Regulations Amending the Employment Equity Regulations: SOR/2020-236
Canada Gazette, Part II, Volume 154, Number 24
SOR/2020-236 November 3, 2020
EMPLOYMENT EQUITY ACT
P.C. 2020-843 October 30, 2020
Whereas, pursuant to subsection 41(3) of the Employment Equity Actfootnote a, the Minister of Labour has consulted with the Treasury Board on the annexed Regulations Amending the Employment Equity Regulations as they apply to the public sector;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Labour and the Treasury Board, pursuant to subsection 41(1) of the Employment Equity Act footnote a, makes the annexed Regulations Amending the Employment Equity Regulations.
Regulations Amending the Employment Equity Regulations
1 (1) The definitions designated CMA and former Regulations in subsection 1(1) of the Employment Equity Regulationsfootnote 1 are repealed.
(2) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:
- bonus pay,
- in respect of a private sector employer, means any additional remuneration paid to an employee as a result of profit sharing, productivity, performance, commissions or any other incentives. (prime)
- overtime hours,
- in respect of a private sector employer, means the hours worked by an employee, in excess of the standard hours of work, for which the employee received overtime pay. (heures supplémentaires)
- overtime pay,
- in respect of a private sector employer, means any remuneration paid for the hours worked by an employee in excess of the standard hours of work. (paie d’heures supplémentaires)
(3) Subparagraph (b)(i) of the definition employee in subsection 1(2) of the Regulations is replaced by the following:
- (i) a person appointed as a casual worker under subsection 50(1) of that Act, or
(4) Paragraph (b) of the definition hired in subsection 1(2) of the Regulations is replaced by the following:
- (b) an employee employed in a portion of the federal public administration referred to in paragraph 4(1)(b) or (c) of the Act to which the Public Service Employment Act applies, means initially appointed to the federal public administration in accordance with that Act except in the case of a person appointed as a casual worker under subsection 50(1) of that Act; and
(5) Paragraph (a) of the definition promoted in subsection 1(2) of the Regulations is replaced by the following:
- (a) an employee employed in a portion of the federal public administration referred to in paragraph 4(1)(b) or (c) of the Act to which the Public Service Employment Act applies, has the same meaning as the definition promotion in section 3 of the Definition of Promotion Regulations;
(6) Paragraph (a) of the definition salary in subsection 1(2) of the Regulations is replaced by the following:
- (a) a private sector employer, means remuneration paid for work performed by an employee, before deductions, in the form of basic pay, pay for piecework, shift premiums, bonus pay and overtime pay, but does not include benefits, securities, severance pay or termination pay, vacation pay, payment in kind, supplementary payments, allowances, retroactive payments, reimbursements for employment expenses or compensation for extra-duty services other than overtime pay;
(7) Paragraphs (a) and (b) of the definition occupational groupin subsection 1(2) of the English version of the Regulations are replaced by the following:
- (a) the workforce of a private sector employer or a portion of the federal public administration referred to in paragraph 4(1)(c) of the Act, means an occupational group set out in column I of Schedule II; and
- (b) a portion of the federal public administration referred to in paragraph 4(1)(b) of the Act, means an occupational group set out in column I of Schedule III. (catégorie professionnelle)
2 Subsections 3(2) and (3) of the Regulations are replaced by the following:
(2) The questionnaire shall contain the definitions Aboriginal peoples, members of visible minorities and persons with disabilities set out in section 3 of the Act to help the employee respond to the questionnaire.
3 Section 11 of the Regulations is amended by adding the following after paragraph (c):
- (c.1) for each employee employed by a private sector employer, a record containing the information referred to in paragraphs 25.1(a) to (f);
4 Subsection 12(3) of the Regulations is replaced by the following:
(3) If a private sector employer generates its annual employment equity report required by subsection 18(1) of the Act using an application or specially designed software provided by the Government of Canada for employment equity reporting purposes, the employer shall retain a copy of the database or other computer record used to generate the report for two years after the year in respect of which the report is filed.
5 The Regulations are amended by adding the following before section 15:
14.1 In these Regulations, a reference to any of Forms 1 to 6 is to be read as a reference to a Form set out in the document entitled Employment Equity Forms 2021, prepared by the Department of Employment and Social Development and published on its website.
6 Subsections 15(1) and (2) of the Regulations are replaced by the following:
15 (1) Forms 1 to 6 are prescribed for the purpose of filing a report referred to in subsection 18(1) of the Act.
7 Subsection 16(1) of the Regulations is replaced by the following:
16 (1) An employment equity report shall contain the following statement certifying the accuracy of the information contained in it:
“I, (name), certify on behalf of (legal name of employer) that the information contained in Forms 1 to 6 of this report is true and accurate in every respect, to the best of my knowledge and belief.
8 Section 17 to 19 of the Regulations are replaced by the following:
18 For each calendar year, an employment equity report shall be completed using Forms 1 to 6 and in accordance with the instructions set out in sections 20 to 31.
19 In circumstances other than the one referred to in subsection 18(3) of the Act, for the purposes of subsection 18(1) of the Act, an employment equity report is deemed to have been filed with the Minister on the day on which the Minister receives it.
9 The portion of section 21 of the Regulations before paragraph (a) is replaced by the following:
21 An employer, in completing Forms 1 to 3, shall report the required information with respect to the number of employees employed by the employer
10 Section 22 of the Regulations is replaced by the following:
22 An employer, in completing Forms 2 and 4 to 6, shall indicate the occupational group in which an employee is employed, as set out in column I of Schedule II, by referring to the occupational unit group set out in column II that most accurately describes the job performed by the employee.
