Lori Straznicky, Executive Director, Special Projects
Re: Unifor Representations in Respect of Canada Gazette, Part I, Volume 154, Number 46: Pay Equity Regulations, November 14, 2020
We write on behalf of Unifor in response to the proposed regulatory text proposed by the Governor in Council and published in the Canada Gazette, Part I, Volume 154, Number 46: Pay Equity Regulations (the “regulations”), which were circulated on November 14, 2020. Unifor wishes to take this opportunity to make submissions in response to the proposed regulations.
Unifor is pleased that the Governor in Council is taking action to implement Pay Equity Act, S.C. 2018, c. 27, s. 416 (the “Act”). This Act promises, at long last, to implement a proactive pay equity regime that will provide redress for the gender wage gap to federally regulated workers in female job classes.
The regulations as drafted nevertheless contain several flaws that, in Unifor’s submission, will prevent workers in predominantly female job classes from realizing the promise of pay equity. These flaws must be remedied if the Act is going to be effective in closing the gender wage gap.
We appreciate the regulations’ aim to simplify the pay equity analysis and give guidance to assist users. Worker representatives are laypeople and are unlikely to have previous experience in applying various pay equity factors, methods and formulas. The lack of resources is particularly true for worker representatives but can also be true for small businesses. It is important that the regulations facilitate effective pay equity analysis. The present regulations do not do this, are likely to frustrate the exercise and prevent workers in female job classes from achieving gender wage equity. Unifor therefore urges the government to simplify the factors, methods and formulas in the regulations as much as possible.
Unifor therefore urges the government to simplify the regulations as much as possible. Unifor also urges the government to add a requirement in the regulations for employers to provide training on the operation of the Act and its regulations to members of its Committee, where a Committee is in place. We ask that these revisions be made as quickly as possible so that the Act can be brought into force at the earliest possible opportunity.
Unifor is the largest private sector trade union in Canada. We represent 315,000 private and public sector employees in all regions of Canada, working in over 20 defined sectors of the economy, including resources, manufacturing, hospitality and transportation. Over a third of our members are women. Approximately 77,000 of Unifor’s members are employed in federally regulated sectors, including telecommunications, fisheries, media, energy and transportation (including rail, air, marine and road transportation).
Unifor was founded on Labour Day 2013, through the amalgamation of the former Canadian Auto Workers and Communications Energy and Paperworkers unions. Unifor is committed to a vision of democratic, innovative, social unionism. Our founding documents recognize that the union’s responsibility as an organized voice for working people must extend beyond the workplace and the collective bargaining table, into society as a whole, and moreover that we work to defend and promote the interests of all working people in Canada, their families, and their communities – not just those that are our members.
UNIFOR SUBMISSIONS ON REGULATIONS
- Pre-Conditions to Applying Predetermined Job Values
Unifor strongly opposes the amendment to subsection 41 (2) of the Act, which permits an employer or a Pay Equity Committee (“Committee”) to adopt and apply job values that had previously been determined by an employer’s pre-existing job evaluation method. In Unifor’s submission, permitting employers to rely on these prior evaluations is contrary to the Canadian Charter of Rights and Freedoms. This provision poses a significant risk that workers in female-dominated job classes in those workplaces will be subject to job evaluation systems that perpetuate gender discrimination in the valuation of their work and will result in their continued denial of equal pay for work of equal value to that of male-dominated job classes.
The amendment contained in section 417 of the Budget Implementation Act, 2018, No. 2, poses four significant risks. First, Unifor’s position is that this amendment, if brought into force, will result in the rubber-stamping of job evaluation systems that were developed by employers without any input from workers or their bargaining agents and that may not truly be gender neutral. There are no safeguards set out in the regulations that will ensure that these prior job evaluations accurately reflect the skills, effort, responsibility and working conditions of the job classes they are evaluating without gender bias. Should this amendment be brought into force without significant additional safeguards, the results of job evaluations in which employees and bargaining agents had little or no say will be imported into the Act’s pay equity analysis without further review.
It is the case that the Act provides that any prior job evaluation results that are adopted for the purpose of the pay equity process under the Act must “not discriminate on the basis of gender” and must “make it possible to determine the relative value of the work performed in all of the predominantly female and predominantly male job classes…”. Yet the decision-making structure of Committees as set out in subsection 20(1) of the Act will effectively allow this requirement to be disregarded if an employer is able to sew discord amongst the employee representatives on the Committee.
