Canada Gazette, Part I, Volume 158, Number 6: Order Grouping Ministers’ Offices for the Purpose of a Pay Equity Plan

February 10, 2024

Statutory authority
Pay Equity Act

Sponsoring department
Department of Employment and Social Development

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order or the Regulations.)

Issues

The Pay Equity Act (Act) and Pay Equity Regulations (Regulations) require that federally regulated public and private sector employers, including federal Cabinet ministers, with 10 or more employees proactively examine their compensation practices and ensure that workers in predominantly female job classes receive equal pay for work of equal value.

Challenges have been identified since the coming into force of the Act and Regulations in 2021 related to the implementation of the Act in ministers’ offices:

The Application of the Pay Equity Act to Ministers’ Offices Regulations (the proposed Regulations) would address these issues and support ministers’ offices in fulfilling their obligations to achieve and maintain pay equity for ministerial staff.

The proposed Regulations would be complemented by the proposed Order Grouping Ministers’ Offices for the Purpose of a Pay Equity Plan (the proposed Order), which would group ministers’ offices for the purposes of establishing and updating a single pay equity plan for ministerial staff.

Background

Pay equity regime

Pay equity is the concept of equal pay for work of equal value. It addresses systemic gender-based discrimination in compensation systems resulting from the undervaluation of work traditionally performed by women.

The objectives of the pay equity regime are the following:

The regime is administered and enforced by the Commissioner, who is a member of the Canadian Human Rights Commission (CHRC). The Commissioner is equipped with a broad range of enforcement powers to encourage compliance, address complaints, and settle disputes.

Together, the Act and Regulations direct federally regulated public and private sector employers with 10 or more employees to take proactive steps to ensure they are providing equal pay for work of equal value. Employers regulated under the Act include private sector employers in industries such as transportation (road, air, rail, maritime); banks; telecommunications and broadcasting, postal and pipelines; and grain handling; and public sector employers such as the Prime Minister’s Office and ministers’ offices; federal Crown corporations; the federal public service; the Royal Canadian Mounted Police; and the Canadian Armed Forces.

Application of the pay equity regime to ministers’ offices

Ministers’ offices that employed an average of 10 or more ministerial staff when the Act came into force, or in a fiscal year after, are currently subject to the Act and have the same obligations as other employers within the federal public and private sectors that are subject to the Act. Ministers’ offices that employ an average of less than 10 ministerial staff are not subject to the Act and instead are subject to a complaint-based regime under the Canadian Human Rights Act (CHRA). Each ministers’ office, as an employer, is responsible for understanding whether they are subject to the Act or the CHRA and for carrying out their obligations accordingly.

With respect to ministers’ offices and ministerial staff specifically, the Act provides the Governor in Council with regulation-making authority to

The Act also provides the Governor in Council with the authority to group two or more ministers’ offices together by Order in Council (OIC) for the purposes of developing one plan for their combined ministerial staff.

Groups of employers

Employers are individually subject to the Act and responsible for meeting their obligations. However, the Act provides that two or more employers may apply to the Commissioner to be recognized as a group of employers under the Act in order to develop a single pay equity plan as a group. Employers in the group have a collective responsibility to establish and maintain a pay equity plan for all the employees of the employers in the group.

When the Commissioner chooses to recognize the group of employers, the Act requires that the Commissioner choose a date on which the group becomes subject to the Act. The date must be after one of the employers in the group became subject to the Act and is the earliest date that would give the group sufficient time to meet their obligations under the Act.

The Act provides that the Governor in Council may, by OIC, group two or more ministers’ offices for the purposes of establishing and updating a single pay equity plan for any such grouping. No such OIC has been made to date.

Establishing the pay equity plan

Under the Act, employers or pay equity committees must develop and implement a pay equity plan for their workplace. Employers have three years after becoming subject to the Act to develop their initial pay equity plan. Employers that have been subject to the Act since it came into force in August 2021 must develop and post a pay equity plan by September 3, 2024.

Increases in compensation

Under the Act, employers are required to increase compensation for employees in predominantly female job classes if the pay equity plan discloses differences in compensation between predominantly female job classes and predominantly male job classes.

