure more consistent job ratings within the establishment.
Ensure sufficient information and resources
Provide committee members with accurate and detailed job information. They should also have access to the resources they require to implement the pay equity process within the establishment.
Use experts and external consultants
You may also want to consider hiring an external consultant to assist in establishing a committee and implementing pay equity within your establishment.
Where to Find Job Evaluation Plans
You have several options in selecting a job evaluation plan. You may:
- design a job evaluation plan, or
- purchase one "off the shelf" from a consulting firm, a union, or an industry association.
Some job evaluation plans are available publicly, for example on the Internet. Others are commercially available and most large human resources consulting firms offer a point-factor job evaluation plan as part of their services. In addition, some human resources consulting firms offer customized plans based on the culture and requirements of the employer's establishment. Another option is to develop job evaluation plans internally, based on other models.
The Labour Program cannot endorse any particular job evaluation plan. This is because no job evaluation plan on its own is a guarantee of gender neutrality-it only represents one stage in the process. Job descriptions or questionnaires and the actual evaluation of jobs must also be free of gender bias.
In some cases, a Labour Program compensation specialist may review an employer's job evaluation plan upon request and provide technical advice on its implementation. Comments on the plan will generally be limited to ensuring that the four criteria are included and adequately described to meet the legislated requirements.
Types of Job Evaluation Plans
Many types of job evaluation plans exist; however, for pay equity purposes, a job evaluation plan should be reliable, gender-neutral and measure the four criteria required to determine the relative value of jobs within an establishment (skill, effort, responsibility and working conditions).
There are two main types of job evaluation plans:
- non-quantitative plans that view jobs globally, in terms of their importance to the organization and do not produce a precise numerical score; and
- quantitative plans that examine the importance of jobs in terms of compensable factors.
Pay equity has led many employers to use quantitative methods.
Non-quantitative job evaluation plans
Non-quantitative job evaluation methods view jobs globally in terms of their importance to the organization and do not produce a precise numerical score. Non-quantitative job evaluation methods include:
- Ranking method
- Classification method
Quantitative job evaluation plans
Quantitative job evaluation methods examine the importance of jobs in terms of compensable factors. Quantitative methods include:
- Job component or structured questionnaire method
- Point-factor method
This is the simplest form of job evaluation. The process involves a whole job, or job-to-job comparison, resulting in jobs being ranked from highest to lowest value. A small employer may choose to use the ranking method of job evaluation, provided that the four criteria (skill, effort, responsibility and working conditions) are considered.
The main steps in this process are as follows:
- Each job is individually compared to every other job based on the highest to lowest level of each of the four criteria.
- The job of most value from each pairing is noted. The number of times a job has the highest ranking is then added, and a hierarchy is determined based on the number of times a job is considered the most valuable in the pairs.
It is likely and acceptable that some jobs may have the same ranking.
For an example of this system, please refer to the Simple Ranking Method for Small Employers Document: Pay Equity in Smaller Establishments.
The advantages of the ranking method are:
- simplicity and ease of administration;
- quick to implement; and
- requires little training.
The disadvantages to this method include:
- lack of detail; and
- difficulty in administration as the jobs to be compared increase.
Simple ranking gives only an indication of order and does not reveal anything about the relative degree of distance between jobs. The process may be influenced by incumbents, and raters may use different judgment criteria. In addition, any new jobs need to be compared with existing jobs, requiring a repeat of the ranking process.
There are generally two sub-types of the ranking method:
- paired comparison method; and
- slotting method.
Paired comparison is a simple system that permits an employer to review and establish the relative value of each job in comparison with all other jobs based on each of the four criteria. This system becomes unwieldy if there are too many job comparisons and is more appropriate for smaller establishments or occupational groups with fewer than 15 jobs.
The slotting method involves comparing and placing jobs into an established internal hierarchy, and cannot be used as a stand-alone tool. Established jobs that appear to be similar in nature, scope or level are identified. Jobs are then assigned to wage levels based on whole-job comparisons with other jobs at the same level.
The advantages of this method include:
- simple and quick administration;
- low cost; and
- little need for training.
The disadvantage of this method is that it is highly subjective, making it difficult to determine the true value of jobs. We do not recommend that it be used for pay equity purposes.
