Process for updating a pay equity plan

Note: This is a non-binding guidance document designed for information purposes only. In case of discrepancy between this document and the Pay Equity Act or the Pay Equity Regulations, the latter prevail.

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Purpose

As your workplace changes over time, including through re-organizations, mergers, the creation of new jobs and new duties and responsibilities for existing positions, it is important to periodically revisit yourFootnote 1 pay equity plan. This will involve examining your workplace with a view to ensuring that new wage gaps have not emerged. The Pay Equity Act (Act) and the proposed Pay Equity Regulations (regulations) establish a requirement to regularly update your pay equity plan, to ensure that pay equity is maintained. Specifically, you must update your pay equity plan at least once every 5 years from the completion of your initial plan.

The Act, together with the proposed regulations, establishes a 3-step process for you to follow when updating your pay equity plan. This page provides an overview of the requirements set out in the proposed regulations for updating a pay equity plan.

Steps

  1. Collect workplace information: you must collect data in the form of “snapshots” (section 45 of the regulations) for the period under review
  2. Analyze workplace information and identify changes: you must analyze the snapshots collected in step one to determine if pay equity gaps have appeared
  3. Implement required adjustments: you must increase compensation to close any pay equity gaps identified and pay lump sum amounts

1. Collect workplace information

You will collect data in the form of “snapshots” taken on specific dates. You will then use these snapshots as the basis of the pay equity analysis. A snapshot is point-in-time data about job classes that will allow you to identify whether any changes in the job classes have occurred. For example, this could include changes to the gender predominance or the compensation in a given job class. A snapshot represents your workplace for the period of time preceding the snapshot back to either the day you last posted your pay equity plan for the first snapshot, or the day you collected the preceding snapshot (subsections 45(1) and 47(1) of the regulations).

The last snapshot used to develop your updated pay equity plan can be referred to as the “final set”. It will represent your workplace for the period of time between the date that the preceding snapshot was taken and the date that the updated plan is posted (subsections 45(3) and 47(1) of the regulations). This means that the final set can represent your workplace for more than 1 year. You must take the final set within 1 year of when you have to post the revised plan. Allowing the information collected in the final set to be used to identify pay equity gaps in the year after it was collected is to ensure that you have time to complete your updated pay equity plan within the 5-year timeline.

With the exception of the final set, you must take snapshots on:

  • March 31, each year, for public-sector employers (paragraph 45(2)(a) of the regulations)
  • December 31, each year, for private-sector employers, or
  • the last day of the fiscal year, each year, for private-sector employers who have a fiscal year that does not end on December 31 (paragraph 45(2)(b) of the regulations)

You will choose the exact date on which you take the final set. However, this date must be 1 year or less before you are required to post your revised pay equity plan under section 80 or 81 of the Act (subsection 45(3) of the regulations). You must post a notice once the final set is collected advising employees of your obligation to update the pay equity plan. This notice must remain posted until you post the final version of the revised pay equity plan (sections 40 and 41 of the regulations). You should keep in mind that you must provide employees with 60 days to comment on the revised pay equity plan before it can be finalized (sections 80 or 81 and section 83 or paragraph 85(2)(b) of the Act).

2. Analyze workplace information and identify changes

You will then carry out a pay equity analysis of the data collected in each snapshot. In this analysis, you will identify any changes that are likely to have impacted pay equity in the following periods of time:

  • between when the final pay equity plan was posted and the first snapshot taken
  • between each snapshot
  • in the period of time covered by the final set

For each of these periods of time, you will need to analyze:

  • changes in job class structures
  • changes to gender predominance
  • changes in the skill required to perform the work, in effort required to perform the work, in the responsibility required to perform the work and the conditions under which the work is performed that are likely to impact the value of work, and
  • changes in the compensation associated with a male or female job class (section 46 of the regulations)

Job class structures

You will need to determine if changes to job class structures have impacted pay equity in your workplace. To do this, you must consider the following changes in your analysis:

  • the creation or elimination of a gender-predominant job class (subparagraph 46(a)(i) of the regulations)
  • the merger of one or more gender-predominant job classes with one or more gender-predominant or neutral (in other words, neither male- nor female-predominant) job classes (subparagraph 46(a)(ii) of the regulations)

If a new gender-predominant job class was created, you will use the steps you used to establish your plan to determine the value of work and calculate the compensation for it. Once you have done this, you will use the new job class in your analysis, including conducting pay equity comparisons..

