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Canada’s Pay Equity Act coming into force

August 3, 2021
Premila Chellapermal

On August 31, 2021 the Pay Equity Act will come into force requiring federally registered employers to proactively plan around and compensate for pay gaps between women and men. The Pay Equity Act Canada has been in development for the last 6 years to help close the gender wage gap in federally registered workplaces.  In Canada, women earn on average .89 cents to every dollar earned by men.[i]

The new Act employs aspects of current equity pay legislation already in place in many provinces such as requiring employers to create job classifications based on gender and putting the responsibility on the employer to look at their practices and compensation schemes. It takes the onus away from employees to seek equal compensation, and makes employers review and change their practices. Employers will have to create equity plans and undergo yearly audits to look at the differences in their wages between female job classes and male job classes. A Pay Equity Commissioner will oversee implementation and compliance. Federal employers will have 3 years to implement any new compensation structures.

This new Act is intended to ensure that women and men receive equal pay for work of equal value versus equal pay for equal work. This is defined under the Act as job classes which predominantly are either occupied by men or women and have comparable skill, effort, responsibility and working conditions. For example, valuing equally the physical work required by female cashiers to that of a male stockperson. The Act is aimed at making sure that job classes that women are overrepresented in due to gender stereotyping, are not underpaid and undervalued. 

How will this impact women?

In Ontario, federally registered workplaces account for around 10% of all workplaces. They are not industries with a high representation of women such as the service sector, including food services and retail,[ii] which are already covered by the provincial Equity Act Ontario since 1990. However, it is an important step to make federal workplaces in alignment with existing rights in Ontario.

Further, there are many factors that contribute to the pay gap. Although pay equity legislation is an important step, the gender pay gap is only one symptom of the wider societal and structural forms of discrimination that impact women’s participation in the economy. Women are more likely to be in part-time employment due to a lack of affordable childcare and an unequal division of family responsibilities.[iii] Women are also more likely to be in precarious work and are overrepresented in certain sectors[iv] which can harm their opportunities for meaningful employment. This has been especially highlighted during the pandemic with statistics showing that women’s employment has been consistently impacted at higher rates than men.[v]

Violence is another barrier faced by women to accessing decent and meaningful employment. It is estimated that half of Canadian women over the age of 16 have had at least one experience of physical or sexual violence in their life time.[vi] Some studies show that women who have experienced intimate partner violence are more likely to be in part-time employment, and earn 60% lower than women who have not.[vii] In addition, the gender pay gap is different among different groups of women. While the average gender pay gap for women in Ontario is 29.3%, racialized women in Ontario experience a gender pay gap of 38%, immigrant women in Ontario experience a gender pay gap of 34% and women with disabilities face a 56% wage gap.[viii]

Although the Pay Equity Act brings another promising development, more policies are needed to eradicate the multiple barriers different women face to fully participate in the economy.


[i] Statistics Canada (2020a) Table 14-10-0340-02 Average and median gender wage ratio, annual. DOI: https://doi.org/10.25318/1410034001-eng

[ii] Statistics Canada (2020b)Table 14-10-0023-01  Labour force characteristics by industry, annual (x 1,000). DOI: https://doi.org/10.25318/1410002301-eng

[iii] Dupont, Anne-Helene. ‘Why are there more women working part-time?’ (Part-time.ca) October 16, 2018. Why Are There More Women Working Part Time? | Part-time.ca

[iv] Statistics Canada (2020c)Table 14-10-0327-03  Proportion of workers in full-time and part-time jobs by sex, annual. DOI: https://doi.org/10.25318/1410032701-eng

[v] Douwere, G. and Lu, Y. (2021) Gender differences in employment one year into the COVID-19 pandemic: An analysis by industrial sector and firm size. Statistics Canada

[vi] Statistics Canada (1993) Violence Against Women Survey [Archived] Available at: Surveys and statistical programs – Violence Against Women Survey (VAWS) (statcan.gc.ca)

[vii] Lakshmi, P. (2016) ‘Speech-The economic costs of violence against women’ The economic costs of violence against women | UN Women – Headquarters

[viii] Equal Pay Coalition available at www.equalpaycoalition.org

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