11 Subsection 23(1) of the Regulations is replaced by the following:
23 (1) An employer shall indicate on Form 1 the industrial sector in which employees are employed by selecting the appropriate industry group description set out in the North American Industry Classification System (NAICS) Canada, developed and administered by Statistics Canada and the statistical agencies of Mexico and the United States and published by authority of the Minister responsible for Statistics Canada, as amended from time to time.
12 (1) The portion of subsection 24(1) of the Regulations before paragraph (a) is replaced by the following:
24 (1) Subject to subsection (2), for each industrial sector indicated by an employer on Form 1, the employer shall complete the applicable Parts of Form 2 in respect of all employees of the employer in Canada for each of the following employment status categories:
(2) Section 24 of the Regulations is amended by adding the following after subsection (2):
(3) An employer who has completed the applicable Parts of Form 2 separately for more than one industrial sector under subsection (1) shall also consolidate the information provided and complete the applicable Parts of Form 2 for those industrial sectors collectively.
13 (1) Paragraph 25(b) of the Regulations is replaced by the following:
- (b) for each CMA where the total number of employees of the employer is 100 or more at any time during the reporting period.
(2) Section 25 of the Regulations is renumbered as subsection 25(1) and is amended by adding the following:
(2) For the purposes of paragraph (1)(b), CMA means a census metropolitan area as set out in the document entitled Statistical Area Classification - Variant of SGC 2016, published by authority of the Minister responsible for Statistics Canada, as amended from time to time.
14 The Regulations are amended by adding the following after section 25:
25.1 In completing Form 2, an employer shall use the following information for each employee:
- (a) their salary, excluding any bonus pay and overtime pay;
- (b) the period over which the salary referred to in paragraph (a) is paid;
- (c) the number of hours worked that can be attributed to the salary referred to in paragraph (a);
- (d) the bonus pay paid in the reporting period;
- (e) the overtime pay paid in the reporting period; and
- (f) the number of overtime hours worked that can be attributed to the overtime pay referred to in paragraph (e).
15 (1) The portion of subsection 26(1) of the Regulations before paragraph (a) is replaced by the following:
26 (1) In completing Form 2, an employer shall determine the salary ranges of the employees using the information referred to in paragraphs 25.1(a) to (c), in the following manner and sequence:
(2) Paragraph 26(1)(b) of the French version of the Regulations is replaced by the following:
- b) au moyen de la table des paliers de rémunération figurant à l’annexe VIII, il détermine les paliers de rémunération dans lesquels sont comprises la rémunération maximale et la rémunération minimale visées à l’alinéa a);
(3) Subsections 26(2) to (4) of the Regulations are replaced by the following:
(2) If the lowest salary of the employees in an occupational group is $250,000 or more, the employer shall leave blank the space on Form 2 used to indicate the highest salary of the employees in the occupational group.
(3) In completing Form 2, the employer shall indicate the salary ranges of the employees in each occupational group as determined in subsections (1) and (2).
16 (1) Subsection 27(1) of the Regulations is replaced by the following:
27 (1) In completing Form 2, an employer shall determine the four quarters of the salary range of the employees in each occupational group by dividing, by four, the difference between the highest and lowest salaries of the employees in the occupational group, determined under paragraph 26(1)(a) and by rounding the result to the nearest dollar.
(2) Subparagraph 27(2)(a)(i) of the Regulations is replaced by the following:
- (i) the lower limit is the lowest salary of the employees in the occupational group, determined under paragraph 26(1)(a), and
(3) Subparagraph 27(2)(d)(ii) of the Regulations is replaced by the following:
- (ii) the upper limit is the highest salary of the employees in the occupational group, determined under paragraph 26(1)(a).
(4) Subsection 27(3) of the Regulations is replaced by the following:
(3) The employer shall indicate on the applicable Parts of Form 2 the number of employees in each quarter of the salary range as determined under subsections (1) and (2).
17 The Regulations are amended by adding the following after section 27:
27.1 In completing Form 2, an employer shall provide the following information for all employees, for employees in each occupational group and for employees in each designated group, using the information referred to in section 25.1:
- (a) the mean and median difference in hourly rates;
- (b) the mean and median difference in bonus pay;
- (c) the mean and median difference in overtime pay corresponding to the overtime hours;
- (d) the proportion of employees who have received bonus pay; and
- (e) the proportion of employees who have received overtime pay.
18 Sections 28 and 29 of the Regulations are replaced by the following:
28 An employer shall complete the applicable Parts of Form 3 in the same manner as prescribed for Form 2 in subsections 24(1) and (2) and paragraph 25(1)(a).
29 In completing Form 3, an employer shall use the information determined in accordance with paragraph 26(1)(b) for the purpose of indicating the degree of representation of employees in the salary ranges set out in that form.
19 Section 30 of the Regulations is replaced by the following:
30 An employer shall, in the manner prescribed in subsections 24(1) and (2), for the employment status categories referred to in paragraphs 24(1)(a) and (b), complete the applicable Parts of Forms 4 to 6 in respect of employees who are employed in an industrial sector for which the employer is required to report separately and in respect of employees who are grouped in industrial sector 1 in accordance with subsection 24(2), for each province or territory where the total number of employees of the employer is 100 or more at any time during the reporting period.