The classification method ranks jobs on a whole-job basis using predefined class descriptions. This is the method applied in the federal public service.
The first step in this process is to analyze and document job content. Benchmark jobs that appear to be similar in nature, scope or level are then identified and clustered together. Preliminary generic definitions for each cluster are developed to form classification levels (grade or wage). Benchmark job descriptions are then compared with preliminary classification definitions and modifications are made, if necessary. Finally, remaining jobs are assigned to classification levels that most closely match the nature and level of the work performed.
The advantages of this method are that it:
- is simple and quick to administer;
- is inexpensive; and
- requires little training.
The disadvantages are:
- jobs may be forced into classifications that may not fit;
- descriptions can be rigged to fit a particular classification; and
- this system may not be practical for establishments with numerous, widely diverse job families.
Quantitative job evaluation plans
Quantitative job evaluation methods examine the importance of jobs in terms of "compensable factors." Quantitative methods include:
- Job component or position analysis questionnaire method
- Point-factor method
Job component or position analysis questionnaire method
The job component or position analysis questionnaire method uses multiple regression analysis to identify the factors and factor weights that best explain relative market wage levels of benchmark jobs. These factors are then used to evaluate non-benchmark jobs.
The first step requires that the employer or job evaluation committee select and define the compensable factors it wishes to measure. A position analysis questionnaire is designed to collect specific information about the defined compensable factors. Market data for benchmark jobs is then collected and entered into a computer program. Multiple-factor regression analysis is conducted on the data to determine which factors should be included in the initial compensation model. The model is then tested using the same set of data that contains the benchmark jobs and is adjusted if necessary to produce the desired hierarchy. All jobs are run through the final model to produce complete internal equity of all the jobs in the hierarchy.
The advantages of this method are that it balances internal equity with external competitiveness by means of one tool-by using the external market place as a primary reference point. It also relies on statistics, resulting in the perception of objectivity. The disadvantages are that it is highly complex and costly to develop. In addition, its relative lack of transparency can make it difficult to communicate results.
Many types of job evaluation plans exist, but the ones most widely adopted for pay equity purposes use the point-factor methods. This type of plan allows organizations to consistently place a numerical value on work performed using defined factors and degrees. Points are assigned to jobs, factor by factor, and are summed up to establish the total value of the jobs. Jobs are then compared based on the overall point value.
At the beginning of the job evaluation process, job evaluation "factor groups" that reflect the four criteria, as well as benchmark job descriptions that exemplify a degree or degrees of factors, should be selected to ensure consistency in applying the rating scales. Jobs within the establishment should then be analyzed and described in terms of the four criteria. Then, raters should determine which degree level of each factor best fits the job and assign respective point values. It is important that raters interpret each factor and degree consistently to determine the internal value of each job. Finally, the points for each job are totalled and jobs are arranged into an internal hierarchy.
The main advantages of this type of method are that it:
- is relatively reliable and objective;
- is easy to evaluate new or revised jobs; and
- can be tailored to the establishment.
The disadvantages are that:
- it can be expensive to develop or purchase;
- it can be time-consuming to administer; and
- a trained Job Evaluation Committee is usually required to evaluate all jobs to obtain consistent and reliable results.
4. Evaluate the Jobs
Section 11 of the Canadian Human Rights Act does not specifically require that you implement a job evaluation process. However, we encourage you to take a systematic approach to measure and rank the value of jobs within your establishment using a reliable, gender-neutral job evaluation plan based on documented job information.
There are several different types of job evaluation plans which can be found from a number of sources. You should select a plan that is appropriate for pay equity purposes. If you are a smaller employer, you can take a systematic approach to pay equity by ensuring that all jobs of equal value in your establishment receive equal compensation.
You are not required by law to use a representative job evaluation committee, but it can help to guide and control bias in the job evaluation process. It is important to remember that the focus of job evaluation should be on the jobs themselves, and not on the people who occupy them. For example, raters must not take into consideration that the incumbent has a Ph.D in Science when determining the value of the junior technician's job that requires only a B.Sc.
5. Identify any Wage Gaps
Once job evaluation has been completed, wages must be examined to find out whether pay inequities exist.
