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What is pay equity and why is it important?

It’s 2021 and women in Canada are still paid an average of 76.8 cents to every man’s dollar. And this salary discrimination doesn’t just end with gender— employees of various races, sexualities and identities also experience significant wage gaps. We’re not going to beat around the bush here: it’s time to join the growing group of companies who’ve set out to correct this. After all, an important part of business is staying “relevant” and adapting to societal shifts.

To ensure that your company is keeping up with the times, the term ‘pay equity’ should be on your radar.

What does pay equity mean?

Companies throw around the term ‘pay equity’ a lot, but what does it actually mean?

According to the Canadian Federal Government, pay equity ensures that employers provide workers with “equal pay for doing work of equal value.” At the root of it, pay equity works to eliminate any wage disparities based on a person’s race, gender, and other criteria.

This is not to be confused with “equal work for equal pay” (which means men and women in the same roles will earn the same salaries.) But more about that later.

Why is pay equity necessary?

Your staff are entitled to payment equality. By keeping up-to-date with pay equity standards, you can ensure that your employee salaries are free from pay wage discrimination— a legal requirement if you operate in Ontario and have 10 or more employees.

Being mindful of pay equity can also benefit the morale of your team. Facilitating an accepting, equal-opportunity work environment can inspire loyalty, enthusiasm, and trust amongst your employees.

Failing to exercise pay equity can also have large impacts on the workforce as a whole. For example, you could be contributing to the racial wealth gap, the gender pay gap and the lack of diverse workplace representation.

What is the difference between pay equity and pay equality?

Oftentimes when talking about pay equity, people confuse it with the term pay equality.

Although they address a similar topic, these two terms mean something a little different.

Pay equality (equal pay for equal work) means providing employees equal pay for the same job. For example, two technicians with the same amount of responsibility and experience— one a man, one a woman— should be paid the same amount.

Pay equity follows the same idea as pay equality but goes deeper into the reasons behind why these disparities exist in the first place. Pay equity explores the various biases, social norms and systematic issues that contribute to salary discrimination. One example: BIPOC individuals fall victim to conscious or unconscious biases and overall, receive less offers for high-paying positions.

Is there a law to ensure pay equity in Canada?

Learning about the laws related to pay equity in Canada is essential for any business to create a better work environment and protect your company from legal action. But perhaps more importantly, adhering to these regulations can also further deconstruct salary discrepancies in the workforce.

The Pay Equity Act

On December 13, 2018, the Federal Government passed the Pay Equity Act which requires employers to consistently examine their compensation practices. This act has not yet come into full force, but it’s still a good idea to be compliant with these regulations moving forward.

The Canadian Human Rights Act

Until the Pay Equity Act is enforced, pay equity is regulated under the Canadian Human Rights Act. This gives workers the right to be free from gender-based discrimination in the workforce and aims to ensure equal compensation for work of equal value, regardless of gender.

If you want to learn more about the laws involved in running a business, check out our post about legislative compliance.

Whether you’re a small business just getting started or a large company with tons of employees, it’s your responsibility to ensure fair wage and pay equity practices at your workplace. It’s never too late to get started.

Need help from an HR compensation specialist? Contact us.

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