Updating the pay equity plan

Employers or pay equity committees that are subject to the Act are required to update their pay equity plan to identify and address any pay gaps that have emerged since the previous version of the plan was posted. The Act and Regulations set out a three-step process that employers and pay equity committees must follow to update their pay equity plan: (1) collecting data, (2) analyzing workplace information, and (3) comparing compensation. Employers have a maximum of five years from the date on which the previous plan was posted to update it.

Ministerial staff

Ministerial staff are appointed by a minister pursuant to section 128 of the Public Service Employment Act. Ministers employ ministerial staff as their employees while they are minister of a particular office. If a minister leaves their office (e.g. as the result of a Cabinet shuffle, resignation, or termination), their ministerial staff are no longer considered to be their employees.

Administrative monetary penalties

The Act provides the Commissioner with powers to encourage compliance with the pay equity regime, including issuing notices of violation to parties that fail to comply with a provision of the Act or the Regulations or that contravene an order made or issued under the Act or Regulations. The Act sets out that the Commissioner may issue a notice of violation if they have reasonable grounds to believe that a designated provision has been violated.

The proposed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments), which are being advanced under a separate initiative, would operationalize the administrative monetary penalties (AMPs) system and support the Commissioner to be able to effectively address non-compliance with the pay equity regime.

The proposed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments) would apply to federally regulated public and private sector employers with 10 or more employees.

Objective

The objective of the proposed Order is to ensure that ministers’ offices are grouped for the purpose of developing and maintaining a single pay equity plan for their collective ministerial staff.

The proposed Regulations have the following objectives:

Description

The Governor in Council would make the proposed Order to group all ministers’ offices for the purposes of establishing and updating a single pay equity plan for their collective ministerial staff. This would ensure consistency in how the pay equity exercise is carried out across ministers’ offices. The grouping of ministers’ offices would be evergreen: all ministers’ offices would be included in the group and new ministerial positions would automatically be added to the group as they are created. The evergreen grouping considers the unique workplace context of ministers’ offices to ensure that the pay equity exercise is continuous for the duration of a given ministry and that new ministries are included in the group upon appointment.

The proposed Regulations would adapt the following provisions in their application to ministers’ offices and would exempt ministers’ offices from the ability to phase in increases in compensation.

Ensure the application of the Act to all ministers’ offices

The proposed Regulations would amend the Act’s application threshold for ministers’ offices so that all ministers’ offices are subject to the Act, regardless of the number of staff they employ. This would ensure that all ministers’ offices with at least one ministerial staff are subject to the Act and that all ministerial staff are included in a pay equity plan.

Provide that the provisions of the Act and the Regulations applicable to groups of employers apply to the ministers’ offices grouped by OIC

The proposed Regulations would provide that the provisions of the Act and the Regulations that apply to groups of employers apply to ministers’ offices grouped by OIC.

This would promote consistency in how the Act is applied to grouped ministers’ offices and other groups of employers under the Act. In addition, it would provide clarity to ministers’ offices and ministerial staff regarding ministers’ collective obligations under the Act and limit redundancy that would be created by requiring separate pay equity plans for each ministerial office.

Set a date on which ministers’ offices grouped by OIC become subject to the Act

The proposed Regulations would provide a date on which ministers’ offices grouped by OIC become subject to the Act. Under the proposed Regulations, ministers’ offices grouped by OIC would become subject to the Act upon the coming into force of the proposed Order to group all ministers’ offices or upon the appointment of a new ministry (i.e. new Prime Minister).

This would provide the grouped ministers’ offices with the time required to understand and carry out their obligations under the Act and Regulations.

Reduce the amount of time allowed for ministers’ offices to conduct the pay equity maintenance review exercise

The proposed Regulations would provide ministers’ offices grouped by OIC with three years, rather than the five years provided in the Act, to update their pay equity plans. This shortened time frame would consider the unique workplace context of ministers’ offices, including the four-year general election cycle, with the goal of increasing the likelihood that the pay equity maintenance process be completed.