20 The English version of the Regulations is amended by replacing “aboriginal” with “Aboriginal” in the following provisions:
- (a) paragraph 3(1)(c); and
- (b) subparagraph 6(1)(a)(i).
21 The English version of the Regulations is amended by replacing “public service of Canada” with “federal public administration” in the following provisions:
- (a) the portion of paragraph (b) before subparagraph (i) and paragraph (c) of the definition employee in subsection 1(2);
- (b) paragraph (c) of the definition hired in subsection 1(2);
- (c) paragraph (b) of the definition promoted in subsection 1(2);
- (d) paragraphs (b) and (c) of the definition salary in subsection 1(2); and
- (e) paragraph 2(b).
22 Schedules I to IV to the Regulations are replaced by the Schedules II and III set out in Schedule 1 to these Regulations.
23 Schedules VI to VIII to the Regulations are replaced by the Schedule VIII set out in Schedule 2 to these Regulations.
24 The Employment Equity Regulations, as they read immediately before the coming into force of these Regulations, continue to apply for the purpose of the completion of the employment equity report for the 2020 reporting period.
Coming into Force
25 These Regulations come into force on January 1, 2021.
(Subsection 1(2) and section 22)
Employment Equity Occupational Groups
|2||Middle and Other Managers||
|4||Semi-Professionals and Technicians||
|6||Supervisors — Crafts and Trades||
|7||Administrative and Senior Clerical Personnel||
|8||Skilled Sales and Service Personnel||
|9||Skilled Crafts and Trades Workers||
|11||Intermediate Sales and Service Personnel||
|12||Semi-Skilled Manual Workers||
|13||Other Sales and Service Personnel||
|14||Other Manual Workers||
Table a1 note
|1||Air Traffic Control|
|3||Applied Science and Patent Examination|
|4||Architecture, Engineering and Land Survey|
|6||Commerce and Purchasing|
|9||Education and Library Science|
|10||Economics and Social Science Services|
|15||Human Resources Management|
|19||Negotiation, Mediation and Conciliation Officer|
|20||Non-Supervisory Printing Services|
|22||Police Operations Support|
|23||Program and Administrative Services|
|26||Ship Repair Chargehands and Production Supervisors (East)|
|27||Ship Repair (East)|
|28||Ship Repair (West)|
- Under $5,000
- $5,000 - $9,999
- $10,000 - $14,999
- $15,000 - $19,999
- $20,000 - $24,999
- $25,000 - $34,999
- $35,000 - $49,999
- $50,000 - $74,999
- $75,000 - $99,999
- $100,000 - $149,999
- $150,000 - $199,999
- $200,000 - $249,999
- $250,000 and over
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
In Budget 2018 (released on February 27, 2018), the Government of Canada announced measures to address wage gaps through the inclusion of new pay transparency requirements in the federally regulated private sector. To support the implementation of these measures, changes to the Employment Equity Regulations (the Regulations) [SOR/96-470] that govern the reporting of salary data by employers are required.
The Regulations were made pursuant to the Employment Equity Act (the Act) [S.C. 1995, c. 44] in 1996 and were last amended in 2006. At that time, the regulatory amendments were administrative in nature and served to update references to the National Occupational Classification, the industrial classifications (North American Industry Classification System, or NAICS) and the geographical area definitions (census metropolitan area, or CMA). Since that time, these instruments have been updated. Therefore, references to these instruments in the Regulations must now be modified to reflect these updates.
Following a comprehensive review of the Regulations, opportunities were identified to respond to recurring administrative issues. As a result, a number of amendments have been identified to update and streamline the Regulations, increase clarity, improve data gathering and reduce the reporting burden.
The issues addressed in these amendments are as follows.
The most significant issue that the regulatory amendments resolve pertains to the definition and calculation of “salary” for reporting purposes. The previous calculation was complex and employers had raised concerns for several years about the administrative burden this placed on them. In part, these amendments support the Government of Canada’s Budget 2018 pay transparency announcement as a measure to raise awareness of wage gaps that affect women, Aboriginal peoples, persons with disabilities and members of visible minorities in Canada. These regulatory amendments modify the current salary reporting requirements to collect information that will enable the determination of an hourly rate of pay as well as bonus pay, overtime pay and overtime hours that will be used to publicly report on the wage, bonus and overtime pay gaps of federally regulated private-sector employers.
Incorporation by reference
The current Regulations contain outdated references to other legislation, census metropolitan areas, the North American Industry Classification System and the Treasury Board of Canada Secretariat occupational classification system, which are subject to regular and/or periodic review and updates. Following prepublication of the amendments, the Labour Program (under the Department of Employment and Social Development) identified that six Employment Equity forms could be modernized by removing them from the Regulations and incorporating them by reference.
Expanding reporting against all census metropolitan areas
Census metropolitan areas are used by employers to understand the availability of members of designated groups in their specific recruiting market in order to conduct an analysis of their workforce. When the Act was enacted in 1986, only 8 of the then 25 census metropolitan areas were included in Schedule 1 of the Regulations (Calgary, Edmonton, Halifax, Montréal, Regina, Toronto, Vancouver and Winnipeg) for the annual employment equity reporting requirements (hence “designated census metropolitan area”). As of the 2016 Census, there are 35 census metropolitan areas in Canada.
