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On April 1, 2018, employers in Ontario will be subject to the new equal pay provisions under the Employment Standards Act  (“ESA”) brought in by Bill 148. As a general rule, employers can no longer establish distinct pay rates based on a “difference in employment status”, defined as follows:

(a) a difference in the number of hours regularly worked by the employees (e.g., full time employees vs. part time employees); or

(b) a difference in the term of their employment, including a difference in permanent, temporary, seasonal or casual status.

The general rule requires equal pay where employees perform substantially the same kind of work in the same establishment, requiring substantially the same skill, effort and responsibility, under similar working conditions. Despite the general rule, exceptions permit employers to establish distinct pay rates on the basis of seniority or merit systems, systems measuring earnings by quantity or quality of production, or factors other than sex or employment status.

The new equal pay provisions apply to temporary help agency employees, who will now be entitled to the same pay rate as employees of the client where they perform substantially the same work.

As of April 1, 2018, employees will be able to bring a complaint under the ESA in relation to their pay rates. However, a transition period applies to employees working under collective agreements in effect on April 1, 2018. The new equal pay provisions do not apply to such employees until the earlier of the date that their current collective agreement expires and January 1, 2020.

Employers who have not already done so, should undertake the following actions without delay:

  • review and update all policies and practices relating to pay rates;
  • assess and compare job functions in the view of the criteria above;
  • consider whether job descriptions need updating to reflect actual differences among classes of employees;
  • consider implementing a system for determining pay that is in line with the exceptions; and
  • make any upward adjustments needed to pay rates after taking the above actions.

Employers should also anticipate that they may need to provide their pay information to the temporary help agencies they utilize and that the cost of using labour supplied by such agencies is likely to rise.

For information on other key changes under Bill 148 and recommended planning actions, please see our earlier blog post here.