Promote continuity of the pay equity exercise in ministers’ offices and ensure that ministers’ offices increase compensation in a lump sum

The proposed Regulations would promote continuity of the pay equity exercise by ensuring that the pay equity process is maintained so long as a ministry remains, even if an election or Cabinet shuffle takes place. The proposed Regulations would also ensure that the pay equity process would start again when there is a new ministry (i.e. change of Prime Minister).

The proposed Regulations would require ministers’ offices to increase the compensation that is payable to its ministerial staff as determined in the pay equity plan on the day after the pay equity plan is posted. Ministers’ offices would not have the ability to phase in increases in compensation. This would ensure that ministerial staff receive any increases in compensation from the ministry that established their pay equity plan.

Ensure consistency under the administrative monetary penalties system

The proposed Regulations would adapt the proposed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments) to ensure that ministers’ offices with less than 10 ministerial staff are assigned the same penalty ranges under the AMPs system as ministers’ offices with 10 to 99 ministerial staff. This would ensure consistency of the application of the AMPs system across ministers’ offices.

Regulatory development

Consultation

Preliminary consultations with some stakeholders on the proposed Regulations and proposed Order took place in summer 2023. The preliminary consultations specifically targeted ministers’ offices that were subject to the Act at the time of consultation and that would be immediately impacted by the proposed Regulations and proposed Order.

Ministers’ offices were consulted by email on the proposed approach, with a request for feedback. Of the 38 emails sent, 3 replies were received, which indicated support for the proposed approach. In particular, ministers’ offices that replied were supportive of grouping ministers’ offices to create a single pay equity plan for all ministerial staff.

Modern treaty obligations and Indigenous engagement and consultation

A modern treaty implications assessment was conducted in accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. There are no impacts on modern treaties identified in relation to the proposed Regulations and the proposed Order.

Instrument choice

The proposed Regulations are required to make amendments to the Act’s application threshold for ministers’ offices, ensure the provisions of the Act and Regulations that apply to groups of employers apply to ministers’ offices grouped by OIC, set a date on which ministers’ offices grouped by OIC become subject to the Act, reduce the amount of time that ministers’ offices grouped by OIC have to update their pay equity plans, and ensure the pay equity process is continuous unless there is a change in ministry. The proposed Order is required to group ministers’ offices for the purposes of developing and updating a single pay equity plan. Regulatory amendments are required as there is no other instrument (e.g. internal policies or external operational directives) that could attain the objectives sought.

Without regulatory amendments in place, it would be challenging for ministers’ offices to achieve pay equity for ministerial staff; ministerial staff in offices with less than 10 employees on average in a fiscal year would not benefit from the pay equity regime; ministers’ offices would be less likely to complete the pay equity maintenance review; and the pay equity process may be interrupted by Cabinet shuffles, resignations, or elections.

Regulatory analysis

Benefits and costs

The regulatory proposal would entail costs to ministers’ offices; however, it would also create cost savings and efficiencies for ministers’ offices and the CHRC when compared to the baseline scenario.

The proposed Regulations would entail costs to ministers’ offices with less than 10 ministerial staff that become subject to the Act and that, pursuant to a pay equity plan, are required to increase compensation for their staff. The cost of pay adjustments is anticipated to be lower than $1 million per year on account of the estimated small number of ministerial staff who would be affected by the proposed Regulations.

The proposed Order to group ministers’ offices would create cost savings for ministers’ offices as only one pay equity plan would be developed for all ministerial staff. This would create efficiencies for ministers’ offices and the CHRC when compared to the baseline scenario, under which ministers’ offices that are subject to the Act must develop individual pay equity plans for their respective ministerial staff.

Baseline scenario

Ministers’ offices with an average of 10 or more ministerial staff are subject to the Act and incur costs related to carrying out their obligations under the Act. The CHRC is responsible for monitoring and auditing ministers’ offices compliance with the Act. Based on analysis of information available in the Government of Canada directory as of April 2023 and through the pay system as of June 2023, it is estimated that between 34 and 37 ministers’ offices have 10 or more staff. Each minister’s office that is subject to the Act must follow the steps listed below.