The Committee decision-making structure provided for in subsection 20(1) of Act, allows employers to override the wishes of employee representatives on the Committee if those employee representatives are unable to reach consensus amongst themselves about how to exercise their vote on the Committee. This creates powerful incentives for employers to fuel disagreement amongst those representatives in the hopes of unilaterally imposing their prior job evaluation results. If employers are able to persuade just one Committee employee representative to vote in favour of using prior job evaluation results, then the employee representatives will be unable to exercise their vote and the employer will be able to unilaterally adopt the prior job evaluations for the pay equity exercise under the Act, regardless of whether those prior job evaluations meet the requirements of subsections 42 and 43 of the Act.
Second, this prospect of importing prior job evaluation results into the Act’s pay equity analysis creates the potential for lengthy litigation disputing whether the employer’s prior system meets the requirements of the Act. Disputes about whether the prior job evaluation systems meet the criteria set out in sections 42 and 43 of the Act will undoubtedly lead to lengthy litigation at the outset of the pay equity process. This will unnecessarily prolong the process and will serve to further delay the realization of pay equity for workers in predominantly female job classes.
Third, many of the job evaluation systems that are in place in the workplaces of Unifor members were created years ago and may not have been maintained. Bringing the amendment into force will permit employers to use outdated values that no longer reflect the skill, effort, responsibility and working conditions of the job classes to which they apply. This will serve to obscure the identification and redress of gender pay gaps.
Finally, Unifor is deeply concerned that this amendment is in violation of s. 15 of the Canadian Charter of Rights and Freedoms (the “Charter”). In Syndicat de la fonction publique du Québec inc. c. Québec (Procureur general), the Quebec superior court ruled that a similar provision in Quebec’s Pay Equity Act discriminated against employees on the basis of sex, contrary to section 15 of the Charter.
The legislation in question excused employers from compliance with that Act if they had established a pay equity program prior to the Act’s introduction. It also denied procedural rights to the affected employees and bargaining agents of those employers. In its ruling, the court found that the Act had created a category of women workers with a lesser set of rights and had therefore permitted the gender pay gap to continue. In so doing, the Court found that the Government of Québec had violated women’s right to be free of discrimination.
The amendment contained in the revised s. 41 (2) of the Act would, if proclaimed, create a class of women workers who would not have the same right to benefit from a truly gender neutral job evaluation method which accurately captures the value of their work. This will result in the perpetuation of the gender pay gap for those workers and will violate their right to equality pursuant to s. 15 of the Charter. It is shocking and unacceptable that the Government of Canada would knowingly pass and implement legislative measures that have already been found to be unconstitutional.
The Act clearly empowers the Governor in Council to impose requirements that must be satisfied in order for an employer or a Committee to adopt predetermined job values for the purpose of its pay equity analysis. Subsection 41 (2) of the Act provides that an employer or a Committee may determine that the value of a job class is a value that has already been determined, provided that it meets the requirements of sections 42 and 43 of the Act as well as “any other requirements that are prescribed by regulation.” Such requirements, if enacted, could redress the likely unconstitutionality of this provision by creating pre-conditions that will ensure that predetermined job values are truly gender neutral, are current, and accurately reflect the skill, effort, ability and working conditions of the job classes within the pay equity plan.
In our submissions in response to the Consultation on the Pay Equity Regulations held by the Labour Program of Employment and Social Development Canada in 2019, Unifor proposed a number of additional safeguards to ensure that any predetermined job values used by employers when establishing their pay equity plan(s) would satisfy the requirements and purpose of the Act. These proposals included, but were not limited to:
- requiring an employer to satisfy the Pay Equity Commissioner that its predetermined job values satisfy the requirements of the Act prior to being permitted to use them to establish pay equity pursuant to the Act;
- requiring that employers disclose details of the prior job evaluation method used to determine job values, and the results of its application, to both bargaining agents and employees prior to adopting it for the purpose of establishing pay equity pursuant to the Act;
- granting bargaining agents an opportunity to enter into negotiations with employers about the use of the prior job evaluation plan; and
- a clear and unfettered right for both bargaining agents and employees to file complaints with the Pay Equity Commissioner about the employers’ use of its pre-existing job evaluation system when implementing pay equity pursuant to the Act.
Unifor notes that not one of these proposals have been adopted by the government in the current draft of the regulations. Unifor repeats and relies on these submissions and urges the government to revise the proposed regulations in order to incorporate them.
- Preventing Manipulation of the Equal Average Method
The Act sets out two methods for comparing the compensation of predominantly female job classes with the compensation of predominantly male job classes of comparable values. The first method is the Equal Average method, which is detailed in section 49 of the Act. It requires an employer or a Committee to compare the average compensation associated with predominantly female job classes within a band with the average compensation of predominantly male job classes in that band.