Reporting against a limited number of census metropolitan areas (i.e. 8) does not provide an accurate and complete portrait of the Canadian labour market as it relates to employment equity. While employers can currently access up to 35 census metropolitan areas through the Workplace Equity Information Management System (WEIMS) when completing their workforce analysis, the Minister of Labour’s annual report on employment equity reports on only those 8 census metropolitan areas previously contained in the Regulations.
Removal of outdated requirements
References pertaining to a time before the Regulations came into force are removed as they are no longer relevant. Any transitional issues relating to the coming into force of the Regulations have been dealt with, given that they took effect almost 20 years ago. In addition, the Regulations referenced the 2004 and 2005 calendar years as transitional starting points for the application of certain reporting requirements and are no longer relevant. Further, the employment equity information system referenced in the Regulations (i.e. the Employment Equity Computerized Reporting System) was replaced by WEIMS, which is itself slated to be replaced by another system.
Mandatory use of definitions
Previously, employers were required to conduct a workforce survey using a self-identification questionnaire containing definitions for the four designated groups (women, Aboriginal peoples, persons with disabilities, and members of visible minorities) that were consistent with those of the Act. This means that employers could modify the definitions, leading to inconsistencies in self-identification data from one employer to another. In practice, most employers already use the definitions contained in the Act or in Schedule IV of the Regulations. For the purposes of compliance assessments, officials from the Canadian Human Rights Commission have indicated that variations on the definitions are rarely accepted.
Previously, salary sections were defined in $5,000 increments up to $100,000 for reporting purposes. Salaries above $100,000 were not captured. This limited breakdown did not reflect current salary levels in Canada, as identified through the national Census administered by Statistics Canada. It therefore failed to provide sufficient data analytics for employers and the Government of Canada.
The Act was enacted in 1986 as a proactive framework that aims to bring about significant change by focusing on awareness, education and enforcement; achieving equality in the workplace; correcting conditions of disadvantage in employment experienced by members of four designated groups; and identifying and removing barriers to employment. It gives effect to the principle that employment equity means more than treating people in the same way but also requires special measures and the accommodation of differences.
Under the Act, federally regulated private-sector employers are required to
- survey their workforce to collect data on the representation, occupational group, salary distribution and shares of hires, promotions and terminations of designated group members;
- identify any under-representation of the designated groups in each occupational group in their workforce;
- review their employment systems, including written and unwritten policies and practices in order to identify employment barriers; and
- prepare and implement a plan to remove employment barriers and achieve equitable representation.
Each year, federally regulated private-sector employers are required to file an employment equity report with the Minister of Labour as required by subsection 18(1) of the Act. The information comprises six forms that include representation data, employee occupational groups, employee salary ranges and the number of employees hired, promoted and terminated. The forms submitted by each employer are publicly available online.
In support of the Act, the Regulations were enacted in 1996. The Regulations provide instructions and prescribe the manner and form by which employers are to comply with their obligations under the Act. The Regulations prescribe
- how to calculate the number of employees;
- how to collect workforce information;
- how to perform a workforce analysis;
- the requirement to perform a review of employment systems, policies and practices;
- how employment equity records must be managed; and
- the content of a private-sector employer report.
The Regulations were last amended in 2006. The amendments were administrative in nature and served to update references to the National Occupational Classification, the industrial classifications (North American Industry Classification System) and the geographical area definitions (census metropolitan area).
Budget 2018 and Budget 2019 announced measures to improve equality in labour market participation through the inclusion of new pay transparency requirements in the federally regulated private sector. To support the implementation of this commitment, an amendment to the Employment Equity Act was included in the Budget Implementation Act, 2019, No. 1. While paragraph 18(1)(c) of the Act currently requires federally regulated private-sector employers to report the salary ranges of their employees and the degree of representation of persons who are members of designated groups in each range and in each prescribed subdivision of the range, the amendments, once in force, will allow the Governor in Council to prescribe additional information in relation to employee salaries that must be reported (e.g. information that can be used to determine whether there are wage gaps within the designated groups).
Amend the Regulations in order to streamline the text, increase clarity, improve data gathering and reduce reporting burden while introducing amendments to collect salary information in a way that supports the implementation of pay transparency measures among federally regulated private-sector employers, as announced in Budget 2018.
The Regulations are amended as follows.
Previously, the Regulations defined salary in respect of a private-sector employer as “remuneration paid for work performed by an employee in the form of salary, wages, commissions, tips, bonuses and piece rate payments, rounded to the nearest dollar, but does not include overtime wages.”
The definition of salary is amended to allow for the submission of a series of data elements available through federally regulated private-sector employers’ human resources (HR) and pay systems that can be used to determine an hourly rate of pay for the purposes of calculating wage gaps within the employer’s workforce. The data elements comprise salary, the period over which salary is paid, hours worked, bonus pay, overtime pay and overtime hours. The definitions of salary and the various other data that employers will be required to report are as follows:
- “Salary” means, in respect of a private-sector employer, remuneration paid for work performed by an employee, before deductions, in the form of basic pay, pay for piecework, shift premium pay, bonus pay and overtime pay, but does not include benefits, securities, severance pay or termination pay, vacation pay, payment in kind, supplementary payments, allowances, retroactive payments, reimbursement for employment expenses or compensation for extra-duty services other than overtime pay.