Gather the information required to develop or update their pay equity plan

Each minister’s office must gather the following workplace information to develop or update its pay equity plan:

Develop the pay equity plan

Each minister’s office must use their workplace information to develop their pay equity plan and determine whether there are differences in compensation between job classes of equal value. Each minister’s office must post a draft and final version of their pay equity plan.

Increase compensation

Each minister’s office must increase compensation for predominantly female job classes if their pay equity plan identifies gaps in compensation between predominantly female and predominantly male job classes. Each minister’s office must post a notice of the increase and the date on which those increases are payable before making them.

File an annual statement with the Commissioner

Each minister’s office must submit an annual statement to the Commissioner with information on their pay equity plan. Information that must currently be provided includes, but is not limited to,

The proposed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments), which are being advanced under a separate initiative, would require employers to submit additional information as part of their annual statement to the Commissioner.

Update the pay equity plan

Each minister’s office must review and update their pay equity plan within five years of posting their previous pay equity plan and close any new gaps in compensation that have been identified. In order to update the pay equity plan they must collect workplace data, analyze the information, and compare compensation to determine if there are differences between predominantly male and predominantly female job classes of equal value.

Regulatory scenario
Costs

The proposed Regulations would entail costs by modifying the Act’s application threshold to make all ministers’ offices subject to the Act, rather than only ministers’ offices with an average of 10 or more ministerial staff.

Based on an analysis of information available on the Government of Canada directory as of April 2023 and through the pay system as of June 2023, it is estimated that between 2 and 5 ministers’ offices have less than 10 ministerial staff and would be impacted by the proposed regulatory amendment to make all ministers’ offices subject to the Act. A range is provided to reflect the possibility that ministers’ offices may have more or less ministerial staff than what was reflected in the directory and pay system at the time of analysis.

The two to five ministers’ offices that become subject to the Act under the proposed Regulations would incur costs to carry out their obligations under the Act. This includes costs to gather the information to develop or update the pay equity plan, costs to increase compensation if the pay equity plan identifies gaps in compensation between predominantly female and predominantly male job classes, and costs to submit annual statements to the Commissioner.

In addition, the proposed Regulations would entail costs to all ministers’ offices by shortening the timeline for ministers’ offices to update the pay equity plan from five years to three years.

Savings

Together, the proposed Order to group ministers’ offices and the proposed Regulations would create efficiencies throughout the pay equity process when compared with the baseline scenario.

Overall cost

Pay adjustments would entail costs lower than $1 million per year.

Overall benefits

All the elements of the regulatory proposal, except the pay adjustments, would entail cost savings when compared with the baseline scenario. The proposed Order to group ministers’ offices would create efficiencies by requiring that the group develop and update a single pay equity plan. The proposed Regulations would also create efficiencies for ministers’ offices and the CHRC by ensuring that the provisions of the Act and Regulations that apply to groups of employers apply to ministers’ offices grouped by OIC. This means, for example, that the group of ministers’ offices would submit a single annual statement to the Commissioner rather than individual annual statements.

Small business lens

Analysis under the small business lens concluded that the regulatory proposal would not impact Canadian small businesses, as it would not impose any administrative or compliance costs on businesses.

One-for-one rule

The one-for-one rule does not apply, as the proposed Regulations and proposed Order would not result in a change in the administrative burden imposed on businesses.

Regulatory cooperation and alignment

This regulatory initiative is not part of a formal bilateral agreement.

Ontario and Quebec are the only provinces that have proactive pay equity legislation in place. Ontario’s pay equity regime applies to all employers in the private and public sector with 10 or more employees. Quebec’s pay equity regime also applies to employers in the private and public sectors with 10 or more employees. However, ministers are exempt from the application.

This proposal would not align with Ontario or Quebec’s exemption for ministers, as it seeks to make all ministers subject to the Act.