The establishment and use of “bands” are crucial to this method of comparing the compensation of male and female job classes. Section 49(2) of the Act, as well as section 1 of the regulations, define a band as “...a range, as determined by an employer or Committee, as the case may be, of values of work that the employer or Committee considers comparable.” Yet neither the Act, nor the regulations, impose any guidance or requirements about how employers or Committees are to establish these bands. They provide no parameters about the range of job values that ought to be included within bands or the number of bands that ought to be established.
This is of significant concern because it makes the equal average method vulnerable to manipulation by employers. Employers will have significant incentives to manipulate the bands in order to alter the results of the wage comparison between predominantly female and male job classes so as to minimize the pay equity adjustments they will owe. They will do this primarily by expanding bands to ensure that undervalued predominantly female job classes are placed in the same bands as higher paid predominantly female job classes, which will increase the average female wage rate of the band. Alternatively, they will expand the bands to include lower paid predominantly male job classes which will lower the average male wage rate of the band. These manipulations will lower the pay equity adjustments that will be owed by employers to undervalued predominantly female job classes.
The regulations as drafted provide no limits on an employer’s ability to manipulate the bands in this manner. Employers who do not have Committees will be free to manipulate the bands as they wish when conducting pay equity under the Act. In workplaces where Committees are established, employers may still be able to manipulate the bands in this manner where they are able to undermine unanimity amongst the employee representatives on the Committee such that the employee representatives are unable to exercise their vote.
Unless the regulations are revised to include parameters guiding the establishment of bands under the Equal Average Method, Unifor expects significant disputes and litigation about the appropriate establishment of bands under the Equal Average Method. This will only serve to prolong the process of establishing pay equity and will impose further delays on the ability of workers in predominantly female job classes to achieve gender wage parity.
Unifor therefore urges the government to establish parameters around the establishment of bands. Specifically, Unifor proposes that the regulations be amended to provide that bands may have a maximum width of no greater than 50 points. This limitation maintains flexibility for employers and Committees to create bands that are appropriate to the circumstances of the workplace, while limiting employers’ ability to unduly expand band widths so as to manipulate the results of the wage comparison resulting from the equal average method.
The government is empowered to enact such a restriction in the regulations pursuant to subsection 181(1) (r) of the Act, which provides the government with the authority to make regulations “generally, for carrying out the purposes and provisions of this Act.” This general regulatory authority is sufficiently broad to permit the government to enact this crucial regulatory limit on employer’s ability to manipulate bands under the Act’s Equal Average method.
Furthermore, this amendment serves the “purposes and provisions of this Act.” As stated in section (2) of the Act, the purpose of the Act is to:
achieve pay equity through proactive means by redressing the systemic gender-based discrimination in the compensation practices and systems of employers that is experienced by employees who occupy positions in predominantly female job classes so that they receive equal compensation for work of equal value, while taking into account the diverse needs of employer, and then to maintain pay equity through proactive means.
In order to realize this purpose, it is necessary that both the Act and the regulations truly enable a fair analysis of compensation for “work of equal value” between predominantly male and female job classes. Such a comparison is not possible if the band widths under the equal average method are manipulated by employers. Imposing a limit on the maximum width of bands will serve to ensure that the value of work performed by predominantly male and female job classes is being carried out in a fair, impartial and accurate manner so that pay equity can be achieved.
- Improving the Equal Line Method
The second method for comparing compensation and adjusting to achieve pay equity is the Equal Line Method. This method is set out in section 50 of the Act. It requires an employer or a Committee to compare compensation associated with predominantly male and predominantly female job classifications through the use of regression analysis. Regression lines for male and female job classifications are established and compared. Female pay is then adjusted if the predominantly female line falls under the predominantly male line.
- Plotting the Regression Line
The regulations set out the factor calculation for the purpose of the equal line method. Plotting a regression line is crucial to determining what, if any, predominantly female job classifications are above the line. Unfortunately, the regulations do not set out a method of plotting a regression line. It should be expected that many employers and Committees will not have the expertise to complete this process. Regulations ought to specify how employers and Committees are to plot a regression line.
- Eliminating Outliers
Outliers can skew the results of the equal line method. If there are one or two predominantly female job classifications paid at a much higher rate compared to predominantly male job classifications or one or two predominantly male job classifications that are paid at a much lower rate than the others, the female regression line is skewed up or the male regression line is skewed down. In both of these situations, underpaid women lose.
Allowing the existence of outliers creates the possibility of manipulation by employers, either to force the male and female regression lines to cross or to pull the lines up or down by increasing the pay of a particular group of women or underpaying a particular group of men. This will have the effect of reducing pay equity adjustments owed to underpaid female job classes.
