Do you have all the answers? New rules for pay transparency to take effect for job postings

Ontario's pay transparency rules are set to take effect mere weeks away. While it’s hoped that most employers are aware of the incoming requirements to disclose compensation in job postings, many may not be fully prepared for the practical implications.

So, understanding the nuances and legalities when it comes to issues such as variable compensation, employees paid at below-market rates, the $50,000 pay range and who, ultimately, is responsible for compliance are crucial as the Jan. 1 deadline looms.

While some employers may think it’s simply a matter of adding salary figures to jobs postings, that requirement is quite minimal, says Gillian Howe, partner at Torkin Manes in Toronto: “The work that goes into establishing what that is is quite involved.”

How do we handle the $50,000 rule?

Under the new rules – which also cover job posting issues such as AI usage, existing vacancies, “Canadian experience” and a timeline for responding to applicants — public job postings in Ontario must now specify what the role will pay. This can be presented as either a single compensation figure or a salary band.

Should employers opt for a compensation band, the spread between the lowest and highest point cannot surpass $50,000; however, if the anticipated total compensation or range exceeds $200,000 per year, the posting is not subject to disclosure requirements.

Some employers are asking whether they should use the full $50,000 spread. Howe cautions that broader ranges invite negotiation.

"Once you set out a range or what the expected comp is, it's going to be difficult to send out an offer that falls below that and people are going to be wanting to have a discussion,” she says.

"Maybe you don't want to do that. Maybe you just want to say ‘It's 70K’ because that's the value equation that has been associated with that position. And you don't want your candidate saying, ‘Well, I think I'm a high-end-of-the-range person and you’ve got a 50k spread here.’”

However, each employer will need to determine what makes the most sense for a given position posting based on the circumstances, says Howe, which could mean a smaller range, using the full $50,000 spread, or not using a range and instead using an expected amount.  

When it comes to the disclosure of pay, that's going to include all forms of wages, so not just base salary or hourly wages but commissions and any kind of non-discretionary bonuses, says Maria Constantine, partner at Cassels in Toronto.

"The piece that's tripping up most employers is understanding the total quantum that an employee could be on track to earn — that's the tricky part, especially where you've got employees who are commissioned and perhaps their commissions are uncapped and it's really unclear what they could be on track to earn in any given year."

Internal audits: Should we increase pay if we see gaps?

The most critical step employers should take before Jan. 1 is conducting an internal pay audit—and this takes time. According to Constantine, employers should organize employees into job groups and take all employees' current job titles, levels, descriptions “to identify any unjustifiable gaps."

If internal audits reveal that some employees are earning significantly below market rates, employers may consider proactive increases. And that can be done with proper communication, she says, such as “We've done so as a gesture of good faith because we want to make sure that everyone — in this sort of pay band or in this this group of employees — is earning at the same scale’ or what have you.”

For the most part, employees will appreciate that the employer did the audit and is trying to “get their ducks in a row,” says Constantine — but HR and management should be prepared for tough questions: "Why have I been underpaid and how long have I been underpaid? And do I have a claim here?"

However, she clarifies that employers are not necessarily obligated to pay identical amounts to employees in the same roles.

“It could be that an employee negotiated a lower package when they started. And, there is certainly discretion based on performance and that kind of thing."

One strategic option is to align pay adjustments with annual merit increases at the start of 2026. It might also be a good time to have them sign an updated employment contract, says Constantine.

How is variable compensation handled?

If an organization relies on commissions, bonuses or incentive plans, it will need clarity on what must be disclosed in the job posting. This is where many employers get stuck, says Howe.

“Where a lot of the discussion for employers and HR is going to happen is ‘wages’ doesn't include any sums paid as gifts or bonuses that are dependent on the discretion of the employer and that are not related to hours, production or efficiency, she says.

“So, where the discussion is going to happen is [with a] bonus … does it fall into the category of non-discretionary and therefore it's in the range … or is this a discretionary form of bonus? And that's really going to be dependent on each employer's circumstances.”