Gender predominance

You will need to determine if changes have occurred that would affect the gender predominance of a job class. To accomplish this, you must consider the following changes in your analysis:

  • a male-predominant job class becoming female-predominant (subparagraph 46(b)(i) of the regulations)
  • a female-predominant job class becoming male-predominant (subparagraph 46(b)(ii) of the regulations)
  • a neutral job class becoming either male- or female-predominant (subparagraph 46(b)(iii) of the regulations), or
  • a gender-predominant job class becoming a neutral job class (subparagraph 46(b)(iv) of the regulations)

Value of work

You will need to identify changes in the skill, effort, responsibilities and working conditions of a gender-predominant job class that are:

  • significant
  • impact the majority of positions in the job class, and
  • are more than temporary (subparagraphs 46(c)(i) to (iii) of the regulations)

You must then analyze these changes to determine if they would lead to a change in the value of work of a job class.

Compensation

For each snapshot, you must determine the total compensation for each gender-predominant job class (subsection 50(1) of the regulations).

You will then use these amounts to identify changes in compensation that have impacted pay equity in your workplace. You will accomplish this by examining changes in compensation in each gender-predominant job class as a percentage of its total compensation to determine if all changes in compensation were made equally on a percentage basis (paragraph 46(d) of the regulations).

For example, if a gender-predominant job class received a $1 per hour raise on an original pay of $15 per hour,Footnote 2 the new pay would represent a raise of 6.25% ((1 ÷ 16) x 100 = 6.25%). In this situation, you can consider the raise to have no impact on pay equity if all the other gender predominant job classes in your workplace also received a raise of 6.25%. If the raise does not equally affect all gender predominant job classes, you must analyze its impact on pay equity in your workplace.

There are 3 situations where the regulations provide you with more specific guidance on how to calculate compensation:

  • in the case where “new” rates of pay applicable to any snapshot came into effect retroactively (for example, due to retroactive implementation of a new collective agreement), you must use the new rate of pay (subsection 47(2) of the regulations)
  • where an increase in compensation of a female-predominant job class resulting from the initial pay equity plan is phased-in over time and is still owed for the period covered by a snapshot, you must calculate the compensation for that job class as if all phased-in increases had been made. This is to avoid “double-counting” the amount that has yet to be phased-in as a pay equity gap in that snapshot (subsection 50(2) of the regulations), and
  • where some of the rates of pay in effect in your workplace are “active” and some are “frozen”, you will be prohibited from comparing job classes with frozen and active rates of pay. When this happens, you must use 1 of 2 approaches set out in the regulations in order to calculate compensation for those job classes (section 51 of the regulations). Please refer to Active and frozen rates of pay

Comparison of Compensation

You will use the equal average or equal line method to compare compensation for all job classes in each snapshot, including the time period covered by the final set. Comparisons of compensation for each snapshot will occur in the same way that it does when comparing compensation in the initial pay equity plan exercise. The Act requires that you compare the compensation between predominantly female and male job classes to identify and address any pay equity gaps in the workplace.

3. Implement required adjustments

Once a maintenance exercise has been completed and the final updated pay equity plan has been posted, the employer will be responsible for making pay adjustments. These include increases in compensation to close pay equity gaps that exist when the updated plan is posted and the payment of lump sum amounts to compensate employees in job classes for pay equity gaps that existed in the periods of time between snapshots since you last posted your plan.

You will follow the requirements set out in the Act for paying increases in compensation. You will calculate lump sum amounts for each period represented by a snapshot, including the time period covered by the final set, by multiplying the amount of the increase calculated for that period by the number of hours an employee worked in that period (subsection 58(2) of the regulations). You must also keep the notice of increases posted for 60 days or until the increases are paid in full, whichever occurs first (section 55 of the regulations).

Additional requirements

Group of job classes

If you used a group of job classes to establish your initial pay equity plan, the regulations prescribe how you can continue to use or not use that group for the purposes of updating your plan.

The regulations will require that:

  • if a snapshot reveals that the representative job class has disappeared, then you must use the next largest predominantly female job class in that group as the representative job class (section 48 of the regulations)
  • if a snapshot reveals that another predominantly female job class within the group is now the largest, you must use that job classes as the representative job class of the group (section 48 of the regulations)
  • if a snapshot reveals the creation of a new job class that has been added to the group, or if a job class within the group merges with any other job class, then you can no longer treat them as a group of jobs and you must analyze each job class individually (section 49 of the regulations)

If a snapshot reveals the creation of a new job class that has been added to the group, or if a job class within the group merges with any other job class, then you can no longer treat them as a group of jobs and you must analyze each job class individually (section 49 of the regulations)

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