It is imperative that outliers be excluded from the formulation of the regression line. This does not mean, however, that outliers should be excluded from pay equity. If for example, an outlier predominantly female job classification is excluded from the regression line, the job class would still be subject to a pay equity adjustment if one is owed. It would not, however, be a factor in calculating the female regression line.
When considering the method by which to identify outliers, both the percentage by which the pay of a job classification is off the regression line and the number of employees in the job classification must be considered and set out in the regulations.
- Calculating the Factors must be User Friendly
Furthermore, the mathematics set out in the regulations are exceedingly complicated. It should be assumed that lay people, both employers and worker representatives on Committees, will be determining what method to put in place and subsequently conducting the calculations. The instructions must be communicated to employers and employee representatives on Committees in layperson’s terms in order to reduce frustration and encourage employers and Committees to complete the exercise thoroughly to achieve the best result for underpaid women.
If on-line calculators and other tools are prepared, Unifor recommends a third party be appointed, by pay equity advocates and experts, to inspect the algorithms and code that produce the tools to be used by employers and Committees. Transparency is key to ensuring trust and use of the system.
- Crossed Regression Lines
Section 50 of the Act stipulates that employers and Committees will look to regulation to describe the actions to take in the event that regression lines cross when using the equal line method. Unifor agrees that such steps must be stipulated, however the draft regulations as currently set out provide too many options and create unnecessary complexity.
In many cases the pay equity regime will be applied and/or inspected by lay people on a Committee. As with the rest of the factor calculation process, the approach used to implement pay equity when the regression lines are crossed must be accessible to all stakeholders. This is not currently the case. Current draft regulations required employers and members of the Committee to understand all four methods for dealing with crossed regression lines. The draft regulations also require them to analyse the results of each in order to determine which method is preferable in their workplace context. It is Unifor’s position that this is highly unrealistic and problematic and places an increased burden on a Committee given how complex the legislative and regulatory regime already is.
Given the problems outlined above regarding the equal average method, and that the employer and Committee have already rejected the equal average method in their decision to use the equal line method, the equal average method as an option for what to do when the regression lines cross should be eliminated.
The Sum of Differences method ought to be eliminated as well. Again, with this method the draft regulations add unnecessary complexity and opportunity to manipulate the process such that underpaid women end up with the lowest pay equity adjustment possible. The method relies on two different mathematical processes to produce pay equity - the first is regression analysis and the second is imposing equal averages onto the regression line, but this time without bands. Crossed regression lines imply that on one end of the pay scale women are paid much more than men and on the other end of the pay scale men are paid much more than women. Summing the differences will leave underpaid women at one end of the spectrum to continue to be underpaid simply because women at another end of the spectrum are paid more than their male counterparts.
The direction to nevertheless complete the equal line exercise to see if the lines can be made to line up and a second option to segment the lines if necessary are sufficient to address the issue of crossed regression lines under the equal line method.
- Inadequate Proxy Method
- Regulations must require proxy employers to share data
Pursuant to subsection 23 (1) of the regulations, an employer or a Committee for a predominantly female workplace has the option of using the proxy method to conduct the pay equity analysis. The theory behind this method is that the employer conducting the pay equity exercise, (the “seeking employer”) will “borrow” male comparators job class data from a similar employer (the “proxy employer”). The borrowing employer then treats those male job classes as though they were employed in its workplace and compares their value and compensation to that of its female job classes.
Unfortunately, the regulations in their current form are unlikely to facilitate seeking employers or their Committees’ use of the proxy method in practice. That is because the regulations do not impose any obligation or create any incentive for a proxy employer to provide the seeking employer with the data about the male job classes that is necessary to perform the pay equity analysis. Rather, the regulations are merely permissive, and provide that the proxy employer must agree to provide that information to the borrowing employer.
In Unifor’s submission, in the absence of such an obligation or incentive, very few if any proxy employers are likely to go to the trouble of sharing their job class data with a seeking employer. This will render the proxy method, as set out in the regulations, of little use in achieving pay equity. We fail to see why the regulations should permit proxy employers to stand in the way of underpaid female workers achieving redress for the discrimination they experience in their pay.
This concern is easily remedied by creating an obligation on proxy employers to share the necessary job class data with seeking employers. This was done in the proxy provisions of Ontario’s Pay Equity Act, R.S.O. 1990, c. P.7. Pursuant to section 21.17 (2) of that Act, a proxy employer “shall” provide a seeking employer with the required job class information provided that the request from the seeking employer is made in writing and is accompanied by certain documents specified in the regulations. The proxy employer is granted 60 days from the date of the request to provide that information to the seeking employer. In Unifor’s submission, this is a simple change to the proposed regulations that will render the proxy method far more viable as a method for delivering the promise of pay equity to workers in predominantly female workplaces.
