Learn how Forrester Consulting quantifies the impact of HR and payroll investments. 
Pay equity laws in Canada
Canada has 14 distinct legal jurisdictions that govern the employment relationship, including the management of pay equity and, increasingly, pay transparency. Depending on your business, your requirements as an employer may fall under federal, provincial or territorial pay equity laws. While many pay equity laws apply primarily to the public sector, there are key obligations for private employers as well, particularly those with 10 or more employees in Ontario and Québec, where legislation requires proactive steps to close gender-based wage gaps and ensure that salary practices are transparent.
Pay equity and pay transparency are closely linked. Pay equity laws focus on eliminating systematic gender discrimination in compensation by ensuring employees receive equal pay for work of equal value. Pay transparency requires employers to be open about pay ranges and compensation practices, helping employees understand how pay decisions are made and giving organizations an opportunity to build trust while demonstrating compliance.
Federal pay equity
About 6% of Canadian employers are federally regulated. These businesses include industries such as banking, telecommunications, interprovincial transportation, trucking and shipping. The federal Pay Equity Act (the Act) came into effect on August 31, 2021.
The Act intends to address systemic gender discrimination in compensation practices and pay systems in federally regulated workplaces. Under the Act, employers with 10 or more employees must develop and post a pay equity plan within three years of becoming subject to the Act. Once the plan is in place, employers are also required to regularly review and maintain the plan to ensure pay equity is sustained over time.
Provincial and territorial pay equity
Outside of the federal regime, provinces and territories play a key role in establishing pay equity obligations for non-federally regulated employers. Ontario and Québec both have comprehensive pay equity frameworks that apply to private-sector employers with ten or more employees. These regimes require proactive steps to identify and close gender-based wage gaps.
In other provinces and territories, pay equity is often addressed through human rights legislation or employment standards, which prohibit pay discrimination and set out equal pay provisions, even if there is no dedicated pay equity statute.
Learn more about specific requirements:
FAQs
What is pay equity in Canada?
Pay equity means ensuring that employees are paid fairly for work of equal value, regardless of gender. It addresses systematic wage gaps by requiring employers to evaluate and compensate jobs typically held by women and men, ensuring compensation practices are free from discrimination.
Who must comply with pay equity laws?
Federally regulated employees with 10 or more employees, as well as private-sector employers in Ontario and Québec with over 10 employees, must comply with applicable pay equity legislation. Pay equity legislation may also apply to public sector employers in other Canadian provinces and territories. Other private sector employers may need to comply with applicable non-discrimination laws.