- “Bonus pay” means, in respect of a private-sector employer, any additional remuneration paid to an employee as a result of profit sharing, productivity, performance, commission, or any other incentives.
- “Overtime pay” means, in respect of a private-sector employer, any remuneration paid for the hours worked by an employee in excess of the standard hours of work.
- “Overtime hours” means, in respect of a private-sector employer, the hours worked by an employee, in excess of the standard hours of work, for which the employee received overtime pay.
Federally regulated private-sector employers, subject to the Act, use WEIMS to submit the six forms prescribed by the Regulations that comprise their annual employment equity reports. WEIMS collates data about each employee submitted by employers and populates each of the forms with aggregated information for each employer. An IT project, at a cost of one million dollars from funds allocated to the pay transparency initiative, is currently underway to modify WEIMS to extract the relevant data from the employee information to calculate employer wage gaps for the purposes of employment equity reporting. A new online application will also be built to publish the aggregated employer wage gap information from the forms in an accessible, user-friendly format. Federally regulated private-sector employers are already required to verify the information generated on the forms before formally submitting them to the Labour Program each year, and this will continue.
Subsequent changes to Form 2 reflect the amendments relating to “salary.”
Form 2 allows employers to submit the required salary ranges and designated group representation for each of the occupational groups within their organization. These occupational groups are connected to the 14 Employment Equity Occupational Groups (EEOGs) found in Schedule II. This form has a number of parts to capture salary ranges, produced for each employment type covered in the Regulations — full-time, part-time, and temporary (Part A, Part B and Part C, respectively). Additional parts to Form 2 have been added to reflect the additional wage gap information for each employment type as well as for the organization as a whole (Part D, Part E, Part F, and Part G).
Incorporation by reference
The Statistical Area Classification — Variant of Standard Geographical Classification (SGC) 2016 (as the official Statistics Canada publication that sets out census metropolitan areas) and North American Industry Classification System are incorporated by reference (“as amended from time to time”). The definition of census metropolitan areas is amended to remove the term “designated,” introduce the Statistics Canada publication, and remove Schedule I from the Regulations. Reference to the North American Industry Classification System has been added to the Regulations to increase clarity for employers.
Form 1 has been amended to reflect all CMAs.
In addition, Forms 1 through 6 of the Regulations are now incorporated by reference as the “Employment Equity Forms, 2021” as published online by Employment and Social Development Canada. These forms will be available through the Service Canada online forms catalogue.
Removal of outdated requirements and systems
Reference to outdated employment equity information management systems is replaced by neutral language to avoid the need for updates in the future should the name of the system change. The way in which employment equity reports must be filed by employers (i.e. an address) has also been updated to provide greater flexibility around the use of technology, given that all employers currently file reports electronically (this change will not preclude the submission of written reports by employers). In addition, minor amendments have been made to remove requirements that are no longer relevant to the administration of the Regulations (e.g. reference to former regulations, specifications from the time before the Regulations came into force, and to requirements specific to the 2004 and 2005 calendar years).
Mandatory use of designated group definitions
Employers are mandated to use the definitions of designated groups found in the Act for the workforce survey questionnaire. While the definitions would need to be included as they are written in the Act, this change would not preclude the inclusion of additional information on the survey that might help to provide clarity to employees. Employers could also choose to expand their workforce survey to gather information on other groups within their workforce for internal analysis purposes, though this information would not be included in their annual report to the Government of Canada.
Salary sections defined in Schedule VIII for reporting purposes have been aligned with the salary sections in use by Statistics Canada to reflect current salary levels in Canada and improve data analytics.
Form 3 contains the degree of representation of employees based on these salary sections and Form 2 contains the top and bottom salary sections for each EEOG. Both forms have been changed to reflect these amendments.
To reflect the changes to what is being reported to the Government of Canada, in addition to the current list of records, employers are required to maintain the following:
- their salary, not including any bonus pay or overtime pay;
- the period over which the salary was paid;
- the number of hours worked that can be attributed to the salary earned;
- the bonus pay paid during the reporting period;
- the overtime pay in the reporting period; and
- the number of overtime hours worked to which the overtime pay can be attributed.
In December 2018, the Labour Program extended invitations to in-person engagement sessions to over 2 200 representatives of employers and stakeholder groups, including unions, special interest groups, industry associations and interested representatives from provincial and municipal orders of government. The sessions took place in late January and early February of 2019. Of the 561 federally regulated private-sector employers invited, representatives of 106 organizations participated. Of the 330 private-sector employers subject to the Federal Contractors Program invited, representatives of 49 organizations participated. Further, 265 responses to an online questionnaire were received, including 131 from federally regulated private-sector employers and 50 from private-sector employers subject to the Federal Contractors Program.
In general, the Labour Program heard that the regulatory changes would likely result in upfront costs for employers due to the anticipated need for changes to human resources systems and internal processes. Overall, employers, and other stakeholders, were supportive of the amendments to the Regulations, and their overarching purpose. Many of the technical amendments unrelated to salary reporting are aimed at updating and clarifying the language in the Regulations; the majority of stakeholders (over 60%) supported these initiatives. Employers voiced that they would require sufficient time to implement necessary human resources system changes.
Employers, and other stakeholders, agreed that pay transparency is an important measure to support reducing wage gaps with respect to the four designated groups. The majority of respondents (70%) supported the proposal to amend the definition of “salary” for federally regulated private-sector employers to support the introduction of pay transparency. Many employers and stakeholders indicated that separating bonus and overtime components from base salary would yield a more accurate depiction of earnings within organizations; however, several employers expressed concerns with the potential administrative burden associated with collecting overtime information.
