Who is covered

The Pay Equity Act requires federally regulated employers, with an average of 10 or more employees, to take a proactive approach to correct gender wage gaps within their organization. 

Who does the Pay Equity Act apply to?

The Pay Equity Act applies to federally regulated employers with an average of 10 employees or more. It also applies to Parliamentary institutions through changes made to the Parliamentary Employment and Staff Relations Act.

About 4,600 federally regulated employers with an average of 10 or more employees and about 1.3 million employees are covered by the Act.

Employers are required, among other things, to:

  • Create and post a pay equity plan within three years;
  • Pay any increases in compensation;
  • Report through annual statements (not until three years after the coming into force); and,
  • Update the pay equity plan at least every five years.

Those employers with an average of fewer than 10 employees  remain subject to section 11 of the Canadian Human Rights Act.

How do I know if the law applies to my workplace?

The Act covers three types of workplaces:

  • Federally regulated private-sector workplaces – e.g. banking, communications and transportation sectors;
  • Federally regulated public-sector workplaces – e.g. government departments and agencies, Minister’s – including the Prime Minister offices, the Royal Canadian Mounted Police and Canadian Armed Forces; and,
  • Parliamentary institutions – such as the House of Commons, Senate, Library of Parliament, Parliamentary Protective Service and the offices of Members of Parliament.

Who is not covered?

Territories and Indigenous governing bodies 

The Act does not currently apply to the governments of Yukon, the Northwest Territories and Nunavut, or Indigenous governing bodies, including First Nations Governments.

Pay equity in these workplaces is still protected through section 11 of the Canadian Human Rights Act or territorial legislation.

What if my workplace has fewer than 10 employees? 

Federally regulated workplaces with fewer than 10 employees remain subject to pay equity requirements in section 11 of the Canadian Human Rights Act.

Examples of federally regulated private-sector workplaces

Banking Activities
Banking services by banks or authorized foreign banks.

Navigation and Shipping Activities
Any water transportation of goods or passengers that involve the crossing of provincial, territorial or international borders on a regular basis. This includes:

  • Port services, including loading and unloading vessels, ship repair and salvage services; and,
  • Navigational, tug, pilot or other harbour services.

Air Transportation Activities
Including airports, airfields, aerodromes, flight and air traffic controllers’ schools and airlines:

  • Airplane hangar parking, refuelling or rental services;
  • Aircraft servicing and maintenance, including cleaning services and maintaining runways;
  • Airline baggage or cargo services; and,
  • Airport security guard services.

Rail Transportation Activities
Rail transportation of goods or passengers that involve the crossing of borders on a regular basis, maintenance or other support services.

Road Transportation Activities
Road transportation of goods or passengers that involve the crossing of borders on a regular basis, maintenance or other support services.

Other Interprovincial Connections
Activities related to interprovincial connections, such as:

  • Canals, pipelines, tunnels and bridges that cross borders; and,
  • Pipeline transportation of oil, natural gas, or petroleum products across borders.

Telecommunications Activities
Such as those related to telecommunications (e.g. telephone, satellite and internet providers) and radio and television broadcasting.

Postal Services Activities
Postal services, including courier services that cross borders and those that are essential to the work of Canada Post.

Works declared to be for the general advantage of Canada
An organization or activity that has been declared by Parliament to be for the general advantage of Canada, such as:

  • Grain handling, including grain elevators, flour, feed and seed mills;
  • Livestock food manufacturing; and,
  • Uranium mining and processing, including nuclear power plants.

Protection of Fisheries
Businesses whose activities deal with the protection of fisheries as a natural resource.

Crown Corporations
Crown corporations that perform duties on behalf of the Government of Canada – Any corporation or subsidiaries established as agents of the Crown and / or who employ employees in connection with the operation of any federal work, undertaking or business, such as:

  • Business Development Bank of Canada;
  • Canada Mortgage and Housing Corporation; and,
  • Export Development Canada.

Why is it important that I know who is considered an “employee” under the Act? 

It is important to know who is considered as an “employee” under the Act because the number of employees in your organization determines whether the Pay Equity Act applies to your workplace. The number of employees also sets an employer’s responsibilities and employees’ rights and recourse.   

Who is an employee?

According to the Act, the definition of an “employee” includes: 

  • Non-management and management employees, which generally include executives and Chief Executive Officers; 
  • Unionized and non-unionized employees; 
  • Full-time and part-time employees;  
  • Permanent, casual and temporary employees;  
  • Dependent contractors; 
  • Employees performing federally regulated activities as part of a separate unit for a provincial employer; and, 
  • Workers on long-term leave (e.g. sick leave, maternity leave). 

If you are employed under a secondment agreement or hold a position staffed through a staffing agency, you may also be considered as an employee.  For example, this could be the case if the employer effectively exercises de facto control over your employment conditions (e.g. daily control over the work performed, selection process, hiring, discipline, training, evaluation or remuneration).  

This means that you are considered an employee under the Act if you work in a federally regulated private-sector workplace, and for example: 

  • You work as a casual;  
  • You are an executive; or, 
  • You are on long-term leave. 

This also means that if you work in a federally regulated public-sector workplace, and you are appointed as a public servant under the Public Service Employment Act or other applicable Acts regulating appointments in the federal public service – you are considered an employee under the Pay Equity Act.

Who are “dependent contractors”? 

Under the Pay Equity Act, which aligns with the federal approach under the Canada Labour Code, a dependent contractor works for a person or organization on a contract or project, and the terms and conditions cause the worker to be economically dependent on the contracting person or organization.

Who is not an employee? 

A few employment relationships do not fall within the definition of an ‘‘employee’’ under the Act.  These excluded employment relationships are specified below. 

If your job position is not included, remember that you still have a right to equal pay for work of equal value. Your right is protected under section 11 of the Canadian Human Rights Act. Independent contractors in both the public and the private sectors are excluded.  

Public-sector employers  
In the public sector, the following persons are not covered by the Act, which means that their jobs will not be analyzed through the pay equity plan process:  

  • Governor in Council appointees (e.g. deputy ministers, heads and members of agencies, boards and commissions);  
  • A person who is locally engaged outside of Canada (e.g. non-diplomatic locally hired staff working in one of Canada’s foreign missions);  
  • A person who is employed through a student employment program (e.g. the Federal Student Work Experience Program, or a co-op or post-secondary internship program). 

Private-sector employers  
In the private sector, the job positions of the following persons will not be analyzed as part of the creation of the pay equity plan: 

  • A person who works for the employer as part of a student employment program (such as a co-op or post-secondary internship program);  
  • A student who works only during their school vacation periods; 

People excluded from the definition of “employee” under the Pay Equity Act maintain their right to equal pay for work of equal value under section 11 of the Canadian Human Rights Act.

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