In A Flash

Pay Equity Commissioner Denies Treasury Board Multiple Plan Application

On June 22, 2023, the Pay Equity Commissioner (“the Commissioner”) denied the application of the Treasury Board Secretariat of Canada (“TSB”) seeking authorization to establish multiple pay equity plans for employees in the core public administration. This is the second decision on this issue from the Commissioner, the first being Canadian National Railway Company, ARDA-2022-0002 (PEC-CHRC) (“the CN decision”), which was denied in part.

From the early jurisprudence of the Commissioner, it appears that a single committee and a single plan will be strongly favoured under the Pay Equity Act SC 2018, c.27, s.416 (“the Act”), and exceptions will not be easily granted. The requirement of sufficient male comparators under the Act is a crucial threshold to cross.  Moreover, employers seeking authorization for multiple plans must also demonstrate that their plans will not reinforce occupational gender segregation, but rather proactively address systemic pay equity in the workplace.

Employers cannot rely on the potential inconvenience or unworkability of a single pay equity committee as grounds for seeking multiple plans, nor should employers approach pay equity as a different version of collective bargaining. Instead, through cogent evidence, employers will have to make a clear and convincing case that establishing multiple plans addressing specific communities of interest is the most appropriate way to meet the objectives of the Act.

Below we analyze the decision and highlight important takeaways for federally regulated employers seeking to meet their obligations under the Act.

Analysis

In an application filed last year, the TSB requested authorization from the Commissioner to establish three plans for over 240,000 employees in the core public administration (“CPA”):

  1. A plan covering 145,000 employees who are in a bargaining unit represented by the Public Service Alliance of Canada (“PSAC”) in managerial or confidential or audit-relation positions, or non-union employees performing similar job functions
  2. A plan covering 47,000 employees who are in a bargaining unit represented by the Professional Institute of the Public Service of Canada (“PIPSC”) in managerial or confidential positions, or non-union employees performing similar job functions
  3. A plan covering 60,000 employees not covered by the first two plans, in bargaining units represented by 16 unions or associations, and non-union employees.

Multiple pay equity plans are an exception to the rule under the Act, which requires a federally regulated employer to establish a single pay equity plan for its entire workforce unless the Commissioner approves a different pay equity plan structure.

To allow the establishment of multiple plans, there is a threshold question of whether it is possible to identify enough predominantly male job classes for a comparison of compensation to be made in relation to predominantly female job classes. Once that test is met, the Commissioner can authorize the establishment of multiple pay equity plans if it is “appropriate in the circumstances”. This broad test was articulated in CN decision at paragraphs 22 to 28.

TSB was able to pass the threshold test, showing that each plan had sufficient male comparators. In its application, TSB identified 626 job classes, of which 178 were predominantly (over 60%) occupied by women or were historically occupied by women, 350 were predominantly male, and 98 were gender neutral. These were evenly distributed across the three proposed plans.

Notably, the Commissioner rejected objections of some of the affected unions and employees’ associations claiming that certain predominantly female job classes did not have direct male comparators within a proposed plan.  Instead, the Commission accepted the submission of TBS that one of the methods for comparison that is suggested in the Act, the “equal line” method, allows for comparing the value of a job and the rate of pay by comparing averages of all male and female job classes in each proposed plan.

Turning to the question of appropriateness, the Commissioner had previously stated in the CN decision, at paragraphs 31 to 34, that the impact of multiple plans on reinforcing occupational gender segregation is important, and that it is crucial to assess whether proposed multiple plans will proactively address systemic pay-based gender discrimination in the workplace. In accordance with these guiding principles, the Commissioner considered (and rejected) six arguments made by TSB on why it would be appropriate to allow the proposed multiple plans:

  • The first argument raised by TSB was that a single pay equity committee would be extremely challenging, as it would need to include at a minimum 18 members, including one member representing each bargaining unit. While the first and second proposed plans proposed by TSB would each have only one representative of bargaining units in its committees, TSB was unable to explain how it would overcome these challenges in the committee established by its third proposed plan, which would have at least 14 such representatives. The Commissioner found that the Act includes a mechanism under which the employer’s vote prevails in situations where employee representatives are unable to agree, and the employer is able to develop a pay equity plan unilaterally if a committee becomes dysfunctional. Further, as stated in the CN decision at paragraph 58, the fact that a large committee will be challenging is not sufficient reason to override the presumption of a single plan.
  • The second argument raised by TSB was that it would take significantly more time to implement a single pay equity plan. However, TSB could not show any evidence that three pay equity plans could be created more quickly than one pay equity plan.
  • The third argument raised by TSB was that a single job evaluation tool could lead to decreased accuracy of results. In support, TSB presented an expert report that argued that six to twelve plans, each including somewhat similar job classes and its own job valuation instrument, would be more accurate than a single plan. However, TSB’s proposal did not itself follow the report’s recommendations, and instead based its proposed plans on its bargaining unit structure.   TSB could not explain how its proposal overcame the problems identified by its own expert.
  • The fourth argument raised by TSB was that a single plan would lead to decreased acceptance of results, but this was based on pure speculation, and unsupported by evidence.
  • The fifth argument raised by TSB was that a single plan would contradict the existing community of interest structure, disrupt labour relations and go against the purposes of the Canada Labour Code. The Commissioner reiterated the view expressed in the CN decision, at paragraph 57, that pay equity legislation should not be interpreted in a way that favours comparison between bargaining units. While there may be a presumption in the private sector that bargaining units share a community of interest, since labour boards have the exclusive mandate to determine the appropriate bargaining unit structure, the same presumption does not apply to the CPA.  This is because the CPA was shaped by unique historical requirements and considerations, including an emphasis on defining bargaining units based on occupational groups.
  • The sixth and final argument raised by TSB was that a single plan for such a large employer was unprecedented. The Commissioner found that there had been other large scale evaluations of jobs that had produced reliable results.

Based on the above, the Commissioner denied the application of TSB seeking authorization for multiple plans.  Instead, the Commissioner called upon the bargaining agents to work collaboratively with TSB to develop a single pay equity plan, which they unanimously supported.

Conclusions

The Commissioner’s analysis and rejection of TSB’s arguments provide lessons for employers on how to make a more convincing case for multiple pay equity plans. At a threshold level, each plan must have sufficient male comparators that allows for comparison under one or more methods prescribed by the Act.

To show that multiple plans are appropriate, employers cannot rely on inconvenience or delay, but must rather show that multiple plans will not reinforce occupational gender segregation, and will proactively address systemic pay-equity in the workplace.  An employer proposing one plan for each bargaining unit in its workplace cannot rely solely on the labour relations status quo, but must show a distinct community of interest within each proposed plan that binds the members for pay equity purposes. Needless to say, employers must develop a rational chain of reasoning justifying their arguments for multiple plans that are linked to the purposes of the Act and its developing jurisprudence.

The Commissioner’s reluctance to support the alignment of pay equity plans with existing bargaining unit structures is certainly concerning.  However, in both the CN decision and the TSB decision, it is significant that the bargaining agents were opposed to the establishment of multiple plans, and this was emphasized by the Commissioner. For unionized employers, this underscores the importance of consultation with bargaining unit representatives, and obtaining their cooperation and support for a multiple pay equity plan structure.

Finally, whether under one plan or multiple plans, employers must carefully review and effectively utilize the mechanisms available to them under the Act that will allow them to expedite the finalization of their pay equity plans, even in the face of disagreement amongst members representing bargaining units.

If you have any questions about the Pay Equity Act or the Regulations, or any questions relating to workplace law in the federal sector generally, please do not hesitate to contact a Mathews Dinsdale lawyer.

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