Several European countries, including France, Finland, Iceland and Sweden have implemented proactive pay equity regimes that apply to both the public and private sectors. The application and pay equity exercises are unique across jurisdictions, including the federal jurisdiction in Canada. Canada’s federal pay equity legislation has taken an approach to ensure that the legislation applies to all federally regulated private and public sector employers, including ministers. This approach aligns with that of other federal legislation, including the Canada Labour Code. There is no requirement to align this proposal with international and/or provincial and territorial legislation as there is a distinct separation in jurisdiction between international, federal, and provincial/territorial governments with regards to labour law.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

A gender-based analysis plus (GBA+) analysis was conducted for this regulatory proposal. The analysis suggested that the proposed Regulations would primarily benefit women that work as ministerial staff. More specifically, research indicates that racialized women, including visible minority, immigrant and Indigenous women [see Oxfam’s Making Women Count (PDF) (2016) and Statistics Canada’s Visible Minority Women reports (2016)], women with disabilities [see Statistics Canada’s Women with Disabilities (PDF) report (2017)], and women with lower levels of education [see Statistics Canada’s Women and Paid Work and the OECD’s Employment Outlook Report (2018)] would be likely to disproportionately benefit, as these groups are more likely to face a larger gender wage gap. The proposed Regulations are also expected to benefit men, 2SLGBTQIA+ and gender non-conforming people who are employed in predominantly female job classes that the pay equity plan identifies as receiving lower compensation compared to predominantly male job classes of equal value. This is because all the employees in those predominantly female job classes would receive the same pay adjustments.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed Regulations and proposed Order to group ministers’ offices are intended to come into force on the same date in spring 2024. Ministers’ offices grouped by OIC would become subject to the Act on the date the Order to group ministers’ offices comes into force or on the date that a new ministry (i.e. a new Prime Minister) is appointed.

The Commissioner, housed in the CHRC, is responsible for administering and enforcing the Act and the Regulations. The Commissioner’s role includes assisting workplace parties in understanding their rights and fulfilling their obligations, including through the development of tools and education materials, investigating complaints and considering applications, and facilitating the resolution of disputes. The proposed Regulations and proposed Order would create efficiencies for the CHRC by streamlining the CHRC’s interactions with the group of ministers’ offices, rather than individual ministers’ offices, and by establishing consistency in when ministers’ offices grouped by OIC must post their pay equity plan.

Compliance and enforcement

The Act was established as a proactive pay equity regime. The Commissioner is responsible for monitoring the implementation of the Act. The Act also allows for complaints to be filed with the Commissioner. The Commissioner is equipped with a broad range of enforcement tools to encourage compliance, address complaints, and settle disputes. These enforcement tools include investigations, proactive audits, order-making powers, and the authority to impose AMPs. The proposed Regulations Amending the Pay Equity Regulations (Administrative Monetary Penalties and Technical Amendments), which are being advanced under a separate initiative, would operationalize the AMPs system.

Contact

Interested persons may make representations concerning the proposed Regulations and proposed Order within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website, but if they use email or mail, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to

Muhammad Ali
Executive Director
Workplace and Labour Relations Policy Division
Labour Program
Department of Employment and Social Development
Place du Portage, Phase II, 11th Floor
165 De l’Hôtel-de-Ville Street
Gatineau, Quebec
J8X 3X2
Email: ESDC.PayEquity-EquiteSalariale.EDSC@labour-travail.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Order Grouping Ministers’ Offices for the Purpose of a Pay Equity Plan under subsection 173(1) of the Pay Equity Act footnote a.

Interested persons may make representations concerning the proposed Order within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Muhammad Ali, Executive Director, Workplace and Labour Relations Policy Division, Labour Program, Department of Employment and Social Development, 165 De l’Hôtel-de-Ville Street, Place du Portage, Phase II, 11th Floor, Gatineau, Quebec J8X 3X2 (email: ESDC.PayEquity-EquiteSalariale.EDSC@labour-travail.gc.ca).

Ottawa, February 2, 2024

Wendy Nixon
Assistant Clerk of the Privy Council

Order Grouping Ministers’ Offices for the Purpose of a Pay Equity Plan

Grouping of ministers’ offices

1 All ministers’ offices are grouped for the purpose of establishing and updating a single pay equity plan.

Coming into force

2 This Order comes into force on the day on which it is registered.

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