Portion of Quebec’s pay equity law struck down (Legal View)

Certain parts of pay equity legislation declared invalid
By Catherine Gagné
|Canadian HR Reporter|Last Updated: 03/24/2014

A Quebec judge has declared sections of the province’s pay equity legislation to be invalid.

In Alliance du personnel professionnel et technique de la santé et des services sociaux c. Québec (Procureur général), Quebec Superior Court Justice Édouard Martin declared sections 76.3 and 76.5 of the Pay Equity Act (PEA) to be invalid, inapplicable and of no force or effect.

The sections were declared invalid because they affect the right to equal salary for equivalent work without distinction based on gender, as guaranteed under the Canadian Charter of Rights and Freedoms and Quebec’s Charter of Human Rights and Freedoms.

The PEA was enacted to remedy certain situations of systemic discrimination suffered by groups of employees who occupied positions in predominantly female job classes.

By adopting the PEA, Quebec required all employers with 10 or more employees to:

•implement a pay equity plan allowing each employer to identify job classes that are predominantly female

•measure discriminatory differences in compensation between these predominantly female job classes and predominantly male job classes

•make the necessary adjustments to achieve pay equity.

When the PEA was enacted, sections 40 to 43 also provided that after having completed a pay equity plan, an employer was required to maintain pay equity continuously. Also, if changes within the organization compromised the pay equity maintenance, the employer was required to make the appropriate adjustments to remedy the situation.

However, these provisions did not indicate what measures employers were required to take in order to audit pay equity maintenance.

In 2009, the legislature passed An Act to amend the Pay Equity Act (2009 Amending Act) which sought, among other things, to clarify the applicable rules for auditing pay equity maintenance.

As a result — after having implemented a pay equity plan — employers are now required to:

•audit pay equity maintenance every five years

•post the audit results for employees to see and include a minimum amount of information

•accept requests for information from employees or the association representing them and allow the available remedies to be exercised.

Alliance decision deals with unions

In Alliance, the public sector unions filed an application in the Quebec Superior Court seeking to have certain sections introduced into the PEA by the 2009 Amending Act declared invalid because, according to them, these sections affected the right to equal salary for equal work without distinction based on gender, as guaranteed under both the Canadian charter and the Quebec charter.

Among the provisions challenged by the applicants, three in particular drew the court’s attention — section 14 of the 2009 Amending Act, which repealed sections 40 to 43 of the PEA, as well as sections 76.3 and 76.5 of the PEA.

Section 14

According to the unions, by repealing sections 40 to 43 of the PEA — which had provided for continuous pay equity maintenance — and replacing them with a requirement to audit pay equity every five years, the legislator compromised the employees’ right to equal salary without distinction based on gender.

The applicants argued that only continuous pay equity maintenance can ensure this right is respected.

However, their arguments did not convince the court, which found that section 24 of the 2009 Amending Act, which repealed sections 40 to 43 of the PEA, did not have the discriminatory effect claimed by the applicants.

The court said the periodic audit method was one of the choices the legislature was entitled to make to ensure pay equity maintenance.

Summary of sections 76.3 and 76.5

Sections 76.3 and 76.5 of the PEA read as follows:

“76.3. After conducting a pay equity audit, the pay equity audit committee, or the employer in the absence of such a committee, shall post the audit results for 60 days in prominent places easily accessible to employees. The posting shall include:

(1) a summary of the pay equity audit process;

(2) a list of the events leading to compensation adjustments;

(3) a list of the predominantly female job classes that are entitled to compensation adjustments;

(4) the percentage or amount of the compensation adjustments to be paid; and

(5) the posting date and information on the rights exercisable under section 76.4 and the time within which they may be exercised.

The pay equity audit committee, or the employer in the absence of such a committee, shall, by a means of communication likely to reach the employees, inform them of the posting and provide details such as the posting date, the posting period and how they may access its content...

76.5. Subject to the third paragraph of section 101, the compensation adjustments apply from the date that is the time limit for the new posting under the second paragraph of section 76.4.

Unpaid compensation adjustments shall bear interest at the legal rate from that date.”

Although Martin concluded the legislature was entitled to opt for the periodic method of auditing the pay equity maintenance, the lack of retroactivity applicable to an employer’s obligation to pay compensation adjustments following changes within the employer was, according to him, a source of gender-based discrimination.

To support this conclusion, Martin referred in particular to evidence presented by the parties that claimed the potential compensation losses resulting from the lack of retroactivity of payments were not negligible, especially for employees retiring before the expiry of the five-year audit period.

The reduced wages earned by such employees would have a ripple effect on the retirement benefits paid to them.

These compensation adjustments should be payable retroactively from the date on which the changes within the organization occurred, said Martin.

Moreover, the fact that section 76.3 did not require employers to inform employees of the date on which such changes had occurred also affected their right to equal pay without distinction based on gender, he found.

For these reasons, “sections 76.3 and 76.5 of the PEA leave behind a lingering whiff of the systemic discrimination the PEA was intended to eliminate. Such a situation runs contrary to the acquired rights we consider to be fundamental and cannot be tolerated in a free and democratic society,” concluded Martin.(Translated from French.)

Suspended conclusions

Although Martin declared sections 76.3 and 76.5 to be invalid, inapplicable and of no force or effect, he also ordered that his conclusions be suspended for a maximum of one year or until the legislature remedies the situation — whichever circumstance occurs first.

The province has announced its intention to appeal the Alliance decision. The Court of Appeal will therefore be called upon to rule on the validity of such statutory provisions.

Catherine Gagné is an associate in the labour and employment group at Blakes in Montreal. She can be reached at catherine.gagne@blakes.com, (514) 982-5061 or visit www.blakes.com for more information.

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