Section 15 of the Equal Wages Guidelines, 1986 provides for two types of wage comparisons: direct and indirect. A direct comparison involves comparing a predominantly female job with an equivalent predominantly male job. Although a direct comparison of the value of the work performed and the wages received by employees in a female occupational group cannot be compared with a male occupational group, an indirect comparison can be made. This requires the use of pay lines.
One method of determining if any wage gaps exist within an establishment involves the steps outlined below:
- Determine wage rates
- Plot and compare pay lines
Once you have determined the extent of the wage gaps, the next step is to examine these gaps to determine whether they are due to any of the reasonable factors allowed under the Guidelines.
Determine wage rates
The first step is to determine the existing wage rate for each position. The Canadian Human Rights Act indicates that wages include any form of remuneration payable for work performed by an individual.
The wage rate used for this purpose is the rate that the employee can expect to achieve given fully satisfactory performance in the job. It may not be necessary to calculate the monetary value of direct and indirect benefits if they are equally accessible to all employees.
For further explanation of the term "wages" in the context of pay equity, please refer to Basic Pay Equity Concepts: Pay Equity Glossary.
Plot and compare pay lines
The next step is to express or chart the wage rate in relation to evaluation values; that is, to plot the pay lines. This involves plotting the total evaluation points and the respective wage rate for each job (see Figure 1 below). One pay line represents the jobs in the male-predominant group and another line represents the jobs in the female-predominant group.
Two lines of "best fit," one for the male-predominant group and one for the female-predominant group, can then be drawn. A line of "best fit" is a line drawn through the group of data points that best estimates the relationship between the variables, in this case, wages and job value. The difference between the lines in Figure 2 below represents the differences in wages between male and female jobs in the establishment. This difference is the wage gap.
Where dozens or even hundreds of jobs have been evaluated, pay inequities may not be immediately obvious. You should use a method of isolating potential problems and determining the size of those problems. If you are a larger employer, you may prefer to use statistical techniques, such as multiple regression analysis, which allows for the indirect comparisons of jobs.
Many employers consider it to be normal compensation practice to group evaluated jobs into grades to make the pay structure easier to administer. The jobs within each grade are considered equal in value for pay purposes; however, grades must not be determined in such a way as to force female-dominated jobs into lower grades.
Examining Reasonable Factors
Once you determine the extent of the wage gaps, the next step is to determine the extent of the pay equity gap and if any part of the wage gaps are due to systemic gender discrimination. Examine job evaluation data to determine whether any differentials can be explained in terms of one of the reasonable factors outlined in section 16 of the Equal Wages Guidelines, 1986. Examples of reasonable factors include differences in performance ratings, seniority, red-circling, rehabilitation or temporary training assignments, internal labour shortages and regional pay rates.
The pay equity gap is the portion of the wage gap that cannot be explained by other reasonable factors. For an employer to justify a difference in wages on the grounds of one of these factors, you have to establish that the factor is applied consistently and equitably in calculating wages.
6. Implement Pay Equity
If pay inequities are identified through the pay equity process, we recommend that you take the following steps:
- calculate the total amount required to eliminate the inequities;
- establish a plan that includes a schedule and method for implementing pay equity; and
- communicate the results of the job evaluation and implementation schedule to employees and employee representatives.
Federal legislation does not impose rigid implementation schedules upon federally-regulated employers, nor does it place a limit on the amount of correction an employer must undertake to achieve pay equity.
It is important to remember that the legislation does not permit any wages to be reduced to correct a pay inequity. Although it is expected that women will be the chief beneficiaries of pay equity implementation, the law applies equally to men. Men employed in occupational groups receiving pay equity adjustment may also benefit from any wage increases.
7. Maintain and Review Pay Equity
Once pay equity has been implemented, we recommend that you establish a system of periodic pay equity reviews. This will ensure that gender-based wage gaps do not reoccur and that new gaps do not emerge.
There are a number of situations where pay equity wage gaps could emerge after pay equity has been implemented. These situations can include, for example:
- organizational change;
- the elimination or creation of new occupational groups;
- change in gender predominance of an occupational group;
- introduction of new benefit plans; or
- the introduction of new compensation systems.
Existing pay administration policies and practices should be reviewed to determine if they are influencing pay differentials between males and females. If this is the case, they may need to be amended to ensure equal pay for work of equal value in the future.
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