On May 10, 2018, the Supreme Court of Canada confirmed judgments of the Superior Court of Quebec and the Court of Appeal of Quebec declaring Sections 76.3, 76.5 and 103.1 para. 2 of the Quebec Pay Equity Act (the “PEA”) to be unconstitutional. In a split ruling rendered in the matter of Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux (2018 SCC 17), with Justices Côté, Brown and Rowe dissenting, the majority agreed with the Superior Court of Quebec and the Court of Appeal of Quebec in that these Sections of the Pay Equity Act breached the right to equality and protection against discrimination at Section 15(1) of the Canadian Charter of Rights and Freedoms.

Currently, the PEA requires that employers in Quebec with 10 employees or more conduct a pay equity maintenance audit every five years. Under Section 76.3 of the PEA, there is no requirement that an audit posting include the date on which any pay inequity began within any applicable five year period. Section 76.5 of the PEA sets out that adjustments in compensation apply from the date of the posting of the results of such audit, rather than from the date on which the pay inequity began.

Moreover, the PEA currently provides at Section 103.1 para. 2 that no compensation adjustments can be assessed by the Quebec Pay Equity Commission before the date on which the audit posting is made, except in cases where the Quebec Pay Equity Commission makes a determination that an employer has acted “in bad faith or in an arbitrary or discriminatory manner”. In such cases, retroactive compensation and interest from the date of such conduct can be awarded by the Quebec Pay Equity Commission under Section 76.9 of the PEA.

The majority of the Supreme Court agreed with the previous rulings in this matter, which found that, because pay adjustments pursuant to these Sections of the PEA are only applicable as of the date of the deadline to make the audit posting, and are not retroactive to the date of the relevant change, the PEA essentially tolerates pay inequality for a period that could be as long as five (5) years, thus aggravating the inequality that the legislation was meant to protect against.

As a result of this judgment, the Quebec legislature will now have to modify the PEA in order to rectify the unconstitutionality. Employers operating in Quebec should stay tuned for these upcoming revisions, and inform themselves as to how the revised PEA may impact their pay equity obligations going forward.