Among the many changes to the Employment Standards Act, 2000 (the "ESA") brought about by the Fair Workplaces, Better Jobs Act, 2017 (known as "Bill 148") is the prohibition on paying certain employees less than others based on their employment status (commonly referred to as "equal pay for equal work"). This prohibition will come into force on April 1, 2018.
The ESA already provided that an employer could not pay an employee of one sex at a rate of pay less than the rate paid to an employee of the other sex when both employees performed substantially the same kind of work in the same establishment, their performance required substantially the same skill, effort and responsibility, and their work was performed under similar working conditions.
The new provisions dealing with equal pay for equal work add a similar prohibition based on employment status. More specifically, once these provisions are in force, the ESA will provide that:
No employer shall pay an employee at a rate of pay less than the rate paid to another employee of the employer because of a difference in employment status when:
- they perform substantially the same kind of work in the same establishment;
- their performance requires substantially the same skill, effort and responsibility; and
- their work is performed under similar working conditions.
The term "employment status" is defined in the ESA as a difference in the number of hours regularly worked by the employees, or a difference in the term of their employment, including a difference in permanent, temporary, seasonal or casual status. Essentially, the employment status refers to the distinction between part-time and full-time employees as well as the distinction between employees hired for specific periods (in other words, hired on a temporary or fixed-term basis) rather than on a permanent basis.
As a result of this change to the ESA, employers will no longer be able to pay employees a different rate of pay based on a difference in employment status when the criteria set out in the ESA are established. This means that an employer can no longer pay a part-time employee less than one that works full-time if both employees perform substantially the same kind of work in the same establishment, their performance requires substantially the same skill, effort and responsibility, and their work is performed under similar working conditions. This prohibition also applies between employees hired for specific periods and those hired on a permanent basis.
A difference in the rate of pay is still allowed in some circumstances. The ESA provides that a difference in the rate of pay will be allowed if it is based on any of the following criteria:
- a seniority system;
- a merit system;
- a system that measures earnings by quantity or quality of production; or
- any other factor other than sex or employment status.
A seniority system usually refers to a system awarding different pay based on an employee's length of service or other similar criteria.
A merit system could be based on skills, accomplishments, competence, performance or some other meritorious traits or behaviours of value to the employer. Employers using such a system must establish a legitimate method of determining merit and implement it fairly. Merit systems should be communicated to employees prior to granting differential pay on this basis. Employers should also keep good records of meritorious traits or behaviours used to justify a difference in pay.
A system that measures earnings by quantity or quality of production should be based on objective and demonstrable standards. Once again, employers should keep good records if pay is based on a system that measures earnings by quantity or quality of production.
Factors other than sex or employment status could also be used to justify a difference in pay for employee performing substantially the same kind of work.
Employers cannot reduce the rate of pay of an employee to comply with their obligation to provide equal pay. Similarly, trade unions cannot cause or attempt to cause an employer to contravene this obligation.
Any employee who believes that their rate of pay does not comply with these obligations can request a review of their rate from their employer. When this occurs, the employer must either adjust the employee's pay accordingly or, if the employer disagrees with the employee, provide a written response setting out its reasons.
Transitory provisions are applicable for certain collective agreements. Collective agreement provisions that are in effect on April 1, 2018 and that are in contravention with the new equal pay for equal work provisions will remain in effect until the earlier of the collective agreement's expiry and January 1, 2020. This transition period will give more time to employers in unionized settings to implement these changes or negotiate compliant terms and conditions of employment.
Furthermore, by regulation, the provisions of the ESA dealing with equal pay for equal work will not apply to a person employed as a firefighter, an employee who is a student under 18 years of age (if the weekly hours of the student are not in excess of 28 hours or if the student is employed during a school holiday) and a person employed in the recorded visual and audio-visual entertainment production industry.