- Right to Return to Proxy Employers to Maintain Pay Equity
The regulations as drafted lack language that would permit a seeking employer to return to a proxy employer to obtain updated data for the predominantly male job classes when maintaining pay equity. Unifor is assured that the government intends to pass regulations that will specify how pay equity is to be maintained in workplaces that lack male comparators, but has not been provided with any details about how this will be achieved.
Unifor remains deeply concerned that, without a right to return to the proxy employer to seek updated job class information, workers in predominantly female workplaces will be deprived of the opportunity to compare the value of their work to that of male work.
A dispute on this subject has been the subject of extensive, ongoing litigation in Ontario in the Participating Nursing Homes case. In that case, affected Unions are challenging the Ontario Pay Equity Tribunal’s interpretation of the province’s Pay Equity Act, which deprived them of the opportunity to obtain updated data for the “deemed” male comparator job classes from the proxy employer in order to maintain their pay equity plans.
In the most recent decision in this matter, the Ontario Divisional Court overturned the Tribunal’s decision, finding that the Tribunal failed to apply Charter values in its interpretation of the Act. The Court ruled:
We find that the Tribunal’s decision limits the equality provision of s.15(1) of the Charter because it denies women in predominantly female workplaces (compared to women who have male comparators within their establishments) the right to maintain pay equity with reference to male work. The fundamental precept of pay equity is that there should be equal pay for work of equal value between women and men. The Act expressly seeks to identify and redress systemic sexual discrimination in the way they are compensated in the workforce. The touchstone of a pay equity analysis is the comparison to male work, as men enjoy the benefit of compensation tied to the value of their work-as opposed to their gender.
The Court’s decision emphasizes the essential element of the pay equity process, which requires that workers in female job classes be able to compare the value of their work to that of male job classes of equal value. The regulations at present do not meet this standard, in that they do not permit workers in predominantly female workplaces to compare their wages against that of comparable male job classes on a continuing basis.
Unifor urges the government to ensure that workers in predominantly female workplaces are able to compare their compensation with that of comparable male job classes on an ongoing basis. This can be achieved by revising the draft regulation to expressly permit seeking employers to return to proxy employers to obtain current data with respect to the relevant predominantly male job classes in order to maintain their pay equity plans.
- Insufficient Maintenance Process
- Limited Requirement to Reassess Changed Job Values
Pursuant to subsection 78(1) of the Act, employers, or their Committees, must update their pay equity plans by identifying:
...any differences in compensation between the predominantly female job classes and the predominantly male job classes as a result of any change, since the most recent posting of the pay equity plan, that is likely to have had an impact on pay equity, other than any change excluded by regulation.
In accordance with this subsection of the Act, section 46 of the regulations identifies the changes that are to be excluded. Subsection 46 (c) of the regulations provides that changes to the skill, effort, responsibility and working conditions of a job class that are “likely to have had an impact on the value of work performed in a job class” must only be considered when updating pay equity plan, where they:
- are significant;
- impact the majority of the positions in the job class; and
- have more than a temporary impact on the job class
In imposing these threshold requirements for when a change to the value of job classes are material enough that employers must reassess the values of those job classes, the regulations create a significant barrier to accurately valuing the work of predominantly female job classes on an ongoing basis.
Employers will undoubtedly rely on these criteria to justify refusing to reassess the value of predominantly female job classes when they are updating their pay equity plans. The vague nature of these requirements, and in particular the requirement that the changes be “significant” will undoubtedly lead to extensive litigation about whether these criteria are satisfied in particular cases. This will delay, and in some cases prevent, workers in female job classes from having the value of their work accurately considered and fairly compensated.
This provision of the regulations reflects an exaggerated fear that the pay equity maintenance process will improperly capture changes to the value of work performed by job classes that may not be related to the gender predominance of those jobs classes. This overwrought concern is unnecessary. In Unifor’s submission, any change that affects the skill, effort, responsibility and working conditions of a job class is one that ought to be considered when assessing the value of that work. This is the only way in which workers in female job classes can be assured that their work is being valued in an equal manner to that of workers in male job classes.
Unifor submits that the simplest and most accurate way to fully and accurately capture the value of work performed by workers in female job classes when pay equity plans are maintained is to require employers and Committees to re-assess the value of that work when a change is “likely to have had an impact on the value of the work performed in a job class.” This can be achieved by amending subsection 46 (c) of the regulations to read:
All changes other than changes that are likely to have had an impact on the value of the work performed in a job class as determined under sections 41 to 43 of the Act.