Federally regulated private-sector employers indicated they will need further guidance and support from the Government of Canada in meeting the new salary reporting requirements, especially in situations where standard hours may be difficult to determine (e.g. transportation and warehousing sectors, seasonal operations). They would also appreciate the opportunity to provide a qualitative explanation of their organization’s wage gap results to ensure that users have a “complete picture” and are given the appropriate context. During the in-person sessions, employers and other stakeholders indicated that they see value in publishing designated group representation information alongside wage gap information to provide additional context. Federally regulated private-sector employers and other stakeholders stressed that pay transparency data should be published in a way that protects the privacy of employees.
The feedback received from these stakeholder groups helped to inform the approach to the amendments. Specifically, the data elements required to calculate an hourly wage gap figure from various base salary payment methods (e.g. weekly, bi-weekly, monthly, annual) were expanded to allow greater flexibility in employers’ submissions. A cost-benefit analysis determined that while there would be initial, up-front costs for employers to comply with the amendments, such as the need to familiarize themselves with new reporting requirements as well as updated industry and occupation classification codes, there would be an overall reduction in compliance costs over time. This is further explained in the Regulatory Analysis section below. A technical guidance document was developed prior to prepublication to ensure clarity around all reporting requirements with an emphasis on wage gap reporting and pay transparency. The technical guidance was emailed directly to employers as part of prepublication communications activities.
The amendments were published in the Canada Gazette, Part I, on August 10, 2019, for a 30-day comment period. An additional 26 submissions were received during that time. Many respondents shared similar views in support of the overarching purpose (i.e. supporting the reduction of wage gaps), although some concerns were raised regarding the approach to be taken, some of which could not be addressed in the Regulations. Generally, the concerns and observations were the same as those expressed during the in-person sessions and in the online questionnaire. In particular, respondents raised the need for detailed guidance and sufficient time to implement changes, and sought reassurance about privacy concerns.
In 2015, a privacy impact assessment (PIA) was conducted for the Employment Equity program, including the WEIMS platform. The 2015 analysis was reassessed for pay transparency, and it was determined a new PIA is not required for the following reasons:
- the personal information associated with the project will not be used for an administrative purpose;
- the data will be published in the form of aggregate statistics;
- there are no substantial modifications to the processes or goals, as this is adding an additional objective to an existing program; and
- there will be no contracting out to another level of government or a third party.
As a result of these consultation efforts, the approach to the amended Regulations was modified to provide for greater flexibility around salary reporting prior to prepublication in the Canada Gazette. Following prepublication, the timelines for implementation were also reviewed with a view to providing additional time for employers to implement the new requirements.
Stakeholders emphasized the need for clear guidance on the implications of the proposals, particularly with respect to unique workforce situations. Work is ongoing and the Labour Program is engaging employers, employee representatives and special interest groups in the development of supporting documentation detailing the changes to reporting processes and systems tools that are provided by the Labour Program. In September 2019, employers were also engaged to discuss challenges with determining standard hours in specific sectors and to identify solutions. Finally, the Labour Program is committed to protecting the privacy of Canadians and will ensure safeguards are in place to protect the information that it collects from employers.
A number of comments were made that fell outside the scope of the regulatory consultation, as they relate to employment equity more generally. Federally regulated private-sector employers and other stakeholders expressed that they believe the designated group definitions in the Act are outdated, non-inclusive and may constitute barriers for employees. Further, the voluntary nature of employees self-identifying as members of a designated group continues to present challenges in measuring employment equity progress for employers. The Labour Program acknowledges the challenges presented by the definitions. While these definitions can only be changed through legislative amendments, future legislative reviews of the Act would provide opportunity to engage stakeholders and obtain their views on potential changes.
In addition, it was proposed that the Government of Canada consider implementing legislative measures to align with similar requirements in the Pay Equity Act, such as including pay equity assessments in public reports and providing more power to the Canadian Human Rights Commission to address systemic patterns of pay discrimination. Some respondents encouraged the introduction of pay transparency measures to the federal public service, while others suggested that the Federal Contractors Program be strengthened with increased sanctions for non-compliance and that pay transparency be introduced.
The Labour Program strives to ensure its policies and programs are updated to address issues as they arise, through effective research and consultation. These suggestions are welcome and, while they fall outside the scope of the Regulations, they will be taken under consideration as part of ongoing policy development and program improvements.
Under the Act, federally regulated private-sector employers are already required to provide pay information as part of their employment equity reports each year. These reports are filed with the Minister of Labour, as set out in subsection 18(1) of the Act. The information comprises six forms, the requirements for which are delineated in the Regulations, that include representation data, employee occupational groups, employee salary ranges and the number of employees hired, promoted and terminated.
Therefore, the Regulations presented an existing vehicle through which modifications to salary reporting could be introduced in support of the Government of Canada’s pay transparency measures, while minimizing the changes required to existing systems and processes for regulated entities and Government alike.
Pay transparency will make pay information filed by federally regulated private-sector employers publicly available, with specific attention paid to making wage gaps of the four designated groups more evident. Experience in other jurisdictions has shown pay transparency to be helpful in raising awareness about the gender wage gap. In Canada, the transparency will be extended beyond gender to the other designated groups. Therefore, pay transparency will help to raise awareness of wage gaps that affect women, Aboriginal peoples, persons with disabilities and members of visible minorities.