While commissions are often non-discretionary because they’re governed by a compensation plan that automatically entitles employees when they meet requirements, discretionary bonuses and long-term incentive plans require careful analysis, says Howe: "Every situation needs to be assessed on its facts.”

Another challenge is when variable pay might lead to a range in compensation that's greater than $50,000, such as sales positions.

“Practically speaking, a good place to look might be historical data for commissions or that variable piece of compensation for other employees with the same compensation structure or positions with similar the same compensation structure to see where it landed in the past,” she says.

“For new positions, where it's tied to net profit and things like that, it might require a more technical analysis of saying, ‘OK, we're creating this position, it's going to be a non-discretionary comp that's a percentage of this piece in the business. If we look at the last three, five years of historical data, what does this net out to as a compensation?’ to sort of establish those ranges.”

Is there any ‘wiggle room’ with variable pay?

For positions where variable compensation could be substantial, Constantine recommends looking at past compensation numbers for employees in that role or in similarly situated roles that are on a similar compensation package to make their best assessment.

If you're truly uncertain whether a role will exceed the $200,000 exempt threshold, she suggests erring on the side of disclosure: "There's no downside to disclosing the range, even if you're not sure if it's going to hit that $200,000 threshold or not,” she says.

“If you think it's more likely than not that it'll be under [it’s fine] to say, ‘OK, the range for this role is $150 to $200,000, but could even exceed that number subject to employee performance’ or… ‘subject to company and employee performance’ to give yourself that wiggle room."

Could we face a pay equity claim?

Once postings go live, employees will see them. Constantine warns that some will discover they're earning less than posted ranges for their own positions and will have questions: “That's where you really could end up in a tricky discussion with an employee."

As for concerns that current employees may claim they have been underpaid or faced pay discrimination, that’s possible but unlikely, according to Howe.

"Unless an employee is able to make a connection between an alleged pay disparity or being underpaid and a protected ground which they identify with under the Ontario Human Rights Code, it would be difficult for an employee to frame such a claim as alleged discrimination in violation of the Ontario Human Rights Code," she says.

Ontario has had pay equity legislation for quite some time, she says, and the new posting requirements don’t specifically address gender-based pay disparity or set out disclosure requirements specifically tied to gender. 

But if it does go to litigation for some reason, by doing internal pay and audit reviews, looking at the market rates, basing pay on factors such as qualifications and experience, says Howe, “employers will have tools to go back to first principles and say, ‘This is how we established it, there's actually an objective methodology here that goes into it.’”

Who’s liable if third parties are involved?

Whether you use recruiters, job platforms or compensation consultants, employers remain responsible for compliance, say the two experts

"Employers should view themselves as the source of the responsibility even where you're using recruiters, using a job platform, like job search websites and platforms, or when you’re doing your audit,” says Howe.

“Ultimately, the buck is going to stop with the employer because the language of it explains it in a way as those third parties acting on your behalf."

If the employer is working with, but also directing, any kind of third-party recruiter, they should have an opportunity to sign off on a job posting, says Constantine.

“Nothing's going to be posted presumably without an employer's authorization and direction. So, I think ultimately, this the exposure is on the employer… subject to any kind of indemnity provisions and agreements that they might have with those organizations that are recruiting on their behalf.”

View transparency as competitive advantage

Rather than seeing these rules as an imposition, Constantine urges employers to embrace the shift.

"I appreciate that it's causing some discomfort for employers who are not used to having to put compensation ranges in job postings. But transparency in terms of compensation, I think we've been moving towards being more upfront about that,” she says.

“If you are an employer hiring in Canada, I think you have to get comfortable with the concept of needing to be transparent about pay from the outset.”

Constantine points out that transparency ultimately benefits hiring.

 "It does sort of foster a workplace culture of transparency, of honesty, of engagement. It helps you to attract and retain top talent,” and saves everybody time if they’re on the same page about compensation.

One final tip? Employers in Ontario should get on board with the idea of not being able to ask about past compensation, she says.

“That is a common theme across Canada in terms of pay transparency, not in Ontario's legislation, but in virtually all of the other provinces that have pay transparency legislation whether it's through their employment standards act or through a standalone act like B.C."