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In March of 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 second of a two-part series. Part One provided an overview of the pay equity maintenance obligation. This 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.

Participating Nursing Homes

In 1995, the Participating Nursing Homes (“PNH”) established pay equity for their female employees using the proxy method. After lengthy negotiations, the PNH, the Ontario Nurses’ Association, and Service Employees International Union, Local 1 (collectively, the “Unions”) reached an agreement to achieve pay equity, and pay equity was established for all female job classes at the PNH by 2005.

After 2005, the Unions alleged that a gender-based wage gap between employees of the PNH and the proxy employer had re-emerged. The Unions argued that pay equity had not been maintained, and insisted that the PHN continue to revisit proxy information to properly maintain pay equity. The PNH disagreed, arguing that the Act only required them to use the proxy method to establish pay equity — not to maintain it.

The Unions eventually applied to the Tribunal to compel PNH to continue to revisit proxy information during the pay equity maintenance process. The Unions’ primary position was that the Act required ongoing reference to proxy information during the maintenance process. In the alternative, the Unions argued that the Act’s failure to require ongoing reference to proxy information was contrary to s. 15 of the Canadian Charter of Rights and Freedoms (“Charter“).

The Tribunal agreed that employers who achieved pay equity using the proxy method had an obligation to maintain pay equity, but maintained that “traditional approach” (outlined above) was adequate. However, the Tribunal’s decision was overturned on judicial review by the Ontario Divisional Court. The Divisional Court agreed that ongoing pay equity maintenance obligations applied to proxy plans, but concluded that it was contrary to Charter values not to require proxy employers to continue to monitor male comparators. According to the Divisional Court, male comparators must continue to be monitored to ensure women subject to proxy plans could seek redress for unjustified pay inequities that emerge after their proxy plan is established.

The Unions appealed the Divisional Court’s decision to the Ontario Court of Appeal. The Court of Appeal agreed with the Divisional Court’s conclusion but did not base its reasoning on Charter values. Applying the basic principles of statutory interpretation, the Court of Appeal reasoned that “[t]he scheme of the Act is built on the fundamental premise that in order to redress systemic gender discrimination in compensation, there must be a comparison between male and female job classes”.  To this end, the Court of Appeal concluded that the proxy plan maintenance process must continue to monitor male comparators to adequately address the fundamental purposes of the Act.

We will be monitoring the Tribunal’s response to the Ontario Court of Appeal’s decision and will keep you apprised of any new procedures that are established for ensuring that pay equity is maintained under “proxy plans” with ongoing reference to male comparators.

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