Proposed legislation will require employers to report on gender pay, other differences
Some employers in Ontario may soon have to track and report on wage gaps between their male and female employees, as well as pay differences rooted in other employee characteristics.
In March, the Ontario government tabled legislation that it said would bring more transparency to employee compensation.
Bill 3, the Pay Transparency Act, 2018, would require employers to report to the government on their workforce makeup and differences in the compensation they pay to their employees, based on gender and “other diversity characteristics.”
Employers would also have to post the reports online or in at least one conspicuous place in all of their workplaces.
The legislation, which would take effect next January, does not specify which diversity characteristics employers would have to report on or how often they would have to submit reports. The government said it would provide more details after it holds consultations on what to include in regulations for the legislation.
The bill would also require employers to include information about expected compensation rates or ranges in all job postings they publicly advertise. It would also prohibit employers from asking job applicants about their past compensation, although prospective employees could voluntarily provide it.
It would also prohibit employers, or persons acting on their behalf, from intimidating, dismissing, or otherwise penalizing employees who disclose their pay to other workers, ask their employer about their compensation, inquire about pay transparency reports, or ask the employer to comply with the legislation.
“The bill establishes requirements that would ensure that all Ontarians, including women and other groups who have been disadvantaged in the workplace, have equal opportunity to get hired, negotiate fair wages, and progress in their career based on merit. Through measures set out in the bill, it will help address the gender wage gap,” said Labour Minister Kevin Flynn.
Government documents state that, on average, women earn about 30 per cent less than men do. Statistics show that the wage gap is even higher for Indigenous, disabled, racialized, or immigrant women.
If enacted, Ontario would become the first province in Canada with pay transparency legislation. The federal government has announced plans to introduce pay transparency measures for federally regulated workplaces.
While the bill did not specify which employers would be subject to the reporting requirements, the government has said it would apply them to the Ontario Public Service first. Following consultations, it said private-sector employers with more than 500 employees would be subject to the act and that eventually it would extend the legislation to employers with more than 250 workers.
Before writing the bill, the government said it studied pay transparency laws in three other countries.
The U.K.’s pay transparency law, which took effect last year, requires employers with at least 250 employees to annually report information on gender pay gaps that exist in their organization. Besides submitting the report to the government, employers must post it on their “public-facing” website for at least three years.
The types of earnings used for the calculations include basic pay, allowances, shift premiums, commissions, incentive payments, performance and productivity bonuses, profit-sharing, and securities options.
In Germany, the federal legislature passed a law last year that requires employers with reporting obligations under the country’s Commercial Code who have more than 500 employees to regularly report to the government on their progress in terms of equality and equal pay. The reporting obligation is every three to five years, depending on whether there is a collective agreement.
The law also gives employees working for employers with more than 200 staff the right to know the average remuneration paid to a comparable group of employees of the opposite gender who do the same or comparable work for the employer. In general, employees have the right to inquire every two years.
Australia implemented gender equity reporting legislation in 2012. Its Workplace Gender Equality Act (WGEA) requires employers with at least 100 employees to annually report to the government on six gender equality factors. These include the gender makeup of the organization, the gender composition of the employer’s governing boards, and equal remuneration between men and women.
Employers must take account of all employees in their report, including full-time, part-time, casual, and temporary workers. Employers have to report each employee’s base salary and their total remuneration, including bonuses, commissions, overtime pay, benefits, and allowances.
The government provides each employer with a report showing how it compares to industry benchmarks for gender equality.
If an employer does not fulfill its reporting obligations, the WGEA has the authority to publicly name the employer. In addition, employers who do not comply may lose eligibility for Commonwealth and state tender contracts and for government grants or other financial assistance.
These are not the only countries with pay transparency laws. A number of other European nations have implemented similar measures to close the gender wage gap, which European Union (EU) statistics show was an average of 16.2 per cent in 2016.
In 2014, the European Commission recommended that all member countries implement at least one of the following tools:
•give employees the right to request information on gender pay levels for the same work or work of equal value
•require employers to report on average gender pay levels
•require employers to carry out audits on pay and pay differentials based on gender
•ensure that equal pay is part of collective bargaining.
A 2017 European Commission report on pay transparency showed that although many of the EU-member countries had introduced at least one of the tools, 16 of the 28 members had not put any of them in place.
“While many countries have recently started to implement these measures, only a handful of countries already have some experience with at least one of the instruments,” said the report.
The commission said it is now considering whether to introduce further measures at the EU level to help close the gender pay gap.
In Ontario, pay equity advocates have expressed concerns that the proposed legislation here will be too weak to be effective.
“Pay transparency is an important enforcement tool,” said Fay Faraday, co-chair of the Ontario-based Equal Pay Coalition. “But this bill must be strengthened if it is to make meaningful change. (The) first reading (of the bill) lets most employers off the hook.”
The coalition has called on the government to make a number of amendments, including expanding the reach of the legislation to apply to all public- and private-sector employers with more than 10 employees similar to the province’s Pay Equity Act.
It also wants the legislation to clearly specify what information employers must include in their pay transparency reports, including compensation structure and wage grids by gender, job classification, and job status. In addition, it says the bill should require employers to deliver annual transparency reports to their corporate shareholders.
With Ontario heading to the polls in June, it is impossible to know whether the pay transparency legislation will survive a possible change in government.
In the meantime, payroll professionals who want to stay on top of potential legislative amendments should familiarize themselves with the bill.
