Canada Labour Code bars status-based wage gaps and caps temporary help agency fees
Federally regulated employers can no longer pay part-time, temporary, casual or seasonal workers a lower wage rate than full-time, permanent colleagues doing substantially the same job, after the Canada Labour Code’s long-delayed equal treatment rules took effect on Oct. 20, 2026.
The rules apply to industries such as banking, airlines, rail, interprovincial trucking, ports and telecommunications, plus federal Crown corporations and First Nations band councils. The federal public service is excluded.
Ottawa estimates 187,549 part-time and non-permanent employees and 19,250 small businesses will be affected in 2026.
Exposure varies by sector. Statistics Canada data cited in the Regulatory Impact Analysis Statement (RIAS) accompanying the regulation put the average hourly gap between full-time and part-time workers at $16.03 in telecommunications and broadcasting and $12.79 in banking, in 2023 dollars – both more than double the $5.84 gap in transportation.
Pay equity compares job classes, while the new rules require an employee-to-employee analysis, as Canadian HR Reporter reported when new equal pay rules took shape for federally regulated employers.
How do wage comparisons work?
Those gaps matter because the comparison test is broad. An employer cannot pay a lower rate of wages because of employment status where two employees in the same industrial establishment perform substantially the same work, under similar conditions, on the same type of rate, the RIAS says. The regulations treat all operations within one Employment Insurance (EI) region as one establishment and allow hourly and salaried staff to be compared.
A difference is permitted only if it results from a system based on seniority, merit or production, or prescribed criteria such as labour-shortage premiums and geographic pay, Toronto law firm Sherrard Kuzz LLP said in an Oct. 19, 2026 post. The system must apply to all comparable employees and be communicated to them, and employers cannot reduce anyone's wages to comply, the firm added.
Employees can also test their pay directly. A worker may request a written review, and the employer has 90 days to respond, with any increase retroactive to the request date, said the firm. Conflicting collective agreement terms can prevail for two years, and contraventions can draw administrative monetary penalties.
Pay equity and wage equality
Federally regulated employers have spent the last several years navigating the proactive pay equity requirements of the Pay Equity Act, and the new wage equality obligation under the Canada Labour Code (Code) will add another layer of complexity, according to Lucy Wu, associate at Hicks Morley, in a post.
"Although these two regimes create separate legal issues, and a pay equity exercise does not automatically involve equal treatment issues under the Code. There is potential for some overlap if, under a pay equity plan, there are distinct job classes based on employment status (i.e., if certain employees are paid differently than those classified as having full time status)," she said.
"Accordingly, pay equity implementation can no longer be viewed in isolation. Decisions about compensation, job classifications, employment status, and pay equity maintenance may now have consequences under two separate statutory regimes."
More change may follow: Bill C-39, the proposed federal labour law overhaul, cleared second reading on Oct. 8, 2026, and Ottawa’s latest round of Canada Labour Code consultations covered wage theft enforcement.