It is expected that pay transparency will prompt employers to take action to examine their practices and show leadership in reducing wage gaps, helping to shift business culture and expectations towards greater equality. The data will be published as aggregate statistics (i.e. average percentage differences) to protect individual privacy. Information such as the actual salary paid to an individual employee will not be made public and Canadians will not have access to information that identifies an individual working within the company (e.g. name, employee number). Rather, data will be rolled into overall statistics presented by each occupational group and employment status, such as the average difference in hourly rates (i.e. presented as a percentage wage gap) between men and women working full-time in the Semi-Professionals and Technicians occupational group.
Amending the definition of “salary” and replacing the process of annualization for employer salary reporting requirements with the submission of data elements that are available through most standard HR and pay systems (i.e. salary, hours worked, bonus pay, overtime pay and overtime hours) is expected to result in a more flexible, streamlined reporting process for federally regulated private-sector employers. It will support the removal of a known burden for employers (i.e. annualization), while also providing the data needed to calculate wage gaps in support of the pay transparency initiative. The data to be collected are information employers should already have access to through their HR and compensation systems. It is also based on information that is currently to be maintained under existing legislation, including the Employment Equity Act, the Regulations and the Canada Labour Code.
The move to expand CMA reporting will improve accuracy and expand data to urban centres in Canada. There will be no additional work for federally regulated private-sector employers, as they are already accessing more than 35 CMAs through WEIMS for the purpose of conducting their workforce analysis. This was validated during the consultation sessions and prepublication period. Only small changes in programming to WEIMS will be required to allow the Labour Program to access and report on the expanded CMA information in the Minister’s Annual Report.
Incorporation by reference of CMAs, the NAICS, and Forms 1 through 6 will streamline the Regulations and eliminate the need for continual updates of the Regulations, in effect reducing confusion for federally regulated private-sector employers.
Replacing references to outdated employment equity information management systems and submission procedures with more neutral language will avoid the need for updates in the future.
Mandating that employers use the designated group definitions found in the Act in their workforce surveys will support positive outcomes during audits conducted by the Canadian Human Rights Commission, as variations are rarely accepted.
Similarly, the other administrative changes should have minimal impact on employers, as they submit salary information through WEIMS, which is clustered automatically into salary sections by the system. The new wage gap reports will follow a similar submission process.
Benefits and costs outlined in this document cover the 2020–2029 10-year period, are based on a 7% discount rate, and are expressed in 2012 dollars. All benefit and cost values are rounded to the nearest hundred.
The present value of the incremental costs anticipated from the amended Regulations is estimated at $1,148,800, which includes (1) compliance costs arising from the Labour Program implementation expenditures (salary as well as operations and management) over the first five years to support the new pay transparency requirements; and (2) administrative burden costs to be assumed by federally regulated private-sector employers.
The latter costs will be related to the employer’s need to familiarize themselves with updated salary reporting requirements and with a new version of the National Occupational Classification included in the Regulations. Affected federally regulated private-sector employers will also assume an incremental recurring administrative burden cost every five years, as they will have to adjust to the latest NAICS revisions incorporated in the Regulations as an ambulatory reference. The estimated present value of these incremental administrative burden costs is $25,500.
Implementation and compliance costs will be partially offset by a decrease in the administrative burden from the introduction of the streamlined salary calculation methodology, which is anticipated to entail annualized savings of $15.62 per affected federally regulated employer, with an overall annualized value of $8,700.
Monetary benefits expected from the amended Regulations will yield a present value of $61,400.
Significant non-monetary benefits are also anticipated as a result of these Regulations, as they will enable the Canadian public to access more detailed and comprehensive employment equity data focused on pay transparency. This information will incentivize federally regulated employers to identify and address wage gaps in their workforce. It will also better inform federal policies aiming to foster equal and inclusive workplaces.
The Regulations carry an expected net present value of −$1,087,400.
- Number of years: 10 (2020 to 2029)
- Base year for costing: 2012
- Present value base year: 2020
- Discount rate: 7%
|Impacted stakeholder||Description of Cost||Base Year||Other Relevant Years||Final Year||Total (Present Value)||Annualized Value|
|Government||Implementation of new pay transparency requirements (salaries, operations and management)||2020||N/A||2029||$1,123,300||$159,900|
|Industry||Familiarize with updated reporting requirements||2020||N/A||2029||$7,100||$1,000|
|Familiarize with periodically updated industry classification code||2020||N/A||2029||$9,200||$1,300|
|Familiarize with periodically updated occupational classification code||2020||N/A||2029||$9,200||$1,300|
|All stakeholders||Total costs||2020||N/A||2029||$1,148,800||$163,500|
|Impacted stakeholder||Description of Benefit||Base Year||Other Relevant Years||Final Year||Total (Present Value)||Annualized Value|
|Industry||Reduction in administrative burden from streamlined reporting procedures||2020||N/A||2029||$61,400||$8,700|
|All stakeholders||Total benefits||2020||N/A||2029||$61,400||$8,700|
|Impacts||Base Year||Other Relevant Years||Final Year||Total (Present Value)||Annualized Value|
Small business lens
The Act and the Regulations apply to any federally regulated private-sector organization that employs 100 or more employees. As a result, these changes do not impose any new administrative or compliance burden on small businesses and, therefore, the small business lens does not apply.