The threshold requirements that presently follow this portion of the subsection ought to be removed. This will ensure that only changes that are likely to have had an impact on the value of job classes included within a pay equity plan must have their value reassessed when the plan is maintained.
- Delayed Adjustments Unjustly Considered Paid When Updating Plan
The Act provides employers with the opportunity to delay and extend the payment of pay equity adjustments in several circumstances. Once the Act is in force, women must wait another three years or more for a plan to be posted. While some workers in predominantly female job classes may receive their pay equity adjustments the day after the plan is posted, others will have those adjustments phased in over a three to five year period, or longer if the employer seeks an extension of the timeframe. Collectively, these provisions mean that women workers could be waiting to receive their pay equity wage adjustments for eight years or more from the date that the Act comes into force.
In some cases, this may lead to situations where employers have not fully paid the initial pay equity wage adjustments owed to underpaid female job classes at the point when they are required to update their pay equity plan(s).
Pursuant to subsection 50 (2) of the draft regulations, when an employer or a Committee is maintaining their pay equity plan, they must calculate any maintenance pay equity wage adjustments owed as though the initial pay equity increases owed had already been paid.
Unifor strongly opposes excluding any unpaid portion of an initial wage adjustment from being considered when the plan is updated. In Unifor’s submission, there is no justification for such a proposal and doing so is a violation of section 15 of the Charter.
The right of women workers to be free from discrimination in their pay has been recognized by the Supreme Court of Canada, the Pay Equity Task Force, the International Labour Organization (the ILO) and the Government of Canada as a fundamental human right. Women in federally regulated workplaces have been calling for a proactive pay equity regime at the federal level for decades. Now that the Act has passed, this provision will create a further barrier to underpaid female workers’ ability to achieve full equality in their pay.
In Unifor’s submission, this delay in providing women with the wages they ought to have been earning if their work had been valued appropriately is already excessive and denies them their fundamental right to be paid in accordance with the value of their work. Proposing that this pay gap should then not be considered a pay equity gap when a plan is updated, and thereby further delaying their realization of equality in their pay is simply unconscionable.
This proposed exclusion would amount to rewarding employers for having delayed and denied pay equity to their workers in predominantly female job classes. It would create perverse incentives for employers to prolong the payment of their required pay equity adjustments in order to lessen the quantum of the adjustments they owe when their plans are maintained. These are employers who will have already been unjustly enriched likely since well before the Act was enacted, by underpaying their workers in predominantly female job classes. There is no legitimate basis upon which they ought to be further enriched at the pay equity maintenance stage.
This provision of the proposed regulations also runs counter to the Supreme Court of Canada’s recent decision in Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux. In that decision, the Court ruled on Québec’s decision to amend its enforcement mechanism for pay equity maintenance. Instead of imposing an ongoing obligation on employers to maintain pay equity, the Act was amended to impose a system of mandatory pay equity audits to be conducted every five years. If the audit determined that a gender pay gap had re-emerged, workers in predominantly female job classes were only entitled to compensation increases as of the date of the audit, regardless of when the gap had re-emerged. Workers were not entitled to retroactive pay adjustments as of the date of the change that had resulted in the pay gap unless the employees could demonstrate bad faith by the employer. The Act also omitted an obligation for the audit posting to include the date on which the gender pay gap had re-emerged, thereby frustrating efforts to determine the date from when the pay equity adjustments ought to have been made.
Writing for the Court’s majority, Justice Abella found that the amended Act “had the effect of making the employer’s pay equity obligation an episodic, partial obligation…” and that it effectively gave “…an amnesty to the employer for discrimination between audits.” The Court held that the legislation had a discriminatory impact on women because:
Although the scheme purports to address systemic discrimination, it in fact codifies the denial to women of benefits routinely enjoyed by men – namely, compensation tied to the value of their work. Men receive this compensation as a matter of course; women, under this scheme, are expected to endure five-year periods of pay inequity, and to receive equal compensation only where their employer voluntarily acts in a non-discriminatory manner, or where they can meet the heavy burden of proving the employer engaged in deliberate or improper conduct. This scheme thus places barriers along the path to equal pay for women. ….By tolerating employer decision-making that results in unfair pay for women, the legislature sends a message condoning that very power imbalance, further perpetuating disadvantage.
The Court held that in creating this discriminatory impact, the Act had violated s. 15 of the Charter, and that this violation was not justified by s.1.
