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In March 2021, the Ontario Court of Appeal released a long-awaited and precedent-setting decision in Ontario Nurses’ Association v. Participating Nursing Homes, 2021 ONCA 148 (“Participating Nursing Homes“).

Contrary to practices previously endorsed by the Pay Equity Commission, the Court of Appeal determined that public sector employers who achieved pay equity using the “proxy method” have an ongoing obligation to revisit comparator information of the “proxy employer” to maintain pay equity. The matter has been remitted to the Pay Equity Hearings Tribunal (the “Tribunal”) to specify what procedures should be used to ensure that pay equity is maintained under “proxy plans” with ongoing reference to male comparators.

This is the first of a two-part series. Part One will provide an overview of the pay equity maintenance obligation. Part Two will explain how the Court of Appeal’s decision in Participating Nursing Homes affects the pay equity maintenance obligation for “proxy employers” in the broader public sector.

What is Pay Equity Maintenance?

Ontario’s Pay Equity Act (the “Act”) was legislated to address historic gender discrimination in compensation for women employed in “female job classes”. The Act requires all public and private sector employers with 10 or more employees to establish and maintain pay equity. Broadly speaking, pay equity is achieved under the Act when female job classes are provided with “equal pay for work of equal value” (“pay equity”).

Pay equity is distinct from “equal pay for equal work” (“equal pay”). Equal pay compares pay for workers who are in the same (or similar) job, whereas “pay equity” compares the pay provided to workers in different jobs. In particular, pay equity compares compensation provided to “female job classes” and “male job classes”.

The Act provides three methods of comparison to achieve pay equity:

  1. the job-to-job method;
  2. the proportional value method; and
  3. the proxy method.

The job-to-job method and proportional value method involve comparisons between female job classes and male job classes within the same “establishment”. In contrast, the proxy method requires eligible employers to compare their female job classes to female job classes of another employer (“proxy employer”) in a different establishment. The proxy method is less common than the other two methods of comparison because it is only available to certain broader public-sector employers who do not have internal male job classes.

Once pay equity comparisons are made, the Act requires employers to increase the job rates of female job classes to achieve pay equity. After that, the employer must “maintain compensation practices that provide for pay equity” (“pay equity maintenance”). The Act does not provide details for satisfying the pay equity maintenance obligation, so the Pay Equity Commission has developed guidance to assist employers in this regard.

Traditional Approach to Pay Equity Maintenance Under the Proxy Method

Under the proxy method, pay equity is initially achieved by comparing the job rates of female job classes of the “seeking employer” to the job rates of the “proxy employer”. During this initial process, a compensation/value formula (“formula”) is established, in part, by comparing a “key female job class” of the seeking employer to a similar female job class of the proxy employer. Traditionally, however, the Pay Equity Commission has not required employers who achieved pay equity using the proxy method to revisit their proxy employers for updated comparator data (“proxy information”) to maintain pay equity. Rather, seeking employers have only been required to revisit the formula internally, comparing their “key female job class” to their other female job classes. Using this internal pay equity maintenance process, proxy employers must implement pay equity adjustments only when there is a change in the compensation of their key female job class, or a change in the value of any of their female job classes.

Stay tuned for Part Two in which we will explain how the Court of Appeal’s decision in Participating Nursing Homes affects the pay equity maintenance obligation for “proxy employers” in the broader public sector.

Many thanks to Alissa Scarcello for her assistance with this article.