Simplifying the way employers calculate employee salaries for the purposes of reporting under the Act is expected to lead to a reduction in the administrative burden for federally regulated private-sector employers.
The previous methodology required by the Regulations was complex and did not correspond to established HR or accounting practices; therefore, these calculations had to be performed manually or be custom programmed. Federally regulated private-sector employers had often brought to the Labour Program’s attention the complexity involved in using the existing salary calculation methodology during the annual submission process. The simplified procedures introduced in the amended Regulations entail an overall discounted reduction in the administrative burden of $61,200, or $109 per affected employer, over the 10-year period considered in the cost-benefit analysis.
This reduction in administrative burden is partially offset by anticipated incremental administrative costs related to the affected employer’s need to familiarize themselves with updated salary reporting requirements and with new versions of the National Occupation Classification and North American Industry Classification System revisions introduced by the Regulations.
No regulatory title was added or removed.
Expressed in 2012 constant dollars and discounted to a 2012 present value base, the annualized decrease in the administrative burden is estimated at $2,973. This value corresponds to an “OUT” in Element A of the one-for-one rule entry associated with these Regulations.
Since no regulatory title is added or removed, the one-for-one rule Element B value for these Regulations is zero.
In 2017, the Labour Program consulted stakeholders on similar cost-saving measures (e.g. removal of salary annualization requirement), but employers were unable to assign a dollar value to the proposals at that time. Estimates were subsequently developed by the Labour Program for publication of the amendments to the Regulations in the Canada Gazette, Part I, using the number of stakeholders affected, the amount of time it takes to perform the activity, the associated wage and the frequency of the activity. This was the first time cost estimates were provided to employers. Through their prepublication submissions, some employers indicated they could not easily quantify the costs for their organization, but no further detail about costs were provided by employers.
Gender-based analysis plus (GBA+)
According to Statistics Canada, in Canada, employed core-aged women (25 to 54 years old) earned $0.87 for every dollar compared to men in terms of their average hourly wage in 2018 (a wage gap of 13.3%), up from $0.81 in 1998.
The target groups for the pay transparency measure are women, Aboriginal peoples, persons with disabilities and members of visible minorities employed in workplaces covered under the Act.
In the Employment Equity Act – Annual Report 2018, considerable differences were reported in the wages of men and women employed by private-sector employers covered by the Act:
- Women in permanent full-time positions earned a salary of $60,000 or more in 2017 (48.6%).
- In contrast, 63.8% of men were in the top salary range for the same period.
Further, the annual report demonstrates similar gender differences when salary is analyzed by designated groups.
- In 2017, Aboriginal women remained much less likely (41.5%) to earn $60,000 or more compared to Aboriginal men (63.0%).
Persons with disabilities
- In 2017, women with disabilities remained much less likely (45.7%) to earn $60,000 or more compared to men with disabilities (61.0%).
Members of visible minorities
- In 2017, visible minority women remained much less likely (48.4%) to earn $60,000 or more compared to visible minority men (60.5%).
The pay transparency measures will help raise awareness of wage gaps within these organizations for the four designated groups. Where wage gaps exist, it is anticipated that pay transparency will prompt these employers to examine their practices and show leadership in reducing their wage gaps.
Implementation, compliance and enforcement, and service standards
The amended Regulations will come into force on January 1, 2021. This will allow employers sufficient time to modify systems and make adjustments to the salary information required to be submitted to the Government of Canada, recognizing that employers report on June 1 based on data that was collected in the previous calendar year (e.g. 2021 data is reported on June 1, 2022). As a result, reporting for the 2020 calendar year will be based on the previous requirements.
To ease the transition for employers, the WEIMS platform will be updated well in advance of the June 1, 2022, reporting deadline. The Labour Program will support employers by providing detailed information and training tools to explain how to collect, calculate and submit their wage gap data using the online system. In addition to being published online, the Employment Equity Forms 2021 will be integrated to the WEIMS, where employer data will be automatically populated into the forms for verification by employers prior to being submitted to the Labour Program.
Monitoring mandatory employer reporting requirements is included in the Labour Program’s performance measurement framework for workplace equity, which is reported annually through the Departmental Results Report and Departmental Plan of Employment and Social Development Canada.
It is a violation of the Act to
- fail to submit, without reasonable excuse, an employment equity report;
- fail to include, without reasonable excuse, any information that is required by the legislation or the regulations; or
- provide any information in the employment equity report that the employer knows to be false or misleading.
The Minister of Labour has the authority to issue a monetary penalty for every violation that occurs, including continued violations, which can count as separate violations for each day on which they are committed or continued.
In its administration of the legislation on behalf of the Minister, the Labour Program focuses on facilitating compliance with reporting requirements rather than enforcement measures. In terms of correcting or preventing non-reporting, the Labour Program procedures for annual reporting are effective in prompting employers to comply with the Act. This collaborative approach results in eventual compliance (currently 100%) without having to resort to using the administrative penalties under the Act.
To promote early understanding and achieve positive compliance from employers, active engagement will be undertaken by the Labour Program, building on the early consultation and engagement strategy that included in-person meetings and an online questionnaire. Labour Program officers will provide guidance to federally regulated private-sector employers through the annual submission process and will verify final submissions as per existing procedures, supported by additional online engagement tools currently in use by the Labour Program.
Employment and Social Development Canada