The Court’s reasons in the Alliance decision will apply equally if subsection 50(2) of the draft regulations, which excludes the unpaid portion of the initial wage adjustment being phased-in from being considered a pay equity gap when the plan is updated, is enacted. This provision would deny women the appropriate redress they are owed for having been denied compensation tied to the value of their work, a benefit routinely granted to men. It would provide them with a lesser right to pay equity in comparison with workers who received pay equity adjustments in a timely fashion. It will force underpaid female workers to endure even longer periods of wage inequity than they have already endured. For these reasons, Unifor submits that this subsection of the draft regulations is unconstitutional and is likely to be struck down by the Courts, should it be adopted. Outstanding pay equity adjustments should not be considered paid when pay equity plans are updated in accordance with the regulations.
- Frozen Wage Rates
The draft regulations set out steps to be taken in workplaces with multiple bargaining units in order to prevent the use of active and frozen wage rates in any pay equity comparison and plan. Frozen wage rates are rates of pay that are frozen due to the expiry of a collective agreement or the absence of a first collective agreement when a bargaining unit is initially certified. Active wage rates are rates in place under an active collective agreement.
The draft regulations set out two methods for adjusting frozen or active wage rates in order to better compare the two – the Administrative Approach and the Historical Approach.
This portion of the regulations serve to further complicate an already overly complex process. Furthermore, we do not understand the intense focus on the issue of frozen wages. Wages experienced during a bargaining period are still the wages experienced by the group of workers covered by the collective agreement. Frozen wage rates are no less likely to discriminate against workers in predominantly female job classes than active wage rates. Is it not the current gender wage gaps that the legislation is attempting to address?
- Administrative Approach
Unifor is concerned that the Administrative Approach is based on an assumption that the frozen wages will receive a wage increase similar to the wage increase received by members of the other bargaining units. This is not necessarily the case. If the increase is not the same as the assumed increase, the pay equity plan will assume pay equity has been achieved when it may not have been. If this underlying assumption is wrong and left un-remedied, underpaid women will continue to play catch up receiving their pay equity remedy at the end of every snap shot instead of on their pay cheques.
Furthermore, the Administrative Approach, as set out in the regulations is only applicable where there are multiple bargaining units included within a pay equity plan. Pay equity plans that apply to only one bargaining unit where there are also non-unionized employees will not be able to use the administrative approach, but must instead resort to using the historical approach. Unifor is troubled by this possibility given the flaws with the historical approach set out below.
- Historical Approach Leaves Gender Wage Gaps Unaddressed
In Unifor’s submission, the historical approach to the comparison of frozen wage rates, which applies when over 50 percent of job classes in the plan, representing over 50 percent of employees covered by the plan, have frozen wages is deeply problematic.
Firstly, the historical approach is incredibly complex. In order to apply it, an employer or members of a Committee must have a working understanding of both the administrative approach and the historical approach. Considering the numerous other methods, factors and analyses set out in the Act that employers and Committee members must comprehend and apply, the historical approach adds yet another burden to both employee representatives trying to exercise their rights under the Act to achieve pay equity, and to employers seeking to eliminate gender wage gaps. This method will undoubtedly create a significant amount of work for external pay equity consultants, but it will only serve to create additional barriers to redressing the gender wage gap.
Furthermore, Committees must also have access to accurate wage information dating back several years for a potentially large number of employees. Administratively, this further complicates an already demanding process.
Thirdly and most significantly, the historical approach is unconstitutional because it traps the gender wage comparison in a prior period and offers no remedy for gender wage gaps that continue to the present day. The historical method requires the pay equity exercise to be conducted in the last year in which fewer than 50 percent of job classes covered by the plan, representing fewer than 50 percent of employees covered by the plan, had their wages frozen. The regulations, as drafted, contain no provision(s) that would address any gender wage gap that exists in the time between the date as of which the historical approach is used and the date when the pay equity plan is finalized.
This concern is best illustrated with an example. In a hypothetical workplace, there is a single pay equity plan that includes one bargaining unit and some non-union employees. The bargaining unit covers 75 percent of employees in the workplace and 85 percent of the job classes, such that the historical approach must be used whenever the bargaining unit wage rates are frozen because of an expired collective agreement.
Job Class A is a predominantly female job class that falls within the bargaining unit. Job Class B is a predominantly male job class that falls outside of the bargaining unit. Job Class A and Job Class B are equal in value and are the only job classes that fall within their band, using the equal average comparison method.
A notice to bargain is issued by the bargaining agent on the first day of 2022, at which point the wages of all of the bargaining unit members are frozen. The bargaining process continues for three years.
The Employer conducts the pay equity process and finalizes its pay equity plan in 2024, prior to the conclusion of the bargaining process. The Employer must use the historical approach when conducting its wage comparison pursuant to subsections 14 (1) and (2) of the regulations. According to the regulations, this exercise requires that the pay equity analysis be conducted in 2021, the last year in which fewer than 50 percent of job classes and employees had their wages frozen. At that time, both Job Class A and Job Class B were earning $20.00 per hour. As their wages were equal, no pay equity adjustments are owed by the Employer.
In 2022, Job Class B receives a pay increase to $22.00 per hour. The wages for Job Class A remain frozen at $20.00 per hour until a new collective agreement is reached in 2025. Thus a $2.00 per hour gender wage gap existed between Job Class A and Job Class B in the period from 2022 until 2024. Yet, because the pay equity analysis was conducted as of 2021, it does not capture or redress that gender wage gap.
Nor will that wage gap be redressed when the pay equity plan is updated. In 2029, when the Employer posts its revised pay equity plan, any gender wage gaps that have re-emerged within the period since the plan was posted will be redressed with a go-forward wage increase and a retroactive lump sum payment. That lump sum payment, however, will only provide redress for the gender wage gap from the date on which the previous pay equity plan was posted, in 2024 until the revised plan is posted, in 2029. The employees in Job Class A will therefore never receive any redress for the $2.00 per hour wage gap that emerged in the period from 2022 until 2024 under the historical method set out in the proposed regulations.
As illustrated in this example, the historical approach provides an incomplete and inadequate remedy to the gender wage gap, potentially leaving periods of time in which the gender wage gap remains unaddressed.
In Alliance, the Supreme Court of Canada found that the Quebec Pay Equity Act’s denial of a remedy for periods of pay inequities in the time between when a pay equity plan was concluded and then subsequently maintained, was unconstitutional in that it violated section 15 of the Charter and was not saved by section 1.
The reasons offered by the Supreme Court of Canada in that decision apply equally to the historical method proposed in the regulations. In that decision, Justice Abella explained, at paragraph 8 that “Leaving wage inequities in place makes women “the economy’s ordained shock absorbers.” At paragraph 33, she explained that the provisions had a discriminatory effect on women because they perpetuated the “pre-existing disadvantage of women.” Finally, at paragraph 38, Justice Abella held: “Although the scheme purports to address systemic discrimination, it in fact codifies the denial to women of benefits routinely enjoyed by men - namely, compensation tied to the value of their work.”
This reasoning applies equally to the historical method for comparing frozen compensation proposed in the current draft regulations. As in Alliance, the historical approach set out in the regulations creates only an “episodic, partial obligation” on employers to value the work of their workers in female job classes equally to workers in male job classes. Instead, the historical approach limits the redress for underpaid female workers to the period before the wages of a majority of job classes and employees were frozen and ignores subsequent gender wage gaps. Using the historical approach, men will continue to receive compensation that is tied to the value of their work as a matter of course. Women will not have that assurance under these draft regulations, but will be left with no ability to achieve pay equity with their male counterparts in the present day and to receive redress for continued gender discrimination in their pay.
In Unifor’s submission, this significant flaw with the historical method is unconstitutional, in violation of section 15 of the Charter. In light of the Court’s prior decision in Alliance, this provision is unlikely to withstand constitutional scrutiny.
In Unifor’s submission, the approach to frozen wage rates set out in the regulations are a solution in search of a problem. Unifor is aware of no evidence that including frozen wage rates within the pay equity comparison process will, in aggregate, skew the pay equity process or serve to inappropriately increase or lower pay equity adjustments owed to underpaid predominantly female job classes. Unifor therefore asks that sections 14 and 51 of the regulations ought to be removed.
- Review of the Act
As a final point, Unifor recommends that a review of the Act and the regulations be conducted earlier than the ten year period specified in subsection 184 (1) of the Act in order to identify and remedy any significant flaws with the operation of the legislation in a timely manner.
Unifor is pleased that the Governor in Council has taken the step of drafting regulations that will bring the Act into force. Nevertheless, we submit that the regulations contain significant flaws that compromise the ability of the Act to deliver the promise of pay equity to underpaid workers in predominantly female job classes. The regulations also contain likely violations of the equality guarantee in section 15(1) of the Charter, rendering this iteration of the Act’s regulations unconstitutional. Instead of miring employers, workers, trade unions and the Government of Canada in lengthy constitutional battles, the government has an opportunity to remedy these deficiencies now. Unifor has provided a guide to how these constitutional flaws can be addressed in the preceding submissions. We trust that the government will seize this opportunity to bring the Act and its regulations into constitutional compliance and ensure that, at long last, gender wage discrimination in the federal employment sector is adequately and appropriately redressed.
We urge the government to act with urgency to amend the regulations and bring the Act into force so that pay equity can be realized for workers in predominantly female job classes as soon as possible.
Lawyer National Representative
Unifor Legal Department Unifor Research Department